The development of conceptual foundations for the formation of an integrated system of management of foreign economic relations (including the territorial level), taking into account both the objective need for decentralization and the above-described inconsistency of this process leads to the problem of delimitation of foreign economic powers between the national and regional levels of management. The process of delineating functions in the sphere of international economic relations between these two levels should be based on a number of fundamental principles.
1. Regional decentralization of management of the foreign economic sphere should be implemented on the basis of the principle of exclusive competence of the state level. It means an exclusive and unambiguous assignment of rights and responsibilities of this level of power in the implementation of international economic obligations, as well as the preservation of a single currency and customs economic space within the country.
The expediency of using this principle is justified by a number of such objective economic arguments as:
excessive decentralization of management of foreign economic activity of the regions leads to the emergence of negative external effects, when other regions and even countries benefit from the measures taken by the region to liberalize international relations (such as the mechanism for creating and acquiring “public goods”); the consequences of the region’s decision-making in the field of monetary policy, the use of tariff and non-tariff methods objectively cannot be spatially localized, which makes regional authorities incapable in this area and requires the implementation of the powers of central government bodies; In all countries of the world without exception, no matter how liberal-market they would seem, the principle of the priority of the center in the regulation of foreign economic activity is unshakable and fundamental.
2. As is known, the principle of determining the competence of the regional link in economic management is subsidiarity (complementarity), interpreted as interference of the highest level of management in solving those issues and problems that cannot be solved at the lower levels of management. However, in the case of the international sphere, subsidiarity should be interpreted in reverse order, understanding the possibility of transferring to the local, regional level the solution of those issues that, due to regional specifics and special foreign economic interests, can most effectively be solved at this lower level.
3. The powers delegated to the regional level in the sphere of international economic relations should be adequate to the financial and material resources of local authorities (principles of material and financial equivalence).
The delimitation of foreign economic powers between the national and regional levels of management in its practical implementation is associated with the problem of distribution of management tools (Table 8). At the same time, it is advisable to concentrate all the main foreign economic instruments of regulation in the hands of republican governing bodies, which is in full accordance with the principle of their international exceptionalism. The participation of the region in international activities can be ensured by traditional forms and methods for this level (implementation of the principle of material and financial equivalence). It is important to emphasize that local authorities should not have independent international competence.
In addition, the classification and typology of regional foreign economic instruments can be carried out on the basis of the resource approach. The meaning of this approach is as follows: since the regional regulation of the foreign economic sphere is carried out through territorial resources, the types and features of the latter can be considered as classification features.
Table 8 Resource requirements by component
Distribution of instruments of foreign economic regulation between national and regional levels of management
Forms of international economic relations | National (Republican) level | Regional (oblast) level |
1 | 2 | 3 |
I. International Trade | (1) Administrative methods: (a) Regulations governing international trade; b) interstate agreements on the development of trade relations | (1) Administrative methods: a) normative legal acts regulating export-import operations of the region; b) agreements on interregional economic cooperation with other countries |
2) Monetary policy: – introduction of currency restrictions; – Exchange Rate Policy | 2) Regulation of foreign exchange relations: – | |
3) Tariff methods: – Mechanism for the collection of customs tariffs; – tariff rate policy; – Tariff policy within the framework of regional associations, which include the state | 3) Tariff methods: – joint tariff policy with the national level of management of free economic zones created in the territory; – Coordination of the size of tariff rates for some goods of importance to the region | |
4) Non-tariff methods: – licensing; – Quotas; – hidden methods; – Subsidies. | 4) Non-tariff methods: – for enterprises of small and medium-sized businesses, joint ventures and individual entrepreneurs with a small authorized capital; objects of local economy carrying out foreign trade operations. | |
II. International Capital Flows | 1) Legal methods: – Legislation on capital flows | 1) Legal methods: – normative acts within its competence on the conditions of foreign investment |
2) Financial and credit policy: – depreciation policy; – Interest rate policy; – terms of lending to capital market participants; – insurance of investment risks | 2) Financial and credit policy: – compensation to banks of benefits for lending to investment objects significant for the region; – participation in insurance of investment risks | |
