2016. vol. 11. No. 4

International investment is one of the key drivers of economic growth in today’s world economy. Thus, creating favourable investment conditions is imperative for any state willing to maintain its competitiveness in attracting international investment capital required for sustainable economic growth. In this regard, the harmonization of investment and regulatory environments is one of the pressing issues facing many countries around the world.

Addressing this issue is a collective task to be undertaken by leading economies, international organizations and informal global governance institutions, such as the Group of 20 (G20) or BRICS group of Brazil, Russia, India, China and South Africa. The contribution of the Organisation for Economic Co-operation and Development (OECD) to harmonizing international investment regimes is significant and includes such documents as the OECD Declaration on International Investment and Multinational Enterprises, the Code of Liberalisation of Capital Movements, the Code of Liberalisation of Current Invisible Operations, G20/OECD High-Level Principles of Long-Term Investment Financing, and the Policy Framework for Investment (PFI). The PFI has become the most comprehensive and exhaustive compendium of investment policy best practices.

This article analyzes the evolution of the PFI and the negotiation processes behind it to compare its content with analogous international documents dealing with investment policy and regulation across all 12 issue areas covered by the PFI, as well as to assess the international business community’s corresponding positions and contributions. It also addresses the OECD-G20 cooperation in formulating the future agenda for investment policy among the leading economies. The selected approach allows for a determination of the PFI’s role in shaping the potential set of universal investment policy principles and concrete rules.

Given the dynamics of economic and financial globalization, national tax authorities often do not have adequate tools to effectively combat tax avoidance practices that exploit gaps in the existing tax rules. To address the global problem of tax base erosion and profit shifting (BEPS), the Organisation for Economic Co-operation and Development (OECD) and the Group of 20 (G20) have consolidated their efforts on an equal footing. Their joint BEPS Action Plan allowed to involve more than 100 countries, both developing and advanced, in designing and implementing rules aimed at aligning the generation of profits and their taxation and increasing the predictability, transparency and flexibility of the international tax environment for business.

This article examines the history of the BEPS project, emphasizing the mode of OECD-G20 engagement in global tax governance, describes the key recommendations made by international institutions to tackle BEPS and forecasts further developments in the area. The author pays special attention to the mechanisms designed to stimulate participation by non-OECD and non-G20 members in the BEPS project and the stance of business on the proposed reforms. He concludes that the work on BEPS is far from finished. Different interpretations of standards, risks of strengthening tax competition between countries and potentially excessive tax burdens on businesses should be addressed. In this regard, OECD and G20 should strengthen their efforts to ensure the participation of developing countries and the private sector, which would stimulate other reforms in international taxation to support global growth and development.

This article analyses the evolution of the Organisation for Economic Co-operation and Development’s (OECD) Principles of Corporate Governance and the economic environment of their transformation, as well as the key changes in the third version of the document adopted in 2015. The authors conclude that this version reflects the recent challenges related to the role of stock exchanges in corporate governance, information disclosure and risk management. However, it is still oriented toward profit maximization amid the lack of attention to the balance of interests among stakeholders and to aspects of corporate governance related to the quality of life. Members of the Group of 20 (G20) that are not members of the OECD participated in revising the document, but this did not result in any dramatic changes in the structure or content of the principles.

This article focuses on the cooperation between the OECD and G20 countries, including non-OECD members, in the process of updating the principles in 2013–15. The authors identify three major mechanisms of cooperation: 1) discussion of corporate governance at regional roundtables and other international events related to corporate governance, 2) online consultations and 3) OECD peer reviews. The article studies the participation of six G20 countries that are not members of the OECD: Brazil, Russia, India, China, South Africa and Indonesia. Brazil was the most active country under review — its representatives actively communicated with the OECD using all available mechanisms. The contributions of China, India, Indonesia and Russia were also estimated as high. The least active participant was South Africa.

This article assesses the impact of sovereign countries in global financial governance. It uses the methodology of international political economy that studies the interaction between political and economic processes in the international arena. It shows the dualistic nature of international financial institutions, which, on the one hand, represent intergovernmental organizations and, on the other hand, are financial institutions with financial goals. The author investigates the principles of sovereign equality, equitable geographical representation and equal (parity) representation of groups of countries with distinct interests in the International Monetary Fund (IMF), Group of 20 (G20) and Financial Stability Board (FSB). The IMF’s decision-making mechanism is shown in detail, including its executive board and the recent redistribution of quotas among member states, with special attention on the formula for calculating quotas, its criticism and possible reform. The article shows the major causes of reducing the impact of the IMF and the formation of a new, globally distributed system of financial governance.

