Global competition as a type of spatial competition
Table of contents: The Kazakh-American Free University Academic Journal №8 - 2016
Authors: Seitkali Anuar, Kazakh-American Free University, Kazakhstan
Iskenderova Fatima, Kazakh-American Free University, Kazakhstan
The world economy, if speaking in general,
has never been in a big state of stagnation there are constant changes and
innovations.
New phenomena in the world economy, which
became known as "globalization" naturally led to the emergence of new
terms. In particular, it includes the concept of "global
competition". Authors of numerous publications consider in what way do
subjects of the world market act in the conditions of the global competition,
but they do not give definition to this phenomenon. Meanwhile, in order to understand
what should be the algorithm of behavior of the certain subject or the country
in general in the changed circumstances, it is necessary to have a clear idea
about the essence of the phenomenon.
What is behind the term "global
competition" - is it the universal all-pervading competition so-called
"struggle of all against all", or the competition in the global
markets, or maybe the competition of the main subjects of the global market?
There is no universally accepted point of view for that question. There is no
definite answer to a question of how long or since what time it is possible to
use this term, and when the global competition appeared in a full volume.
Is it is possible to claim that it has
appeared in connection with the activity of multinational companies? In this case, the most controversial
concepts about consequences of the global competition can be reduced to two
opposing groups - whether the competition during an era of globalization dies
away or becomes fiercer. In other words, there are more questions than answers.
In this case, since the phenomenon of global competition is young as well as
globalization of the economy itself, it is possible to talk about the
tendencies that are present in the moment. Therefore, it is worth finding out
definition of the category of "global competition" and its place in
system of forms of competition. As global competition is priori linked to certain
cross-border economic processes in the global economic space, it should be
assumed that the answers to these questions must be sought in the spatial competition
theory. The term "spatial competition" contains dichotomy that is the
presence of two components - the space and the competition. Each of these must
be analyzed from the perspective of the basic postulates of economic theory. At
first sight, it might seem that this will not cause difficulties however, there
is a problem. The problem is that the factor of space is rarely taken into
account in the economic theory.
Competition forms in classical understanding
were considered irrespectively spatial aspect, except for the cases when the
spatial distribution factors could affect the prices of production factors. In
the economic theory the factor of space was not considered as theoretically
essential it was believed that it represents an exogenous variable, which is
not an integral part of functioning of an economic system.
The emergence in the late 20-ies of XX
century of the theory of monopolistic competition, in which there was a concept
of spatial differentiation had given an impetus to emergence of researches of
spatial aspect of the competition.
It is well known, that the model of the
spatial competition considers effect in case of which the space influences
pricing, and general balance when firms are dispersed, and the prices of
transportation play an essential role in a final price.
It is necessary to know that there are
American and European methods of studying of spatial economics in general and
the spatial competition in particular. German scientists are known for making
the theory foundation for the future researches, they belong to the European
method. However, the first scientist who have coined the term of "spatial
competition" into the economy was an American economist Harold Hotelling
in 1929. He came to the conclusion that in case of monopolistic competition the
firm which is in the quasi monopolist's state, creates the market space [1].
The consequence of this conclusion was the emergence of the term "spatial
competition", which implies the possible behavior of the subject in the
space of the possible market and the impact of space (distance) on the price.
The American method takes J. Clark and F.
Fetter's works (1924) as a basis. Modern researches are presented by M. Porter,
P. Krugman, and G. Stigler's works. The spatial competition implies competition
among producers (sellers of goods), for a share of the market space in the
conditions of imperfect competition by influencing the price [2].
The subjects of spatial competition are
usually large companies, which divided in the space (at different regional
markets). The object of the spatial competition is the market share in the
space. Of course, there is a question about the place of spatial competition
among traditional forms of competition. This type of the competition, can be
considered as the behavioral competition in the conditions of imperfect competition.
