Nefedkin V.I.
Ph.D., senior researcher
Center for Resource Economics, Institute of Economics
and organization of industrial production SB RAS
(IEOPP SB RAS, Novosibirsk)

A feature of the Russian economy, inherited from Soviet times, remains the high concentration of management. If in the USSR almost all significant enterprises were part of a rigid management vertical (enterprise - production association - ministry), now a significant part of production assets are integrated into large structures, which are characterized by a branched spatial organization and dominance in certain areas of activity and regions. There are clear signs that the influence of such structures in the Russian economy is increasing, and vertical (hierarchical) coordination is increasingly replacing horizontal coordination, based on the interaction of equal market entities. The nationalization of assets that are important from the point of view of power, combined with the growth of the largest corporations through the merger and takeover of regional companies, significantly change the structure of individual industries and the economy as a whole, and also affect the development of regions.

The reasons for this go far beyond economic relations themselves. The hierarchy of economic power in modern Russia has become an integral part of a more complex structure, which is commonly called the “vertical of power.” According to the authors developing the theoretical concept of “power-property”, in the modern Russian hierarchy, in parallel with the main pyramid of power, a hierarchy of big business has developed. Within the framework of this structure, economic activity is controlled by a “vertical” primarily through the dominance of state corporations in the economy, as well as leading monopolies, formally private, but really dependent in their policies on those who are at the center of this structure (Pliskevich, 2015).

Large business structures in Russia: evil or good?

In the 1990s, domestic authors conducted a number of studies that studied the stages of formation and features of organizational forms of large businesses in Russia, and also assessed the effectiveness of various forms of integration of production assets. In particular, it was noted that enterprises belonging to financial-industrial groups (FIGs) showed better results than the industry as a whole (Dementyev, 2000).

From 2004 to 2010, the Center for Macroeconomic Analysis and Forecasting regularly published reviews that highlighted the most notable events and trends in the field of corporate mergers and acquisitions. An analytical summary of these unique “corporate chronicles”, including a detailed classification of integrated business groups, is presented in a monograph published in 2009 (Pappe, Galukhina, 2009). Its authors noted that, despite the observed increase in state presence in the economy over the past five years, no transition to a new state-capitalist model is visible. The events of the next six years, in our opinion, no longer provide grounds for such a conclusion.

After the crisis of 2008-2009. reservedly positive assessments of the role of big business in the Russian economy are gradually being replaced by critically negative ones. The reason for criticism most often became individual stories related to the manifestation of the monopoly position of corporations with state participation, dubious schemes for transferring previously state-owned assets to the control of private individuals, precedents of large-scale state support for large companies, including those controlled by private capital.

The operating models of private business groups also became the object of criticism. It was noted that the predominant form of large Russian business has become conglomerates registered in offshore companies, owned by one person or a narrow group of people and operating, in essence, as investment funds engaged in purchasing undervalued assets for the purpose of their subsequent resale. At the same time, during periods of crisis, they receive state support, which is directed not to the modernization of production and innovation, but to the repayment of corporate debts and the acquisition of cheaper assets and real estate, including abroad (Blyakhman, Zyabrikov, 2015).

An attempt at a deeper analysis of changes in the sphere of large business and an assessment of their impact on the organization and performance of the Russian economy inevitably leads to the formulation of interrelated research questions:

• What changes in the Russian economy are initiated by the development of big business?
• Is it possible to explain the mechanism of these changes based on known theoretical concepts?
• Is it possible to quantify the influence (power) of big business?
• Are there stable long-term trends characterizing the degree of influence of big business on the Russian economy?
• What are the already observed and possible future consequences of these trends for the economy as a whole and individual regions?

From market power to economic power

In studies of monopolistic competition, market power is associated with the ability to extract additional profits through influence on the market that violates the conditions of perfect competition. In the modern theory of market organization, a firm turns from a market subject into an industry subject. Behind this lies an important and quite realistic position: the subjects of competition are not goods from different manufacturers, but directly the producers of these goods. At the same time, the premise that a manufacturer is assigned to a certain industry, which simplifies the theoretical analysis, does not fit well with the realities of the modern economy, in which there are large diversified corporations that can compete with each other, including through the acquisition of assets in different industries.

