Modernization of Russian Enterprises: the Value Chain Perspective. The Case Study of Tube&Pipe and Furniture Sectors

Abstract

The paper is the first analysis of the competitiveness of Russian enterprises from the perspective of value chains (the approach that was developed in the framework of Institute of Development Studies, Sussex, UK), with a focus on the example of tube & pipe and furniture producers. The first value chain is governed by the suppliers of raw materials and the second one by the retail traders. In both industries, the competitiveness of Russian producers is limited to the abilities of key players in the value chain to redistribute value added in their own favor. That is why in spite of the advantages on the raw material side Russian enterprises have no enough resources for modernization and the overall competitiveness level of domestic producers in both industries remains modest. Study shows that any non-selective methods of supporting enterprises (such as tax reductions) exert extremely limited influence on the performance of domestic participants in those chains where one of the links is characterized by serious entry barriers and related opportunities of rent redistribution in favor of a particular player.