It should be noted, that it is necessary to distinguish between "the
spatial competition" and " the competition on space of the
market." The criterion of this division is the ability (or its absence) to
create own market space by subjects of the competition. Competition in the
market space means that the traditional forms and types of competition occur on
an advance created (an existing) market. Because of the spatial competition,
the firm can expand (to increase) the field of the activities. As it is known -
the competition comes from the outside.
Before emergence of the term "global
competition" the concept "territorial competition" was widely
used, the essence of which consisted that two or more territories in case of
implementation of foreign trade competed, or there was a struggle for the new
markets for possession of resources. However, in order to understand feature of
the global competition, it is necessary to represent accurately the main
characteristics of process of globalization as in a definition "the global
competition" the main thing is the term "global". At the same
time, it is necessary to emphasize, that the competition should be considered
as a process. The competition understood, as process is present until arises
any obstacles for an entrance on the market.
Describing the success secrets of global
companies, M. Porter emphasizes, that if an international company wants to
achieve serious success, it will have to be transformed from multilocal
competitor (which allows the separate branches to compete independently in the
various local markets) to a global organization that focuses the entire system
of production and market positions to struggle against the competition [3]. Thus, M. Porter emphasizes changes as
activity of the subject of the global competition and the essence of the
subject. However, M. Porter does not give accurate determination of the term of
global competition.
Such means of the competition as cost
reduction, improvement of quality and expansion of the range of goods and
services are becoming a kind of engine of globalization. The American economist
J. Garret believes, that the growing competition in world trade is one of three
main mechanisms of globalization [1].
M. Delyagin believes, that "the global
competition is the competition of an era of globalization, which is conducted
in the conditions of domination of global monopolies in the uniting markets
both economic and not economic measures, having tough comprehensive character
which is leading to inevitable degradation of the weakest participants"
[4]. However, this determination describes a nature of
the global competition rather than determines its essence.
Some foreign researchers suggest to use the
new term for the modern competition - "hyper competition".
In the light of using of basic provisions
of the theory of the spatial competition it is possible to give the most
general definition to the global competition. Therefore, the global competition
is the competition which ignores national boundaries and the subjects of the
competition come from the outside finding the objects in a certain country.
Indeed, in modern conditions activities of
relatively large corporations include development nonconventional (in the geographical
plan) markets for them, or attempts of implementation on the markets, which are
already divided by the other companies. On the other hand, it is necessary to
be protected from the competitors coming from the outside. Therefore, the
company should build the strategy both defensive and offensive.
Paraphrasing words of the English economist
D. Marshall about change of a world economic order, it is possible to tell that
today the world order which was characterized by domination of the "national
capitalism" competing with each other recedes into the past, and the new
order which creates transnational capitalism comes to its place" [5].
It is supposed, that the formation of
global competition has passed several stages after the development of the phenomenon
of globalization. The criterion for these stages should be considered as
development of the quantitative characteristics of the phenomenon in its
qualitative changes.
It is necessary to differentiate the
concepts "global competition" and "competition in the global
(world) market". Difference of one from another consists in possibility
(impossibility) of creating the market space. Hence, it is possible to clarify
the definition of global competition - a competition that ignores national
boundaries and makes it possible to create your market space for a particular
subject.
It is possible to allocate a number of
distinctive features of the competition during a globalization era.
First, the strengthening of a role of the
state, which is expressed in support of activities of the national companies in
the world markets. Therefore, in Germany there is a special agency, which
counteracts the foreign companies, for example Russian. All main European Union
countries set import restrictions of a number of goods: agricultural products,
steel, textiles, etc.
The authorities of the certain states in
the European Union limit access to distribution networks even for each other
[6]. The main result of globalization is expansion of the competition from the
level of firm to the level of the government. Now the economic capacity of the
place depends much more on institutional parameters, which are substantially
created under the influence of the government. It is possible to draw a
conclusion that the global competition is characterized also as "the
institutional competition". If the countries want to attract mobile
production factors on the international level, the governments of the countries
must enter the institutional competition with the foreign governments.