At first glance, the desire of large businesses to acquire non-core assets has a positive effect on the market, increasing the level of competition in industries and areas of activity with high concentration. However, in practice, when carrying out such transactions, it is not so much considerations of developing the core business through, for example, completing vertical integration schemes, that prevail, but rather the desire for “inorganic” growth and speculative motivation. There are many examples when core assets were acquired solely for extensive business growth and elimination of direct competitors, and non-core assets were acquired for the purpose of resale during a period of favorable economic conditions. Not only private corporations, but also corporations with state participation “sin” with such acquisitions.

In the economy of “corporate conglomerates,” the goal of competition is not to obtain maximum market power in individual industries, but to maximize total power in all industries and areas of activity in which there are assets controlled by the corporation. We will call this power “economic” in the sense that it allows us to extract additional benefits from the entire range of opportunities that large businesses have, but which other economic agents do not have.

The term "economic power" has long been used in the works of economists and sociologists. V. Eucken, in a work published back in 1940, noted that “the first task of national economics is the discovery of specific facts that justify economic power, and the study of the actual influence of economic power” (Eucken, 1996, p. 337). F. Perroux described the “dominance effect” associated with the presence of power relations in the economy (Reggoich, 1950). In the works of K. Rothschild (1971), W. Samuels (1979) and a number of other researchers, economic power is presented as the most important factor, consistently ignored within the framework of mainstream economic theory (see also: Young, 1995).

The term “economic power” has many meanings and has not yet entered the mainstream. At the same time, the interpretation we propose allows us to expand the possibilities of studying the influence of big business on the economy beyond the traditional analysis of industry markets, and “corporate power” can be considered as one of the manifestations of economic power.

If the market power potential of a single-industry firm can be assessed as its share of industry output, then the economic power potential of a diversified corporation can be assessed by measuring the degree of its presence in all industries and regions. By acquiring new assets, a corporation increases its economic power and is able to extract additional benefits.

From the point of view of the new institutional theory, the inclusion of power relations in the subject of economic analysis means expanding the rational choice model by introducing into it the preconditions of inequality (asymmetry) of transaction agents (Williamson, 1981). In our case, such agents will be large corporations, which, due to their size, market position, proximity to government structures and other circumstances, have capabilities that other economic entities do not have.

The asymmetry is manifested both in relation to transactions carried out with independent agents, and in internal (intra-group) transactions with agents included in corporate control schemes - subsidiaries and affiliates, structural divisions. The greater the total volume of transactions carried out with the participation of a corporation, the greater the potential benefits that corporate owners and top managers can derive from the asymmetry described above.

There are two fundamentally different ways to increase the volume of transactions for each individual corporation. The first is through the creation of new and development of existing business lines (companies), that is, organic growth. The second is through the accession and absorption of other companies, that is, inorganic growth, which, unlike the first, does not increase, but redistributes the added value created in the economy.

If a corporation acquires control of an independent company or a company previously controlled by another corporation, it increases its economic power. The organic growth of a corporation provides a similar result, provided that it grows faster than its competitors. This means that the consequences of unidirectional changes in the concentration of economic power can be diametrically opposed even in the same country in different periods. Thus, relying on government support for the development of large diversified businesses in South Korea and Japan has made it possible to achieve impressive economic results. At the same time, after a long period of economic growth, this development model began to falter and forced, in particular, the South Korean government to seriously reformat relations with big business, introduce additional restrictions and reduce preferences for the activities of chaebols.

Assessing concentration of corporate power

Methodical explanations

Strictly speaking, it is impossible to directly “measure” power. It is more correct to talk about measuring the potential of power. Power is associated with relationships of dominance and subordination, which can be represented in the form of a hierarchical “tree”, where lower-level subjects are subordinate to higher-level ones. This representation of power already allows for quantitative assessments 1 . The power potential of a corporation is determined by the economic and administrative resources that it controls, and can be based not only on a monopoly position, but also on the value of assets, market capitalization, number of employees, volume of controlled monetary resources, functional, technological or legal dependence on it of other economic agents.

As a metric, you can use the total volume of transactions in which the corporation participates. Since only recorded transactions can be directly measured, the most adequate indicator would be sales revenue reflected in the financial statements of legal entities. This indicator, unlike assets or profit, has no industry specificity. If certain industries may, due to objective reasons, be more capital-intensive or, say, less profitable than others, then from the point of view of sales revenue, all industries and companies are equal 2.

