The Baltic Region

2015 Issue №1(23)

Economics

Monotowns: A New Take on the Old Problem

Abstract

The authors of this paper propose an approach to studying risk management in the most vulnerable monotowns that would account for the relations between major stakeholders and use the tools developed in the framework of the new institutional economic theory. Having compared the existing definitions of the “monotown” concept, the authors present their own approach. They identify key reasons behind monotown vulnerability and systematize stakeholders’ risks. The authors then posit that a study of monotown- related issues would be incomplete without accounting for stakeholders’ interests and relations. Monotown problems become apparent in the context of institutional agreements carried out with high transition costs and increased risks of opportunistic behaviour encountered by the institutional agreement stakeholders. Solving these problems through the methods proposed in the article would help to identify a wider range of alternatives while still taking into account all the typical scenarios. The authors analyse the process of risk management in monotowns from the viewpoint of international practices; and identify structural alternatives of outweighing these risks by considering key relations affecting the implementation of each alternative.

Download an article

The Baltics in the Geography of the Largest Transnational Corporations of Europe

Abstract

The aim of this study is to examine the place of the Baltic States on the corporate world map, a contemporary, foreign-investment-driven alternative to the more familiar political map. To this end, the author studies the geographical place of the Baltics in the documentation of transnational corporations. The research database consists of financial reports and presentations of 60 leading European (including Russian) transnational corporations. Special attention is paid to companies from countries with significant FDI stock in the Baltic States. This study is a first step towards analyzing international investors’ interpretation of the new European borders. The connection between the neighborhood effect on FDI distribution and geographical segmentation in the corporate paperwork is established. Some companies use a multilevel division (e. g. Europe/Eastern Europe), where the Baltics is usually associated with “Europe” (with or without Russia and Turkey). However, in some cases the Baltic States are clustered u nder “home market” (as is the case with some Swedish companies), “former Soviet Union” (some Russian companies), “Northern Europe and Central Asia,” and even “Middle East and Eastern Europe." Varying understanding of where exactly th borders of Europe lie could explain the plurality of attitudes of the European business establishment to the EU sanctions against Russia.

Download an article

The Belarus Business Environment as Assessed by the Management of Leading Finnish Companies Operating in the Country

Abstract

Inward foreign investment stock has grown remarkably in Belarus. It increased tenfold since 2000 to reach over $14 billion by the end of 2012. According to the Central Bank of Belarus, Finnish firms have invested nearly $100 million in Belarus making Finland the sixteenth most active foreign investor in the country. Approximately 7,000 companies with foreign capital were registered in Belarus by the beginning of 2013. Finnish companies founded three dozen of these foreign firms. A lack of scientific reports on the perception of foreign businesspeople in the Belarusian business environment necessitated an empirical study. This article studies the attitudes of the directors of Finnish firms operating in Belarus on the Belarusian business environment. In September-October 2013, the author conducted interviews with directors of 10 Finnish corporations. The PEST model was used to describe the perception of the Belarusian business milieu by Finnish businesspeople. The main empirical finding can be summarised by quoting a Finnish CEO, “Belarus is like any other market on the globe with the exception that foreign firms do not want to attract publicity about their activities in the country due to the poor public image of Belarus.”

Download an article

International Relations

Latvia in the System of European Territorial Security: a View from the Inside and Outside

Abstract

This article focuses on Latvian contribution to European security, which, for the purposes of this study, is understood as a territorial system of regional security. Such system is a combination of interconnected institutions with Latvian participation operating in the field of security, Latvian cooperation with other European countries in the field of security, and the European perception of major security challenges and threats (that Latvia may or may not agree with). A systemic approach to studying the role of Latvia in the territorial system of European security requires a solid theoretical framework. The theories of international relations discussed in this article fall into two categories: those where territorial security systems are viewed as a product of external factors, and those that focus on internal regional factors. In this article, the authors rely on a variety of methods, including those that are characteristic of classical theories of international relations (such as realism and liberalism), and those employed in social constructivism studies. It is concluded that Latvian cooperation with institutions and countries of the territorial system of European security is rather limited, which indicates either a lack of the country’s integration into the system or a crisis of the system itself. An important result of the study is the validation of a systemic approach to studying regional security systems. This angle proves particularly useful in identifying crises of territorial systems of regional security in various regions of the world.