3) Fiscal policy: – preferential taxation; – Subsidies | 3) Fiscal policy: – local tax exemptions; – participation in subsidizing investment projects of regional importance | |
4) Organizational methods: – development and implementation of investment projects with the participation of foreign partners on a program basis; – placement policy (development of schemes for the location of production, with the participation of foreign capital, stimulating policy) | 4) Organizational methods: – regional programs for attracting foreign investment and developing international cooperation; – organizational measures to improve the investment attractiveness of the territory; – Placement policy (permission to allocate land plots, environmental standards, etc.) | |
5) Organizational methods: – participation in the creation of foreign economic infrastructure facilities; – creation of free economic zones | 5) Organizational methods: – participation in the creation of foreign economic infrastructure facilities; – participation in the creation of free economic zones in the territory; – information support of foreign economic relations | |
III. International Labour Market | (1) Legislative conditions for international labour migration | 1) Development of regional programs for the development of labor force skills at the level of world standards |
(2) Economic measures to regulate emigration and labour immigration | 2) Organizational measures aimed at increasing the general awareness of the workforce about the conduct of international business (organization of seminars, conferences, publication of booklets) |
In a generalized form, the typology of regional foreign economic instruments according to this criterion can be presented as follows:
I. General measures:
(a) Legal:
representing the interests of the region in multilateral negotiations at the state level on international economic cooperation; participation in the conclusion of agreements on interregional economic cooperation that do not contradict the legislation of the Republic of Belarus;
b) forecasting and programming:
determination of the forms and directions of international economic cooperation optimal from the point of view of regional interests; development of regional export programmes;
c) economic methods:
creation of additional incentives to attract foreign investment by abolishing or reducing local taxes, financial benefits on loans; provision of additional financial guarantees to participants in regional programs related to the development of international economic relations; insurance of foreign investment projects;
d) organizational methods:
assistance in the organization of cooperation ties between economic entities of different nationalities, as well as sales pools uniting exporting enterprises; organization of territorial representations in foreign countries and regions with potential for international cooperation; providing technical assistance in attracting foreign investment; assistance in the production of newsletters, brochures on foreign markets; together with national authorities, the creation of free economic zones, “Euroregions” in the region.
II. Regulation of international economic relations through the labor resources of the region:
(a) Legal:
participation in the development of regulatory legal acts regulating labor migration, as well as the use of labor resources in the development of international economic relations;
b) forecasting and programming:
development and implementation of educational programs for the retraining of personnel, taking into account the structural changes in the region;
c) organizational methods:
the establishment of educational centres; organization of symposia, conferences on the problems of international business; exchange of delegations; advanced training of senior employees of foreign trade services of regional enterprises.
III. Regulation of natural, land resources and ecological conditions of the region:
(a) Legal:
participation in the development of regulatory legal acts regulating the use of natural and land resources in international economic relations; environmental legislation in respect of non-residents of the country;
b) forecasting and programming:
schemes of location of enterprises in terms of foreign and joint ventures in order to optimally use the resources of the region; design and planning plans for urban development;
c) economic methods:
payments for natural resources in respect of non-residents; fines and environmental taxes for violation of environmental legislation; payment for the allocation of land plots for the construction of joint and foreign enterprises.
IV. Regulation through other immobile facilities of the region (infrastructure), including small and medium-sized businesses:
(a) Legal:
participation in the development of regulatory legal acts regulating the conditions for the use of infrastructure facilities by non-residents;
b) forecasting and programming:
development of programs for infrastructure support of foreign economic relations of the region; programs for the development of small and medium-sized export-oriented businesses;
c) economic methods:
tax and financial incentives for the development of infrastructure facilities that serve international economic relations and increase the investment attractiveness of the territories; subsidizing exporting enterprises of small and medium-sized businesses;
d) organizational methods:
marketing research and consulting assistance in facilitating the entry of enterprises into foreign markets; organization of exhibitions, sales, fairs in order to highlight new foreign markets; assistance in the formation of information infrastructure facilities; advising on international business.