In the context of intragroup hierarchy, we will distinguish between companies (legal entities) and groups of companies. Let us assume that for any company it is possible to pinpoint the company above it in the hierarchy that controls it. In this case, we will consider the criterion of control (full power) to be the possession of a majority of voting shares (ownership shares). If a company is not completely controlled by another company, then it can be considered independent. A group of companies connected by this kind of hierarchical relationship of control/subordination will be further called a corporation. Each company can be localized, that is, associated with a specific region, depending on the place of its registration with the tax authorities or its actual location. Thus, by “tying” each company to a specific corporation and region, it is possible to assess the corporate and territorial structure of transactions.

The mechanism of concentration of corporate power can be illustrated with the following conditional example. Let’s imagine that in the economy there are five independent companies that purchase goods and services in equal (single) volumes according to the “each from each” scheme, that is, carrying out free (voluntary) transactions among themselves. For simplicity, we assume that the intensity of transactions is constant over time. The total number of market transactions (Q) in this case will obviously be equal to Q = N 2 - N, where N is the number of companies. For N = 5, Q will be equal to 20. After two companies merge into a group (corporation), transactions between them will become controlled (limitedly voluntary), and Q will decrease to 18. The addition of another company will reduce the number of market transactions to 14, etc.

If we calculate the Herfindahl-Hirschman Index (HHI) 3 value for all three cases, it will be 2000, 2800 and 4200, respectively. The merger of all companies into one corporation (Q = 0) will correspond to the maximum possible value of HHI = 10000. Thus, an increase in HHI, other things being equal, will mean an increase in the concentration of corporate power and the share of intra-group (limitedly voluntary) transactions.

For the practical application of this approach, it is important what information is used to evaluate transactions. The financial statements of companies (legal entities) record data characterizing the number of transactions - sales (for a given company) and purchases (for supplier companies). If, for example, revenue is consolidated according to the rules of international financial reporting standards (IFRS) with the exclusion of intra-group (inter-segment) flows, then the calculation will inevitably be distorted towards understatement. The higher the degree of vertical integration in the group of companies, the greater the reduction. The greatest accuracy is provided by primary unconsolidated data, which contains the most complete information on the volume of transactions 4. These data are contained in the financial statements of legal entities according to Russian accounting standards (RAS). The use of such data allows the use of a single methodology for calculating consolidated revenues for all corporations and, therefore, ensures comparability in dynamic analysis.

Calculation based on corporate ratings data

Data on sales volumes of large corporations can be found in various sources. For example, RA Expert has been rating the largest domestic companies since 1994. Based on those given in the ratings for 1994-2014. data on the revenue of the 200 largest Russian companies (in our terminology - “corporations”), we calculated the HHI values, which in this case can be interpreted both as a characteristic of the degree of hierarchical (corporate) control in the economy, and as a general indicator of the concentration of the potential of economic power. The dynamics of HHI make it possible to distinguish two periods that are fundamentally different in terms of the main trend (Fig. 1).

In the first period (1994-2004), a rapid decrease in concentration was observed. Over ten years, the index value has decreased by almost 3 times. This is not surprising, since this was a period of mass privatization and subsequent disaggregation of the “giants of Soviet industry.” During this period, the revenue of large industrial enterprises either decreased in nominal terms or grew more slowly than the total revenue of other companies. During the second period (2004-2013), the HHI value stabilized - it reached a maximum in 2008, and in 2009-2013. returned to the levels of 2005-2007. The long-term trend of decreasing concentrations gave way to stabilization.

How high is concentration in the Russian economy? The HHI value in the last four years was 330-360 points. For comparison: the same indicator for the 200 largest US companies over the same period was in the range of 115-118 points 5 . Thus, Russian concentration indicators, despite all the conventions of this comparison, are more than 3 times higher than American ones.

The conclusions drawn from the analysis of annual ratings data should be taken critically. The main problem is that when compiling corporate ratings, data from consolidated statements under IFRS are taken as a basis, and in their absence, data from management or financial statements compiled according to Russian standards (RAS). Mixing indicators obtained using three different methods in one rating inevitably distorts the calculation of concentration.

