Экономические науки / Макроэкономика

Cand. of Science in Economics Taranenko I.V.

Donetsk State University

THE KONDRATIEV’S CYCLES AS A BASIS OF INNOVATION STRATEGIES AT GLOBAL ECONOMY

Under the conditions of the world system’s transition to the globalization - and - innovation stage of post-industrial development at the turn of the XX century, the strategies of countries’ competitiveness should be developed taking into account the cyclic world dynamics. A prominent sociologist and economist Nikolay Kondratiev established linkage between the large cycles and the processes of stock accumulation and the dynamics of innovations [1]. The explanation of «Kondratiev’s cycles» through the “waves of technological innovations” was developed in works of Joseph Shumpeter, Alfred Kleinknecht, Gerhard O. Mensh, Christopher Freeman and others.

Although Kondratiev waves time limits are still being under the discussion [2], it is important to separate Kondratiev cycle upwave and downwave stages for compare it with globalization periods. So the upwave stage of the 1^st Kondratiev cycle (1785/90–1844/51) took the period from the end of 1780-s – beginning of 1790-s till 1810 – 1817. Ascending stage of 2^nd Kondratiev cycle (1844/51–1890/96) N. Kondratiev determined is marked as 1844/51 – 1870/ 1875. The prosperity stage of the 3^rd long cycle covered 1890 – 1896/1914 – 1920 years.

Kondratiev’s followers propose to determine the limits of the 4^th and 5^th cycles’ ascending stages accordingly as 1939 – 1950/1968 – 1974 and 1984 – 1991/2005 – 2008 [2, p. 190].

The principle stages and historical types of globalization interpreted by British historian Antony Hopkins [3], Ukrainian researcher of globalization problems Anton Filipenko [4, p. 19], experts of the World Bank [5] and Organization of Economic Cooperation and Development (OECD) are generalized in Table 1.

Table 1

Generalization of the points of view to the stages and types of globalization

Antony Hopkins	Anton Filipenko	World Bank	OECD
Archaic Globalization	Archaic (Low-intensity) Globalization: trade of ancient civilizations and middle-age states	-	-
Proto- Globalization 1600 – 1800	Proto- Globalization: the period of Great Geographic Discoveries, World market formation, beginning of industrialization (XV-XVI cent. - till the beginning of ХІХ cent.*	-	-
Industrial Globalization: 1800 – middle of ХХ cent.	Modernistic Globalization: transition of the society to modernization and industrialization as a result of scientific and industrial revolutions (first quarter of ХІХ cent. – second half of ХХ cent.)*	First wave of Globalization: 1870-1940	First stage of Globalization - internalization (activization of export flows): from the middle of ХІХ cent.
Post-colonial Globalization: 1950 – 1970 -s		Second wave of Globalization: 1950 – 1980	Second stage of Globalization – transnationalization (activization of FDI flows): after 1945
Modern Globalization: after 1970	Post-colonial (organic, consistent) form of globalization: elimination of colonial system (1950-1970-s), disintegration of USSR and East Block (1990-s.)*	Third wave of Globalization: from 1980-s	Third stage – exactly Globalization: from 1980-s

Composed by [3, 4, 5]

The comparison of time limits of Kondratiev’s long cycles with the stages or «waves» of globalization given in Table 1 demonstrates the considerable coincidence of globalization processes acceleration with upwave stages of Kondratiev’s cycles. This coincidence has to be considered through the prism of J. Shumpeter’s thesis about the exclusive role of innovations in causing long cycles of business activity.

Such a statement leads to an assumption that innovative processes expand by different way in different phases of a long cycle. G. Mensh has determined that an economy is most sensitive to innovations in the period of depression [6]. According to the research of C. Freeman, the development of innovative processes takes place in the period of recovery [7]. The research carried out by A. Poletaiev and I. Savelieva shows that the periods of maximum number of basic innovations coincide with the depression phases of the world long cycle [8, p. 45]. The study of dynamics of the world leading companies’ expenditures on research and development (B. Yaruzelskiy and C. Dehoff) showed a 5,7% growth of such expenditures during the world financial and economic crisis in 2008-2009, in spite of a 8,6% decrease of operational income and a 34% fall of net profit [9, p. 3]. More than two thirds of the companies included in 2009/2010 Global Innovation 1000 maintained or increased R&D spending in 2008. Furthermore, the analysis revealed that innovation investment is increasingly viewed as essential to corporate strategy: More than 90 percent of executives surveyed said innovation is critical as they prepare for the upturn. “Innovation is what drives our competitive position in all three of our markets — automotive, professional, and consumer — and therefore we can’t back off,” says Robert Lardon, corporate vice president for strategy and investor relations at Harman International Industries Inc. Adalio Sanchez, general manager of IBM’s System X server business, echoes that point of view: “I would argue that the recession is a catalyst for increased innovation” [9, p. 4].

