Import Dependence and Import Substitution in Russian Manufacturing: A Business Viewpoint

Abstract

T his study evaluates the import dependence of Russian industrial firms and analyzes the 'switch' to using Russian products and technologies in the context of their availability and firms' interest in them. The main information source for the study was a survey of company executives conducted in September-October 2015. The obtained results suggest that in quantitative terms the import consumption levels for manufacturing industries in Russia are relatively small, especially compared with the corresponding levels of Western European countries. At the same time, about two thirds of the surveyed companies are significantly dependent on imports, primarily imports of machinery and equipment. The main reason for the use of imports is the absence of Russian analogues. If they are present, there are problems with the low quality of those Russian analogues and the fact that they are not in line with the client's technological requirements. In general, a higher level of import dependence is typical of high-tech and Keywords: import of products, technologies, and services; import dependence; import substitution; Russian industry; technological level of production; firms' behavior. successful companies, which means that these companies are the most vulnerable to any import restrictions.The current import dependency level does not satisfy many companies which forces them to try to reduce this dependency: mostly it takes the form of switching to national suppliers, slightly less often -import diversification. The Russian import substitution policy is associated with an attempt to revive, modernize or create the missing production elements in the national economy, i.e., it is essentially vertical. However, in the absence of close work with the horizontal measures, such as the development of certain critical technologies, the formation of new areas of knowledge and filling previously missing science competences, such a policy is characterized by a 'limited shelf life' , constant lag, with a focus primarily on the price competitiveness. All this generates an expansion of an economy that is highly sensitive to currency fluctuations. A proactive import substitution policy linked to new emerging markets is needed.

Macroeconomic conditions for the growth of competitiveness of Russian companies

“…The developed economies showed the growth rates on average twice above the growth rate of the Russian economy. And growth rates of the developing economies surpassed it on average more than by 7 times [10].…”

Role of the Industry Import Substitution Strategy in the Country Economy

“…In financial subsidies, it is necessary to formulate a preferential monetary policy aimed at supporting the development of importsubstituting industries, provide preferential import substitution for bank loans to ensure the flow of funds, develop a preferential price policy to stimulate the import substitution of the industry, import substitution of the product industry, developed price increases, increase their profits and acceleration of capital accumulation. The state can provide service support to the import substitution industry in the development of technologies, reduce production costs and raise the technical level [18], [19], [20], [21], [22].…”

“…Previous stagnation signs gave way to a notable increase; the industry share in the economies of these countries has increased; life quality has improved. India, sub-Saharan Africa, China applied the experience of Latin America in the import substitution policy in the 1960s [4], [19], [20], [21], [22]. Materials and Methods (Model)…”

Sustainable Import Substitution in Russia: Institutional Conditions and Efficiency Imperatives

“…It is necessary to consider drivers of companies preferring foreign products and technologies to their domestic counterparts (if any). This will identify the main bottlenecks of domestic supply to be eliminated by means of import substitution policy (Chernova, 2017;Simachev 2016).…”