It should also be taken into account that the reporting of Russian companies under IFRS includes consolidated data on their foreign assets. If we measure the potential of economic power in Russia, then the proceeds of foreign assets will distort the calculations. In addition, during the analyzed period, the methodology for compiling the Expert RA rating changed: if initially only industrial companies were included in the rating, then starting in 2003, the range of participants was expanded to include other industries of the real sector, commercial banks and insurance companies.

Alternative calculation

To ensure comparability of indicators between different corporations, we carried out an alternative calculation using primary financial reporting data (RAS) and information on corporate control of the 500 largest Russian companies by revenue (Top 500) 6 in the non-financial sector. Accordingly, existing banking groups were not considered as separate corporations. The consolidated revenue of each corporation was determined as the sum of the revenue of all the companies it controlled.

Company indicators were included in corporate indicators only if there was full control (more than 50% of voting shares or authorized capital). Companies not included in corporate control schemes, including joint ventures with parity of ownership, were treated as separate corporations. Based on consolidated revenue indicators, the 200 largest corporations 7 were identified for each year and HHI values ​​were calculated, showing the concentration of revenue (see Fig. 1).

A comparison of the calculation results using corporate ratings (see Fig. 1) and the alternative methodology (Fig. 2) reveals significant differences. If in 2004 the HHI discrepancy was 173 points, then in 2013 it was already 390 points. The discrepancy is explained by both the different composition of companies and the factor of “reduction” of revenue under IFRS, which relatively underestimates the number of internal transactions in large corporations 8 . In addition, the dynamics of the concentration index has fundamentally changed. The point of minimum concentration in both calculations coincides (2004), but then the dynamics of HHI are very different: if in the first calculation its value practically stabilizes after 2004, then in the alternative there is a pronounced upward trend.

Fluctuations in concentration in certain years are associated with major corporate events: the forced bankruptcy of the Yukos oil company, the acquisition of Sibneft assets by Gazprom, the reform of RAO UES, the takeover of TNK-BP by Rosneft. Not all of these events resulted in an increase in the concentration index. Nevertheless, the presence of a long-term upward trend is obvious. Over ten years, the concentration index increased from 491 (2004) to 746 (2013), or 1.5 times.

An analysis of changes in corporate concentration indicators shows that the largest corporations became their main drivers.

Table 1 shows that the concentration of corporate power in the real sector is increasing over time. Over ten years (2004-2013), the share of the largest (Top 5) corporations in the revenue of the Top 500 companies increased by 8.2 percentage points. The share of the largest state-controlled corporations in the total revenue of the Top 5 for the same period increased from 69.5 to 85%.

Table 1

Distribution of Top 500 revenue between the five largest corporations in 2004-2014. (V %)

Changes in the spatial distribution of economic power

The growing concentration of economic power has definite consequences both for the economy as a whole and for individual regions in whose territory divisions (regional assets) of large corporations operate. Vertical integration of assets leads to a distortion of statistics on the gross regional product, 9 and the use of various corporate schemes directly affects the income of regional budgets, the inflow and outflow of financial resources, the production and distribution of added value, and ultimately the standard of living of the regional population.

As noted above, company revenue can be distributed (localized) depending on the place of their tax registration. The changes in the territorial concentration of sales revenue that have occurred over the past 11 years are obvious. Table 2 shows that the share of companies registered in the Central and Northwestern Federal Districts increased the most - by 9.4 and 3.7 percentage points, respectively. At the same time, 90% of the growth in the share of the Central Federal District was provided by Moscow. And the increase in the share of St. Petersburg occurred against the background of a decrease in the share of the rest of the North-Western District. The increase in the Southern District's share after 2010 appears to be due to increased business activity triggered by the 2014 Winter Olympics in Sochi.

table 2

Distribution of Top 500 revenue between federal districts in 2004-2014. (V %)

*Within modern administrative boundaries.

Sources: author's calculations.

The greatest “losses” during the period under review were suffered by the federal districts where hydrocarbon raw materials are produced, the export of which forms the basis of the economic potential of modern Russia. The pattern is obvious: the greater the oil and gas production, the greater the decline. The largest decrease was in the Ural (6.7 p.p.) and Volga (3.3 p.p.) federal districts, which provided 79% of all oil production in 2014 10 . The share of the Siberian Federal District, which has provided the entire increase in oil production in recent years, has decreased by approximately 1.5 times.