Download an article

The EU Vs. Russia: Legal Nature and Implementation of the Union’s Restrictive Measures

Abstract

The author proposes his take on the EU sanctions against Russia. He aims to understand the legal nature of the EU restrictions, the exact procedure of their implementation, revision, and repeal, as well as their judicial review. To this end, he proposes a system of sanction classification, analyses current EU legislation on the imposition and implementation of sanctions, as well as the case law on the sanction policy. The author also examines EU sanctions imposed on other countries and compares them to the Russian ones. He thus comes up with the following classification of sanctions against Russia: individual sanctions, those targeted at Crimea and Sevastopol, and anti-Russian economic sanctions. He concludes that the EU sanctions against Russia are inconsistent with the legal nature of restrictive measures, since they are a punishment rather than a policy tool. The author believes that in the current political conditions it may be difficult for the European Union to reach a unanimous agreement to repeal or prolong the sanctions. This article is inspired by the discussions that took place during the international conference “Russia and the EU: the Question of Trust” held in Luxembourg on November, 28—29 (2014).

Download an article

The Kaliningrad Region

Human Resource Efficiency as a Development Factor for the Kaliningrad Economy

Abstract

Various studies of economic and geographical relations in Russian regions often overemphasise the role of economy. However, the quality and quantity of human resources is one of the key factors behind distribution and development of production. Human resources are of even more importance in the Kaliningrad exclave. This paper aims to increase understanding of the role of human resources in the economic development of the Kaliningrad region. The study uses the cohort component method, scenario-based forecasting of the development and application of human resources, and econometric calculations of the comparative efficiency of human resources application across a range of economic activities. The author puts forward a number of recommendations for a better application of labour resources through sectoral restructurization of economy (which requires a higher value-added standard and has to be consistent with local natural, human, and innovation resources) and through improvement of the professional training system.

Download an article

Social Facilitation: the Kaliningrad Region and Russian Mainland Regions

Abstract

The authors look at the concept of social facilitation as a possible component of Russian social consolidation in the course of social reforms. The article focuses on the results of an empirical study of the levels and characteristics of competence in social facilitation, which is here understood as the ability to apply certain knowledge and systems of skills and as a success rate of actions based on experience in improving the conditions of social development. The study was conducted in the Kaliningrad region in 2012—2013. The data was obtained through a survey of 400 respondents using the authors’ methodology encompassing eight basic elements of competence and a structured interview aimed at a better understanding of the subject of the study and attitudes towards it. The data is compared against the results of a similar study in two regions of central Russia with similar conditions. The results suggest a disharmonic and inconsistent structure of competence in social facilitation, low motivation for social
activity in youth, and a narrow range of ideas about possible areas of personal activities in the current conditions. Gender differences are identified in the level and structure of competence. The authors believe that certain differences in competence components identified through mathematical methods are determined by the geographical characteristics of the Kaliningrad region — its exclave nature, a relatively small territory, and proximity to the EU countries. It is stressed that the regional conditions affecting motivation, forms and areas of activities, and structure of experience should be taken into account in selecting means and methods of organising youth activities. They can also serve as a basis for the regional youth policy.

Download an article

Economics and Geography

The Baltic Finnish Peoples Divided by State and Administrative Borders: Territorial Development of the Karelians, Vepsians, and Setos

Abstract

Ethnocultural diversity of the Russian Federation is not only an important component of its historical heritage but also a significant resource for development. However, a number of ethnic groups are on the brink of extinction. The aim of this study is to investigate the impact of changes in state and administrative borders on the territorial and demographic development of small ethnic groups. The article analyses the case of three Baltic Finnish peoples living in the Russian North-West and divided by borders of different levels: Karelians (Finland, the Republic of Karelia, and the Leningrad and Tver regions), Vepsians (the Republic of Karelia and the Leningrad and Vologda regions), and Setos (Estonia and the Pskov region). The analysis is based on the cartographic and statistical demographic data, as well as the results of a complex expedition made in summer 2014 in the Pechory district of the Pskov region. The results of the study show that the assimilation of peoples divided as a result of migration and di vision of their ethnic territory by political borders takes place at an accelerated rate. The study makes it possible to formulate certain recommendations and improve the measures to maintain the language and culture of ethnic minorities of the Russian North-West.

Download an article

Structural and Functional Characteristics of the Spatial Development of Rural and Urban Areas in the Northwestern Economic District

Abstract

This article is dedicated to the problem of increasing spatial polarisation in the population distribution systems of the Leningrad, Novgorod, and Pskov regions. The author examines the impact of development and distribution of factors of production on demographic processes and trends in the transformation of the population distribution system. Based on an analysis of the sectoral structure of economy and demographic development trends, the author proposes a functional typology of urban and rural settlements. He stresses the discrepancy between the established population distribution systems and the demographic trends in regional development. It is suggested in the paper that the overcoming of spatial heterogeneity should be considered at the regional level from the perspective of improving the stability of district population distribution systems and strengthening organisational and economic ties between urban and rural areas. The author issues a number of recommendations for overcoming the spatial differentiation and ensuring a balanced development of district population distribution systems.

Download an article

Reviews