Periodic Reporting for period 1 - MARKETS (Mapping Uncertainties, Challenges and Future Opportunities of Emerging Markets: Informal Barriers, Business Environments and Future Trends in Eastern Europe, The Caucasus and Central Asia)
Période du rapport: 2020-08-01 au 2022-07-31
In the past ten years, diplomatic and economic relations between the EU and a number of post-USSR republics have steadily improved. Efforts to diversify domestic economies and to attract foreign investments have multiplied in the past years in the region, through initiates that include visa liberalization and economic and fiscal reforms aimed at reducing barriers to entry for foreign business seeking access to domestic markets. The response from the international business community to these efforts have been modest to date. While a number of corporate entities have tried to enter new markets, the attractiveness of such newly opened republics remain limited, in large part due due to at least two inter-related factors: First, lack of widely available strategic intelligence on the region and its individual countries. Second and interconnected with the first factor, these information gaps are largely due to the paucity of specialists on the region available on the market.
• Why is it important for society?
Occupying 1/6 of the Earth’s dry land, the post-Soviet region is one of the main EU economic partners for import and export of materials. While providing natural gas, oil, metals, cotton, the post-Soviet region is also a prospective market for luxury goods and specialised services. Political and diplomatic relations have intensified over the past years, leading to growing economic exchanges. This has been made possible thanks to the progressive opening up of post-Soviet republics giving clear signals to foreign investors and, in particular, EU-based actors, of their availability to intensify exchanges.
MARKETS addresses the currently limited existence of clear guidelines that could enable new, and existing, business actors to get a clear overview of the hidden risks associated with engaging in business in the post-Soviet region. It does so by embedding an aggregate of research projects intended to provide a wide and deep understanding of the loci of informality in the business sector by providing a wider framework. We will look at the way domestic and international institutions, as well as governance actors, deal with informality, what happens when they fail to encourage business actors to formalize they activities and come “out of the shadows”. We will also look at private sector perspectives and motives for engaging with informal practices, and how these practices are generated, develop or get phased out and what are the main determinants of their fate. Finally, we will look at the societies in which these business operate.
• What are the overall objectives?
The program will collect original empirical data (O.1) (drawing from new research solidly grounded in fieldwork) to identify how informality, here defined as the aggregate of (monetary and non-monetary) practices that are concealed from a state, affects modes of governance and business models/market strategies/entrepreneurial initiatives in the economy, as well as related societal implications. (O.2). These empirical findings will enable us to frame our research in current theoretical debates, and to produce new findings on the region useful for informality enquiries worldwide (O.3). Eventually, this will contribute to the capacity of the network to issue recommendations for policy and business actors on how to contribute to reforms in the region and how to navigate local business environments bringing in views from a variety of sectors, regions and actors (O.4).
• Why is it important for society?
Occupying 1/6 of the Earth’s dry land, the post-Soviet region is one of the main EU economic partners for import and export of materials. While providing natural gas, oil, metals, cotton, the post-Soviet region is also a prospective market for luxury goods and specialised services. Political and diplomatic relations have intensified over the past years, leading to growing economic exchanges. This has been made possible thanks to the progressive opening up of post-Soviet republics giving clear signals to foreign investors and, in particular, EU-based actors, of their availability to intensify exchanges.
MARKETS addresses the currently limited existence of clear guidelines that could enable new, and existing, business actors to get a clear overview of the hidden risks associated with engaging in business in the post-Soviet region. It does so by embedding an aggregate of research projects intended to provide a wide and deep understanding of the loci of informality in the business sector by providing a wider framework. We will look at the way domestic and international institutions, as well as governance actors, deal with informality, what happens when they fail to encourage business actors to formalize they activities and come “out of the shadows”. We will also look at private sector perspectives and motives for engaging with informal practices, and how these practices are generated, develop or get phased out and what are the main determinants of their fate. Finally, we will look at the societies in which these business operate.
• What are the overall objectives?
The program will collect original empirical data (O.1) (drawing from new research solidly grounded in fieldwork) to identify how informality, here defined as the aggregate of (monetary and non-monetary) practices that are concealed from a state, affects modes of governance and business models/market strategies/entrepreneurial initiatives in the economy, as well as related societal implications. (O.2). These empirical findings will enable us to frame our research in current theoretical debates, and to produce new findings on the region useful for informality enquiries worldwide (O.3). Eventually, this will contribute to the capacity of the network to issue recommendations for policy and business actors on how to contribute to reforms in the region and how to navigate local business environments bringing in views from a variety of sectors, regions and actors (O.4).
The first 6 months of the project were mostly used to set up the project structures and to begin the recruitment. Recruitment was largely affected by the COVID pandemic and was spread over a longer period with Bremen and Mastricht being the first to announce a competition in October 2020 and select fellows and Finland being the last one since, by national rules, the fellow needs to be physically there to be allowed to start a work contract. Recruitment happened at the partner level but was also supervised by the project coordinator with announcements uploaded both on national and international websites, twitter, facebook and on the euraxess portal/ By April 2021 all fellows were recruited and had started their training. This is when the capacity building phase started. Coursework was active at all partners’ institutes and therefore fellows were able to attend their first courses already in the 2020-2021. Training at home institution was relatively smooth, thanks to the fact that coursework had migrated online and all fellows were registered for ID, access to the system and received adequate support to use their home university online infrastructures. As a result, the local training proceeded as planned with all students taking the necessary courses to pass to the second year. More difficult was the implementation of the network events. They were significantly affected by the pandemic and the kick-off event and further ones could not take place because of the high risk. As a result, the first in-person meeting happened in June 2022 in Istanbul, a location that was chosen to facilitate travel from all the partners given the diverse pandemic restrictions present in Europe. The network compensated for the lack of in-person meetings through a number of approaches. First, the event that was supposed to happen in Bremen, to present each fellow’s research, was held as a regular online event in 2021. After that we all agreed that an in-person meeting was highly necessary and started catching up with the events. After the one in Istanbul, we are now planning another one in Tbilisi in December 2022.
The past ten years or so have seen an exponential increase in research on informality. Since the very first use of the term “informal economy,” and the ILO's engagement with the issue, research on informality has been produced in many disciplines, Studies on informality have also acknowledged the multi-layered nature of informal practices and their blurred nature;3 that is, that they happen at all levels of society and institutions. However, informality has also prompted studies of informal institutions, economic and corporate actors,5 as well as more bottom-up approaches at the community and urban level,6 together with a variety of actors and practices.7 Empirical studies have confirmed that informal and shadow practices do not necessarily have a negative effect on state performance, but they can be related to effectiveness in certain areas.8 This has pointed researchers and policy makers in a new direction, suggesting that informality has to be understood and controlled, rather than repressed and liquidated. A major flaw in the research on informality, however, has been the lack of coordination among research centres and disciplines. MARKETS will create an integrated narrative on informal economies, informality and their role in the redefinition of business environments in the region. Embedded in economic disciplines but nuanced thanks to a deep social and cultural understanding of transitional economies.