The share of revenue of companies registered in Moscow and St. Petersburg is increasing, while the share of companies in the periphery and especially the eastern regions, which traditionally have a stable raw material specialization, is decreasing. The assumption that the growth in the share of economic capitals in the revenue of Russia's largest companies is explained by higher growth in business activity in comparison with other regions is easily refuted by statistical data. From 2004 to 2013, the share of Moscow in the total GRP of all constituent entities of the Russian Federation increased by only 1 percentage point, and St. Petersburg - by 0.8 percentage points. 11 The observed changes in the corporate and territorial structure of revenue are due to the fact that corporations increase their power mainly through mergers and acquisitions of existing companies.

The consequences of the largest transaction in Russian history on the market of corporate mergers and acquisitions are indicative. The revenue of the TNK-BP corporation registered in the Tyumen region (now PH-Holding) after the acquisition by Rosneft decreased from 1279 billion rubles. in 2012 to 688 billion in 2013 and up to 10 billion rubles. in 2014. As noted in the notes to the financial statements of PH-Holding, the decrease in revenue was mainly due to a decrease in sales volumes due to the transfer of trade flows to other enterprises of the Rosneft Group 12.

Corporate annuity

A general consequence of economic power is the discrepancy between private and social costs, known from economic theory. Unlike models based on the assumptions of equal and voluntary exchange, in our context, the divergence of private and social costs and benefits is not an externality (an unintended by-product of a transaction), but a conscious result of maximizing utility in conditions of inequality of agents (Dementyev, 2004). It can be assumed that the growing concentration of economic power will mean that an increasing proportion of transactions will be carried out in unequal conditions for the participants. Moreover, this applies to both internal and external transactions for the corporation. If, say, a small supplier to a large retail chain is forced to supply its products at reduced prices, then it does not matter whether he is within the corporation or, due to his low economic power, is forced to submit to the conditions of an agent who obviously has greater economic power. In any case, the consequences for the dependent supplier and the distribution network will be diametrically opposed.

The growth of the potential of economic power of a certain corporation expands the possibilities for it to receive additional benefits, which are not limited to traditional monopoly rent and are not exhausted by unequal, but formally market transactions. They should be supplemented with the benefits of increased loyalty of government authorities to large corporations. Of course, the possibility of obtaining these benefits is not limited solely to the scale of business of potential beneficiaries. However, large corporations have a greater chance of receiving various types of preferences. An example is the anti-crisis program of the Government of the Russian Federation in 2008-2009, according to which the bulk of financial assistance was received by “systemically important” corporations, that is, large corporations.

Receiving various preferences provides additional opportunities to increase sales and improve financial performance. Since some corporations receive benefits because others do not, this means that such benefits are of a rent nature. Therefore, for a generalized description of these benefits, we will introduce the concept of “corporate rent”. Such rent can exist in different forms. A large corporation, due to its special (not necessarily monopoly) position, can receive:

• economically beneficial regulated tariffs (for natural monopolies) and favorable prices for government orders;
• direct government subsidies to support current economic activities or to implement investment projects;
• access to external financing on non-market terms, including loans on preferential terms from banks with state participation;
• benefits on taxes and other payments to the budget.

Situations are possible when the state, due to expected negative effects and social resonance, is forced to assume the obligations of large corporations - potential bankrupts. In this case, a kind of “nationalization” of the obligations of large corporations occurs.

Possible effects on the economy and individual regions

Market power allows a company to extract additional profits associated with market dominance. In this case, the increase in “producer surplus” is not symmetrical to the decrease in “consumer surplus,” which leads to the emergence of so-called “deadweight losses for society” (Tirol, 1996). Strengthening the economic (corporate) power of one company can lead to an asymmetric deterioration in the position of other companies and end consumers. In other words, the overall effect on society, as with market power, may be negative. Potentially negative effects can manifest themselves in different directions:

• transformation of additional profit (rent) into costs;
• diseconomies of scale;
• decrease in efficiency due to the replacement of market competition with internal corporate control (with vertical integration).

It should be emphasized that the effect of the noted effects is not predetermined, that is, they do not always accompany an increase in concentration. Moreover, there are possible symmetrical effects that can act in the opposite direction. Thus, receiving corporate rent in the form of additional profit - if used to modernize and expand a business - can provide a positive effect on the economy. At the same time, the practice of large corporations 13 shows that additional profits are subsequently transformed into increased costs.

