Economic sciences/2.Foreign economic activity

Ph.D., Assistant Professor Zhylenko K. M.

Dniprovskyi national University by Oles Honchar, Ukraine

The main aspects of functioning of the Ukrainian financial and industrial corporates

Foremost, it is necessary to take into account the fact that almost all countries in whose economies there has been a stable growth have pursued an active policy of supporting the creation of financial and industrial corporate associations. As a result, in the US, about 100 largest corporations produce 60% of GDP, create about 50% of jobs, and carry out 90% of research and development. In Japan, five leading corporations control up to 80% of the national market [4, 5].

Among the reasons preventing the formation of transnational corporations on the basis of Ukrainian financial and industrial groups, there are three key ones. The first is the unregulated shareholder relations within corporate entities, the low level of consolidation of property, the underdevelopment of holding principles of organization of joint activities. The operating companies function as an advisory service, not as a centers, strategic planning or coordination of financial flows.

The second problem is the limited investment opportunities. Insufficient investment potential for the implementation of major projects of production modernization is observed even in groups formed around leading Ukrainian banks.

The third problem is the low quality of corporate governance. In relation to this issue are highlighted in errors in selection of participants FIG, the lack of pre-development of corporate strategy, and program implementation. Long-term integration and joint activities are currently not widely disseminated, and many agreements on the creation of FIGs are of a general nature and do not provide for the obligations of the interacting parties.

However, for the most successful corporate structures (in particular, FIGs) created by banks, financial and trading companies, the following are common features.

Firstly, they are striving for an optimal balance of financial and industrial components. Secondly, the presence in the reviewed structures of large successful industrial enterprises with a large export potential. In most cases, they include energy companies, metallurgical enterprises, as well as enterprises of the military-industrial complex. Almost all corporate entities are striving to diversify and expand their activities in the spheres of the economy that they occupy. Thirdly, there is a penetration of leading FIGs in the industry that satisfy the demand of the domestic individual consumer (food and light industry, imports of food and consumer goods, trade in petroleum products, production of building materials). This is due to the need to obtain the highest possible rate of return. Fourth, there is an expansion (for the time being on an insignificant scale) to high-tech industries (currently unprofitable, but determining the future growth prospects of the economy - electronics, telecommunications, etc.). Fifthly, there is an aspiration to search not only consumers of its products and counterparties on current activities on foreign markets, but also strategic investors and partners [1,3].

Thus, by targeting the most successful Russian corporate entities, when implementing measures of loyal state support, it is possible to revitalize existing corporate structures in the Ukrainian economy and move them to the next stage in the process of their transnationalization. At the third stage, it is necessary to give the corporation the official status of a transnational or interstate financial and industrial group.

Transparency of the formation and functioning of corporate entities is extremely important, especially if these aspects are guaranteed by state participation. The state doesn’t have to participate in the FIG capital, it must definitely certify the fact of creating a corporate structure and guarantee the «purity» of its origin.

In this aspect, an extremely important problem is the recognition by the state of the most successful corporate entities (including transnational ones) and giving them the status of official financial and industrial groups. More important is giving them certain preferences, due to which the most successful realization of both corporate and national interests of the country of the corporation's establishment within the whole world economy should be achieved. Consequently, as the most preferable direction of the state's actions, it is not so much the desire to form new financial and industrial groups through agreements (which often remain only on paper), but rather the stimulation of the activity of leaders among Russian corporations with the obligatory coordination of corporate interests and the interests of the national economy [2,6].

The development of Ukrainian transnational corporations can, based on these assumptions, be carried out in two ways. Firstly, through the formation of powerful national corporations (formal and informal FIGs) with their subsequent expansion in the world economy. Secondly, the existing system of division of labor and corresponding production cooperation between the CIS countries through the creation of transnational and inter-state financial-industrial groups with participation of the economic and financial resources of partners. At the initial stage of the transnationalization of corporations, a second preference may be given to a second approach. This is partly due to a lack of own resources for the rapid creation of powerful integrated corporate structures. In the fourth stage of transnationalization Ukrainian corporations is the choice of the host country and forms of expansion.