Therefore, we can assume that the time of «starting» the innovative process covers a considerable period during the depression and recovery phases. In turn, the Japanese scientist M. Hirooka proved that the diffusion of innovations takes place simultaneously with the upwave stage of Kondratiev’s cycle [10].

The results of scientific research allow to assume that innovative competitive advantages are formed on the descending (downwave) stage of Kondratiev’s large cycle, whereas the diffusion of innovations takes place on the ascending (upwave) stage of the «long wave». The ascending stage of Kondratiev’s long cycle is characterized by favorable conditions for profiting from competitive advantages provided by integration and globalization.

The discovery of the relations between the dynamics of globalization and innovation processes in the world economic system, the determination of a correlation between the periods of globalization processes acceleration and definite phases of Kondratiev – Shumpeter’s «long waves», as well as determination of peculiarities of innovative processes implementation on particular phases of the long cycle lay down the foundations for developing strategies of competitiveness for economic entities’ – enterprises (companies), regions, countries and international integration groups.

On the descending stage of the long cycle the formation of innovative competitive advantages through companies’ management and government’s assistance to the innovation process is of particular importance.

Such policy will result in the creation of conditions for an «innovation jump» and efficient implementation of innovative model of economic development for the countries which are highly integrated into the global economy, on the ascending stage of the cycle. The realization of innovative competitive advantages, in turn, creates conditions for stimulating the participation of separate companies and countries in the process of global integration on the basis of partnership on the growth stage. Thus, the integration competitive advantages can be used most efficiently on the ascending stage of Kondratiev’s cycle. The data of the world globalization dynamics for the period of 1980 – 2000 prove the above statement.

The economists argue that the ascending phase of the Kondratiev’s fifth cycle ended in 2005-2008 whereupon the world economy entered the depression phase which will probably last from 2010 to 2020 [2, p. 237]. This period is the most favorable for «starting up» a new wave of innovation activity directed at the development and implementation of innovations at the global level.

The period from 2010 to 2020 considered as a descending stage of Kondratiev’s fifth long cycle is the most favorable for stimulating the innovation activity, especially in the countries integrated into the global economy. The approach proposed above may be applied in Ukrainian economy for develop innovation strategy at post-crisis period.

References:

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2. Коротаев А.В. Кондратьевские волны в мировой экономической динамике / Коротаев А.В., Цирель С.В. // Системный мониторинг: Глобальное и региональное развитие / Отв. Ред. Д.А. Халтурина, А.В. Коротаев. – М.: Книжный дом «ЛИБРОКОМ», 2010. – 296 с.

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6. Mensch G. Stalemate in Technology – Innovations Overcome the Depression. / Mensch G. - New York, NY: Ballinger. - 1979

7. Freeman C. Technical Innovation, Diffusion and Long Cycles of Economic Development. / Freeman C. / The Long- Wave Debate / Ed. by T. Vasko. Berlin: Springer. P. 295-309

8. Полетаев А.В. «Циклы Кондратьева» в исторической ретроспективе / Полетаев А.В., Савельева И.М. – М.: ЗАО «Юридический дом «Юстицинформ», 2009. – 272 с.

9. Jaruzelski B. Profits Down, Spending Steady: The Global Innovation 1000. / B. Jaruzelski, K. Dehoff. // Strategy + Business.- Issue 57. - Winter 2009, Reprint number 09404. – 14 P.

10. Hirooka M. Innovation dynamism and economic growth. A non-linear Perspective. / M. Hirooka. – Cheltenham, UK-Northampton, MA : Edward Elgar , 2006.