Secondly, supranational bodies also
interfere with the competition. Therefore, the European Parliament prohibits
foreign companies to buy up the gas and electric companies in Europe. It is
clear, that the background of it - is not to allow the large foreign companies,
first of all Russia, neighboring for Kazakhstan, and its "Gazprom" on
the European market, though dependence of the countries of Europe, in
particular Western in the Russian gas is obvious, also multiple discussions of
analysts from the EU concerning the conclusion of the contract on supply of gas
between Russian "Gazprom" and the large Chinese company CNPC can
serve that confirmation [7]. The competition for gas amounts between China and Europe is increasing, and the People's Republic of China becomes the favorite [8].
In most cases, it is about strategically
important industries. It is possible to draw a conclusion that the hidden
methods of protectionism both on national, and at the supranational level
amplify.
Thirdly, manifestation of the global
competition has accurately expressed national aspect. Also, it should be added,
that not each country representatives participate in the global competition.[9]
The level of development and the
competitive environment varies depending on the industry or market that is
connected with a variety of operating conditions, history and stage of
development of the industry, price situation, its changes and a set of other
significant factors. This requires the development of special measures to
promote competition in certain sectors.
As an example, it is possible to take the
construction industry, and the cement industry in particular, it is in number
of the most fast-growing world industries. On the example of this industry, it
is possible to trace how competitors create the market space by market
penetration of other countries. To take for example Russia, the largest
producer of cement in the world, it takes the fifth place in the world on cement
production volumes, yielding to China, India, the USA and Turkey.
In February, 2016 Russia imported from the countries which are not entering into "Customs union", 66,6
thousand tons of cement. Following the results of 2 months (January, February)
import of cement to the Russian Federation has constituted 91,9 thousand tons
(in 2015 - 155,5 thousand tons, in 2014 - 219,9 thousand tons). In case of
stabilization of dollar rate on the current values (68 rub/USD) and a rise in
price of the Russian cement, insignificant increase in import is expected.
For the period January - February, 2016, as
well as last year, the main countries on export to the Russian Federation were Lithuania (39,29%) and Latvia (19,72%) which have occupied 59% of the
market. In 2014, Iran and Turkey were leaders.
Russia exported
cement in February 2016, countries which are not members of the Customs Union,
14.0 thousand tons of cement. According to the result of 2 months, the cement
exports from Russia amounted 21.2 thousand tons (in 2015 - 22.0 thousand tons,
in 2014 - 47.9 thousand tons.).
Within two months the main countries for
imports of cement from Russia were Abkhazia (54.30%) and Finland (18.62%), in 2015, Abkhazia had 46%, on the second place there was Azerbaijan with 24%. In 2014, Azerbaijan was the absolute leader with 78% of Russian exports [10].
Exporting country to Russia, MT / year, month |
2014 |
2015 |
2016 |
2016
Total |
1 (jan) |
2 (feb) |
Lithuania |
178273 |
294304 |
5714 |
30410 |
36124 |
Latvia |
357481 |
293251 |
6488 |
11646 |