Based on the ratio of the attractiveness of the host country and the regime favoring the introduction of TNCs into its economy, the form of the transnationalization of the corporation is determined. Forms of expansion of the activities of TNCs are: direct foreign investment, as a result of which associates, subsidiaries and branches (in the form of a permanent representative office or office of a foreign investor, a private enterprise or a joint venture) between a foreign investor and one or more firms, land, facilities (except for those in public ownership) and / or real property (equipment) or items belonging to foreign entities as well as movable property or equipment (ships, aircraft, drilling platforms) operating outside the country of a foreign investor) [2,7].

All above-listed forms of foreign divisions of TNCs represent a type of interconnection of the parent company and the subsidiary company along the lines of property. However, at the present stage of development of transnational corporations, the type of interconnection within the sphere of activity is becoming more widespread. This type can include licensing, management, lease agreements, industrial cooperation, contracts, franchising, engineering, consulting. Thus, around the TNC parent company, a different type of ownership economic zone should be created, consisting of foreign units with varying degrees of control both in terms of ownership and in the line of business. The subsidiaries associated with the parent company are not formally part of TNCs, and their performance indicators are not reflected in the consolidated balance sheets of the corporation, nevertheless, they make a significant contribution to the overall performance of TNCs and are almost beyond control government bodies of the host countries.

Production can be carried out abroad, because the importation of certain goods and services into the country can be difficult due to customs restrictions, and also because of the specific nature of the product (for example, the maintenance of any equipment is possible only at the site of its location). Consequently, instead of increasing production in the home country of the parent company for the purpose of subsequent export of products, a network of subsidiaries of different orientation is created in the host countries (production, distribution, service, etc.). In this case, this form of expansion is more preferable to increase exports, which must be confirmed based on a comparison of the effectiveness of various forms of expansion.

As a result of the study of the theoretical and methodological foundations for the development of transnational corporations in the context of a systemic transformation of the economy, the author obtained the following results. As a new condition of the environment for transnational corporations, a systemic transformation of the economy (both world and national) is highlighted.

Under the systemic transformation of the economy, the author means a change that transforms its basis. In the context of this scientific research as a systemic transformation, we will consider the transformation of the world economy into a global one. In the course of this transformation, the economic basis is changing, as the global economy is characterized by transnationalization, while the global economy is based on globalization. In the global economy (unlike the world economy), no national economic system can be thrown out of the process of globalization. Any national economy will be integrated into the global one, regardless of whether it will receive any benefits from such integration or not. An example is the experience of most of the third world countries that are embedded in the global economy in deviant forms that do not allow achieving high socioeconomic development. It is characteristic that TNC acts as a vehicle for such integration in the new global economy as part of its international expansion.

REFERENCES

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2. Rokocha V.V. The multinational corporations / V.V. Rokocha, O.V.Plotnikov, V.E.Novickiy but other – K.: Sippe2001. – 304 p.

3. Garretsen, H. FDI and the Relevance of Spatial Linkages: Do Third Country Effects Matter for Dutch FDI? / H. Garretsen, J. Peeters // DNB Working Paper. 2007. № 162. P. 1-22.

4. Dunning, J.H. Explaining International Production / J. H. Dunning. London: Unwin Hyman, 1988. 378 p.

5. United Nations Conference on Trade and Development (UNCTAD) (2013). World Investment Report 2013. Global value Chains: Investment and Trade for Development, Geneva: United Nations. 12. Retrieved from http://vasilievaa.narod.ru/ptpu/10_4_99.htm (in Eng.).

6. Hudym K.M. (2014). Priority forms and directions of functioning of the modern international business. Economy of Ukraine, 6, 77-85 (in Ukr.).

7. Hudym K.M. (2014). Transnationalization as a factor of globalization. Visnik KNTEU, 4, 33-44 (in Ukr.).