An increase in concentration can be accompanied by relative cost savings (positive economies of scale), and replacing the market with internal coordination can help reduce transaction costs. However, the predominance of inorganic growth can significantly limit the possible positive effects and at the same time provoke the development of negative phenomena accompanying an increase in business scale.

The consequences for the regions in which the production activities of large corporations are carried out will depend on the level of control (power) of the corporation in relation to the consolidated regional companies. A regional asset acquired by a large corporation, as a rule, consistently undergoes organizational metamorphoses, accompanied by a decrease in its contribution to the economy and budget of the region. However, the basic production process may not change. The enterprise can continue to produce the same products in the same physical volumes. However, changing the mechanisms of corporate control will have dramatic and, as a rule, unfavorable consequences for local budgets and, ultimately, for the economic and social development of the region. These consequences, aggravated by unidirectional changes in tax legislation, become one of the factors in the growth of imbalance in the budgets of individual constituent entities of the Russian Federation (Nefedkin, 2015).

A company that has fallen into the orbit of corporate power is usually included in a scheme of industrial and financial integration. A “reorganization” of the controlled company occurs, as a result of which it can be divided into several companies, lose its status as a legal entity, or become a branch or representative office of the parent company, deprived of any independence and managed from the corporate center. This “consolidation” of regional assets is primarily characteristic of vertically integrated corporations, in which transfer prices and other business organization schemes (processing, tolling, etc.) are widely practiced, reducing the revenue of operating companies and the tax base of the region. The concentration of corporate power in many cases leads to a decrease in local content 14 produced by the regional assets of large corporations, and to a reduction in the regional component in the added value produced.

Our research first of all confirmed the possibility of using the proposed approach to explain the mechanism of influence of big business on the economy. At the same time, qualitative and quantitative analysis of the observed trends allows us to propose a number of meaningful conclusions and hypotheses that can be tested in subsequent studies. They can be formulated in the form of answers to the questions posed in the introduction.

In the last decade, noticeable changes have been observed in the Russian economy, due to the growing influence of big business and, first of all, corporations directly or indirectly associated with the state. These changes can be interpreted as a steady movement towards state-corporate capitalism, the immediate and long-term consequences of which have yet to be assessed.

The changes taking place cannot be fully explained within the framework of traditional approaches associated with the study of monopolistic competition and industry markets. The description of these changes and assessment of the degree of their impact on the economy can be based on the concept of economic power, which involves expanding the premises of the “new institutional theory” due to the hypothesis of limited voluntariness of transactions in conditions of dominance of some economic agents over others.

The degree of influence of large businesses can be quantitatively assessed using the proposed method, based on an assessment of the structure and concentration of indicators characterizing the volume of transactions and the degree of corporate control over them. The results of calculations using different data sets suggest the presence of a long-term trend towards an increase in the concentration of economic power in 2005-2013. In conditions when external shocks are the main factor in the rate of economic growth of the country, it is extremely difficult to identify the specific impact of the growing concentration of corporate power on the development of the economy as a whole. Apparently, this is the subject of a special study that is beyond the scope of this publication. However, there is reason to believe that the inorganic growth model, characteristic primarily of the largest Russian corporations with state participation, does not contribute to an increase in added value for the economy as a whole and negatively affects the rate of economic growth.

Further growth in the concentration of economic power and the accompanying increase in corporate rent, in our opinion, will negatively impact the opportunities for economic growth in the medium and long term. Countering this trend using traditional antitrust tools has little chance of success. Reorienting Russian big business to an organic growth model seems to be an extremely difficult task, but without solving it, we cannot seriously count on sustainable growth of the economy as a whole and solving the accumulated problems in the development of resource regions, in our opinion. The use of well-known practices of interaction between transnational corporations and developing countries, involving the implementation of local content development programs that contribute to increasing the added value remaining in the country (region), on the territory of which large-scale natural resource development projects are being carried out, could, in our opinion, contribute to eliminating the growing asymmetry in economic relations between economic centers and regions - the main suppliers of export raw materials and radically changing approaches to developing the resource potential of the eastern regions of Russia.

1 For example, in a corporate hierarchy, the power potential of a certain manager is determined by the number and rank of employees and departments subordinate to him, and the size of the budget he manages.