18134 |
Iran |
653541 |
249101 |
1001 |
4175 |
5175 |
Republic of Korea |
141528 |
134067 |
4777 |
181 |
4958 |
Norway |
92508 |
84300 |
|
4000 |
4000 |
Turkey |
582207 |
106690 |
353 |
3529 |
3882 |
Germany |
44830 |
63972 |
1086 |
2439 |
3524 |
Egypt |
34491 |
32670 |
|
2992 |
2992 |
China |
282513 |
74782 |
1969 |
1006 |
2975 |
Poland |
270432 |
96170 |
988 |
1800 |
2788 |
Netherlands |
12416 |
16865 |
399 |
1238 |
1637 |
France |
13222 |
12777 |
402 |
1041 |
1443 |
Bulgaria |
9660 |
29480 |
|
726 |
726 |
United Kingdom |
6592 |
4616 |
249 |
420 |
669 |
Greece |
4474 |
2838 |
528 |
132 |
660 |
Slovakia |
4723 |
3122 |
278 |
283 |
560 |
Hungary |
5028 |
3928 |
224 |
111 |
335 |
Slovenia |
4012 |
7103 |
334 |
|
334 |
Ukraine |
71252 |
97348 |
253 |
63 |
316 |
Austria |
5502 |
3822 |
52 |
208 |
260 |
Spain |
242 |
762 |
|
183 |
183 |
USA |
2318 |
7648 |
80 |
|
80 |
Estonia |
10624 |
3033 |
66 |
|
66 |
Japan |
|
|
60 |
|
60 |
Belgium |
1932 |
1480 |
51 |
|
51 |
Sweden |
461878 |
101903 |
|
|
|
South Africa |
340 |
4000 |
|
|
|
Mongolia |
|
10464 |
|
|
|
Azerbaijan |
|
186 |
|
|
|
Ireland |
772 |
520 |
|
|
|
Panama |
497 |
|
|
|
|
Italy |
914 |
54 |
|
|
|
Turkmenistan |
|
385 |
|
|
|
Denmark |
9952 |
18911 |
|
|
|
Finland |
714 |
113 |
|
|
|
Czech Republic |
2226 |
|
|
|
|
Vietnam |
266 |
|
|
|
|
Thailand |
6208 |
11856 |
|
|
|
Total |
3273566 |
1772520 |
25353 |
66581 |
91934 |
Exports from Russia (breakdown by importing
countries), MT |
2014 |
2015 |
2016 |
2016 Total |
1 |
2 |
Abkhazia |
6893 |
63202 |
3167 |
8359 |
11526 |
Finland |
3930 |
22463 |
927 |
3025 |
3952 |
Azerbaijan |
263380 |
32669 |
2265 |
470 |
2735 |
Turkmenistan |
45083 |
8755 |
670 |
871 |
1541 |
Uzbekistan |
5100 |
1357 |
129 |
888 |
1017 |
Ukraine |
5046 |
4193 |
56 |
118 |
174 |
South Ossetia |
4561 |
3537 |
|
172 |
172 |
Guinea |
|
|
|
110 |
110 |
Korea (DPRK) |
1687 |
207 |
|
|
|
Tajikistan |
552 |
60 |
|
|
|
Tanzania |
115 |
|
|
|
|
Cuba |
101 |
|
|
|
|
Georgia |
|
601 |
|
|
|
Mongolia |
113 |
757 |
|
|
|
Kyrgyzstan |
1536 |
512 |
|
|
|
China |
|
102 |
|
|
|
Svalbard and
Jan Mayen |
271 |
|
|
|
|
Latvia |
84 |
72 |
|
|
|
Moldova |
330 |
|
|
|
|
Total |
338782 |
138486 |
7214 |
14012 |
21226 |
Exports by Month, cumulative totals, MT |
2014 |
2015 |
2016 |
jan |
16841 |
11948 |
7214 |
feb |
47912 |
21982 |
21226 |
mar |
72017 |
35735 |
0 |
apr |
102910 |
49450 |
0 |
may |
137459 |
58445 |
0 |
jun |
160465 |
66191 |
0 |
jul |
193607 |
74314 |
0 |
aug |
224364 |
82711 |
0 |
sep |
261818 |
93189 |
0 |
oct |
298888 |
105516 |
0 |
nov |
313115 |
120758 |
0 |
dec |
338782 |
138486 |
0 |
One of the main features of economic
globalization is its cross-border, so the analysis of the "global
competition" category must be related to the theory of economic space.
Methodology of spatial economy allowed to define the global competition as a
competition that ignores national boundaries, i.e., subjects of competition
come from the outside, finding the necessary objects in a certain country. Such
approach allows to distinguish between global competition and competition in
global markets and not to put an equal sign between them. One of characteristic
features of the global competition is strengthening of a role of the state in
foreign economic activity that in turn requires determination of level of the
state intervention.
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Table of contents: The Kazakh-American Free University Academic Journal №8 - 2016
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