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BRICS Journal of Economics No.3 (2020)

Industrial Revolution 4.0 in the BRICS countries: What are the challenges for industrial policy?

Yurii Simachev, Anna Fedyunina, Mikhail Kuzyk

Long-term scenarios predict that the BRICS countries can overtake the G7 countries in their contribution to the world economy, but, as follows from the analysis of multicomponent international indices, the same countries lag significantly behind the G7 countries in terms of preparedness for a technological future. In this regard, the growth prospects of the BRICS economies are largely determined by possible strategies of the countries to disseminate and use the Fourth Industrial Revolution (Industry 4.0) technologies.

Analysis of TiVA OECD data revealed that BRICS was not very profitably integrated into global value chains — far from the final consumer abroad and relatively close to suppliers of raw materials and semi-finished products — which in the long term determines the limitations on increasing economic complexity. Analysis of the WITS World Bank data revealed that BRICS was relatively poorly involved in the processes of international exchange of products related to the technologies of Industry 4.0 — industrial robots, additive technologies, computer-aided-design and computer-aided-manufacturing technologies, and biotechnologies — and retained the position of net importers, with China making the greatest contribution to the dynamics of trade.

Taking into account the general growth of global competition for technologies associated with Industry 4.0 and the continuing lag of BRICS in creating and using such technologies, the authors highlight the challenges for the industrial policy of the BRICS countries and discuss possible answers within the framework of industrial and trade policies. Challenges for BRICS include continued participation in global networks as countries serving the production and trade of new technologies; lagging behind in the level of development of the institutional environment and infrastructure for development of technologies; formation of limited “hotbeds” intensively using the Industry 4.0 technologies; and, thus, growth of spatial, inter- and intra-sectoral inequality.

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Law and economics vs. formal legal approach in criminal prosecution of the cartel

Andrey Shastitko, Kirill Dozmarov

Criminal prosecution of monopolistic activities in the form of market cartelization is the most sensitive instrument for individuals and can both have a serious deterrent effect and restrict behavior that is beneficial to the public welfare. The paper considers theoretical and economic aspects of choosing an antitrust enforcement regime in view of the projected changes in the discussion and application of the norms of article 178 of the Criminal Code of the Russian Federation, taking into account possible differences between organizing a cartel, entering into a cartel agreement and participating in a cartel. It is obvious that there are various options for correlating the concept of concluding an agreement and participating in it, including anti-competitive. However, it requires realistic assumptions about human behavior. Based on the principle of methodological individualism and the concept of bounded rationality used in economic sciences, the authors demonstrate restrictions on projecting the ratio of agreement conclusion/participation of legal entities (economic entities) on actions of individuals. Practical issues of designing criminal punishment for cartels are considered taking into account various legal concepts, including the form and types of guilt, as well as on the basis of comparison with other articles of the Criminal Code providing punishment for collective unlawful acts. In connection with the reproduction of the tradition of hostility in antitrust legislation, the Russian antimonopoly legislation has identified the risks of objective imputation (risks of type I errors) and insufficient punishment of the cartel organizer (risks of type II errors) in case of underestimation of the weight of economic concepts based on the principle of methodological individualism and the assumption of bounded rationality of individuals.

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Inflation targeting: From “constrained discretion” to singularity

Oleg Buklemishev

In recent years, inflation targeting has become a staple of international monetary policy. The paper considers different challenges this monetary policy regime faces with regard to suppressed inflation, attaining the zero lower bound on the policy interest rates, and committing central banks to simultaneously pursue additional objectives such as financial stability. Inflation targeting has proved inefficient in raising inflation to the target zone from below, and unorthodox monetary policy tools have not proved their validity in this regard yet. As a result, monetary authorities are more inclined to discretion allowing them to compromise different aspects of “pure” inflation targeting. The value of this discretion is based on asymmetric information and boosted by additional functions assumed by central banks. However, it might bring about serious problems of dynamic inconsistency, compounded political uncertainty, and bureaucratic misconduct. Since none of the alternatives to inflation targeting currently looks fully satisfactory, it is concluded that the inflation targeting regime should be transformed to take into account the current situation, but a necessary precondition for the effectiveness of the new regime is enhanced accountability of central banks.

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State regulatory measures of the government of India in the situation of the COVID-19 outbreak

Yogender Chauhan, Zhanna Mingaleva, Irina Mirskikh

The aim of the paper is to analyze the measures taken by the government of India to prevent the spread of coronavirus infection among the population, as well as to mitigate the impact of COVID-19 pandemic on the activities of companies and enterprises and to prevent a socio-economic crisis. The main shortcomings and positive results achieved by the government of India, state and city administrations in the fight against COVID-19 are identified using bibliographic and comparative analysis methods and taking into account the historical context. The authors conclude that the
existing “Epidemic Diseases Act,” 1897, which is applied as the main normative act regulating the epidemiological situation in the country, does not take into account all the factors and conditions of the spread of infectious diseases in the modern world and does not reflect the reality in terms of
effective response to the outbreak of coronavirus disease.

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Harmonization of tax and financial systems within BRICS

Michail Kosov

The modern world economy is characterized by such factors as capital mobility, intensification of production processes and cash flows. In such circumstances, it is particularly important for economic entities to understand all possible legal consequences of their operations. Financial policy should be formed by public legal entities, taking into account the guarantees of avoiding unjustified financial, economic and other barriers to the development of the world economy and international trade. The BRICS countries, which have a huge potential for building and developing close economic ties, have different and sometimes contradictory law enforcement and legislative approaches. Such contradictions are most acute in the tax sphere, currency, administrative and customs relations. The current international legal framework seeks to bring legal regulation closer to comparable or uniform rules.

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