The article shows the hierarchy (by function as well as by country representativeness) of the system of global financial governance, established by 2010. It discusses the leadership of countries according to quantity and to key indicators (revenues, assets and market capitalization) of global systemically important financial institutions (banks and insurance company). Based on countries’ membership in the G7 and the G20, the FSB, IMF, Organisation for Economic Co-operation and Development, and Bank for International Settlements countries are designated as at the core, semi-periphery or periphery of the international financial system in the context of the world systems theory. The influence of the technical elite, prevailing in the international financial sector, as well as the qualitative composition (education) of its members are revealed. The article concludes that there is significant polarization in the international financial system (core and the so-called marginal majority). Unlike the IMF, the newly created global financial institutions of the G20 and FSB fully comply with the principles of equitable geographical representation and parity representation of states with distinct interests.

This article analyzes global financial market regulators, with a brief look at institutional reforms within the global financial system. Its purpose is to detect and outline major shifts in the interaction of the global financial regulators within the last decade.

A structural analysis of the vast empirical data on the activities of the global regulators led to a selection of the most important institutions and to a description of the major measures. The authors studied the documents issued by these institutions, assessed their relevance and the intensity of their cooperation as well as the logic of interactions among them, outlined the priorities in their goals, and established a pattern in the functioning of the institutions as an integrated system. They concluded that a consolidated system of institutions of global financial governance exists. This system has grown in size, but remains viable. It comprises both long-time established and newly legitimized formal and informal global institutions.

The role of informal institutions is growing. They provide a necessary flexibility in operations and a high level of compliance at the same time. This study focused on the activities of specialized international institutions, whose importance is constantly increasing although their influence has not yet been fully revealed. The article considers many aspects of global banking governance among the top governance priorities of the emerging system. In their conclusions, the authors justify the point that the system of global financial governance has the potential to continue developing and become more efficient.

At a time when oil prices are low, non-oil exports are important for the members of the Eurasian Economic Union (EAEU). This study assesses the effects of the EAEU’s economic integration on the development of new exports.

EAEU countries are far behind global export leaders in several categories according to the revealed comparative advantage, used by the Hausmann-Klinger method to assess national export baskets. Belarus exports the most products, and Russia and especially Armenia and Kazakhstan export notably fewer.

The comparative advantages of Kazakhstan and Russia are concentrated mainly in minerals, chemical products and metals. The export structure for the other EAEU countries is more diverse, with a high share of foodstuffs in Armenia and textiles in Belarus. Kazakhstan and, to a greater extent, Belarus and Russia show a rather complex export basket, significantly ahead of Armenia according to this indicator. For the EAEU as an independent participant, its trade complexity index is higher than that for its member countries individually.

This article uses the Hausmann-Klinger methodology to identify the future comparative advantages of the EAEU countries. These are product groups, towards which a structural transformation of the EAEU exports most likely occurs. The research focuses on the integration aspect of possible non-oil exports, seeking to identify goods, including chemicals and textiles, that can eventually provide a comparative advantage for the EAEU as a whole. Most of the products considered have a greater economic complexity than those in the EAEU’s current export basket, so would improve its overall export structure.

The new geopolitical reality that resulted from the dissolution of the USSR created the conditions for the establishment of the Shanghai Cooperation Organisation (SCO) in 2001. The successful settlement of border issues between Russia and Kazakhstan, Kirgizstan and Tajikistan as well as with China also facilitated the process. With Uzbekistan joining the “Shanghai Five,” a new regional organization emerged. The SCO’s priorities were in the security sphere and the fight against the proliferation of drugs, illegal migration and organized crime, given the requirements of the times and the specific regional situation (including that in Afghanistan).

As one of the active founders, Russia has always taken a leading role in the SCO’s organizational, political and legal formation, including setting specific trends and forms of cooperation, taking common measures, and holding events. During its presidency in 2008–2009 and 2014–2015, Moscow made additional efforts to strengthen cooperation among the SCO members in meeting new regional security challenges and to agree on coordinated positions on the key issues on the international and regional agenda. To increase the SCO’s credibility and political significance, Moscow emphasized its expansion, particularly with regard to the Eurasian Economic Union and the Silk Road Economic Belt.

With global political and economic development growing more complicated, in order to revitalize Russia’s role in the SCO it is necessary to strengthen cooperation with China. The strategic character of bilateral relations reaffirmed at the Russian-Chinese summit in the summer of 2016 set a solid foundation.

This article systematically analyzes the full text of the Trans-Pacific Partnership (TPP) from the perspectives of breadth, depth and new concepts. First, by comparing it to free trade agreements (FTAs) that the United States has signed with economies in the Asia-Pacific region and FTAs other economies have signed in the region, it assesses the extension of the TPP text’s chapters. Second, it classifies those chapters into four categories: deepening traditional topics, deeper integration, new topics and other institutional topics. Third, the article summarizes four new concepts based on an analysis of the text: to generalize the U.S. idea of international trade and investment rules, to respond to the demand for change in global value chains on global trade governance, to consider the interests of multinational corporations and small and medium-sized enterprises, and to prioritize U.S. interests while taking into account other members’ interests. Finally, the article analyzes the comprehensive impact of TPP rules on China.

Korea has developed rapidly since the 1960s. It is one of the four Asian tiger economies and a good model for developing countries. Korea shows the world how a developing country can develop its economy rapidly and become industrialized. Its development strategy has mainly been an export-oriented trade policy. As a result, its trade volume grew from $1 billion in 1966 to $1 trillion in 2011, which is a 1,000-fold increase within five decades. Since 2011, Korea has become one of seven countries with a trade volume over $1 trillion. However, the Korean economy has experienced turbulence as well as positive growth. It underwent severe economic crises such as the Asian financial crisis in 1997 and the global financial crisis in 2008. Its economy has been extremely vulnerable to the external economic environment, although it has improved and strengthened, particularly since the global financial crisis. During those two crises, the government carried out an appropriate trade policy with a strategic approach to upgrade its industrial structure and competitiveness in global markets.

This article comprehensively discusses Korean trade policy and strategy over the last five decades, and how its national economy has developed rapidly. It also explores how the government sets its strategic targets in Asia and the Asia Pacific region. It considers two mega free trade agreements (FTAs) — the Regional Comprehensive Economic Partnership and the Trans-Pacific Partnership — as new opportunities for further development. Therefore, it is wise to analyze these regional mega FTAs in order to maximize the national interest.

Relations between the West and Russia have worsened since Russia annexed Crimea in February 2014. This article explains how this deterioration has affected the Arctic Council. The council is an international institution with eight member states with territory in the Arctic (Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the United States) as well as six indigenous peoples’ organizations. The mandate of the institution is to promote environmental protection and sustainable development in the Arctic. There is currently a debate in the media about the impact of Russia’s actions on Arctic governance. Some accounts argue that the Arctic Council’s work continues unabated in the aftermath of Crimea, while others point to worrying signs that the institution is experiencing difficulty. This research helps settle this debate by empirically demonstrating Russia’s behaviour. It concludes that the breakdown in Russian-United States relations has not had an immediate impact on the council. The article employs descriptive statistics to understand Russia’s patterns of activity in the council in three periods (1998–2000, 2007–2009 and 2013–2015). It examines Russia’s participation in meetings and its sponsorship of initiatives. It draws from a variety of council documents. It shows that earlier in the history of the council, Russia’s participation was similar to the Nordic countries. The article empirically demonstrates that Russia’s participation in the Arctic Council has increased over time.

The level of analysis concept is an excellent tool for studying the evolution of international relations. This article focuses on the institutional approach of three levels of interaction: the intergovernmental level (IGL) describes traditional contacts among heads of states or governments as well as among ministers; the transgovernmental level (TGL) consists of relations among civil servants of middle and low rank; and the transnational level (TNL) includes the dialogue of non-governmental participants such as business, non-governmental organizations (NGOs) and epistemic communities. Robert Keohane and Joseph Nye identified TGL and TNL, but the studies of these levels has intensified as a result of burgeoning links among civil servants, business, NGOs and experts from different countries. Transgovernmental and transnational interactions stabilize relations among various actors.

This article clarifies the stabilizing potential of TGL and TNL interactions. First, the degree of autonomy of civil servants from the political level of government has to be taken into account. Second, the state regulates the level of independence of both business and NGOs. TGL and TNL interactions can stabilize relations only if civil servants are independent from the political level in what concerns technical issues and where both business and civil society are strong. Third, real economic interdependence matters because it forms an agenda of cooperation in a particular field. The intensification of trade and investment flows does not automatically lead to real interdependence. In this case, contacts at the transgovernmental and transnational levels acquire a formal character and no cooperation emerges, which does not allow for stabilized relations in crisis situations at the IGL.

The empirical section of the article demonstrates how widening and deepening relations between the European Union and Russia, especially since 2000, led to thickening transgovernmental and transnational interactions but these levels failed to stabilize relations between Moscow and Brussels following the 2014 Ukrainian crisis. On the contrary, the EU’s reaction (sanctions) led to the destruction of economic links at both levels, whereas Russia deconstructed transnational non-profit relations. Tensions at the IGL also negatively affected the epistemic community (a part of the TNL), leading to its politicization. Changes and fine-tunings in the concept of institutional levels of analysis, suggested in the article, help to explain recent developments in EU-Russian relations. The article also recommends purposefully restoring relations at the transgovernmental and transnational levels to facilitate overcoming of the crisis in EU-Russian relations.