2 This principle, strictly speaking, does not apply to companies in the financial sector. The revenue (turnover) of financial intermediaries, determined by the amounts of transactions, can reach astronomical values. It is not entirely correct to compare it with the revenue of companies in the real sector.

3 The Herfindahl-Hirschman index is calculated as the sum of the squares of the shares of companies, measured as a percentage, in the total value of the indicator. For five equal-sized transactions of companies, it will be equal to 5x20x20 = 2000.

4 It should be taken into account that as a result of the merger of two companies, water transactions between them will no longer be reflected in the financial statements of the merged company, which may also affect the results of calculations.

6 Data for the 500 largest companies provide a good approximation of the entire real sector, since they include the majority of assets attractive for corporate control. In 2005-2014, according to our estimates, these companies accounted for 50-56% of non-financial sector revenue.

7 According to our calculations, the 200 largest corporations in 2002-2014. controlled 95-97 0/o of the revenue of the Top 500 companies in the non-financial sector. For initial data for calculations and final rankings of the top 200, see: https: yadi.sk d Lndd01RNkvh5D.

8 In 2013, the revenue of the Gazprom group according to IFRS amounted to 5,145 billion rubles, the total revenue of companies controlled by Gazprom and included in the Top 500 amounted to 10,205 billion rubles, that is, the group’s revenue in comparison with corporations that did not switch to IFRS was underestimated twice.

9 In the methodological explanations of Rosstat for statistics on gross regional product, it is noted: “The creation of corporations operating on the basis of integrated vertical and horizontal schemes has become widespread... Therefore, the assessment of added value for such divisions is relatively conditional. As a result, in the regions where the parent companies are located, the added value is somewhat overestimated and, on the contrary, in the regions where the divisions of these companies are located, the added value is underestimated" (quoted from: http://www.gks.ru/free_doc/new_site /vvp/met-r.htm).

10 According to the Analytical Center for the Government of the Russian Federation. Fuel and Energy Complex of Russia-2014. 2014. June, http://www.ac.gov.ru/files/publication/a/ /5451.pdf.

12 Explanations to the balance sheet and financial performance report of JSC RN Holding for 2013. http://rnholding.org/.

13 In this case, this applies not only to Russian, but also to foreign companies.

14 Local content usually refers to an increase in added value in a country (region) directly or indirectly, through multiplier effects, caused by the implementation of projects for the extraction and processing of natural resources by transnational corporations.

List of literature / References

Blyakhman L. S., Zyabrikov V. V.(2015). Strategy of horizontal integration of firms: global and Russian trends // Problems of modern economics. Jsfe 2. pp. 27-37.

Dementyev V. E.(2000). Financial and industrial groups in the strategy of reforming the Russian economy // Russian Economic Journal. Jsfc 11 - 12. pp. 3 - 9.

Dementyev V.V.(2004). Economic power and institutional theory // Questions of Economics. No. 3. P. 50 - 64.

Nefedkin V. I. (2015). “Budget curse” of resource-rich regions // EKO. Jsfe 6. P. 5-24.

Eucken, W. (1996). Fundamentals of national economy. M.: Economics.

Pappe Y. Sh., Galukhina Y. S.. (2009). Russian big business: the first 15 years. Economic chronicles 1993-2008. M.: Publishing house. house of State University Higher School of Economics.

Pliskevich N. M.(2015). Transformation of the power-property system in Russia: regional aspect. Reforms and quality of the state // World of Russia. JM? 1. P. 8 - 34.

Tirol J.(1996). Markets and market power: a theory of industrial organization. St. Petersburg: Economic School.

Perroux F.(1950). The dominance effect and modern economic theory. Social Research, Vol. 17, No. 2, pp. 188-206.

Rothschild K.(1971). Power in economics. Harmondsworth: Penguin.

Samuels W.(ed.) (1979). The economy as a system of power. New Jersey: Transaction Books.

Williamson O.(1981). The economics of organization: Transaction cost approach. American Journal of Sociology, Vol. 87, No. 3, pp. 548-577.

Young D.(1995). The meaning and role of power in economic theories. In: J. Groenewegen, Ch. Pitelis, S.-E. Sjöstrand (eds.). On economic institutions: Theory and applications. Aldershot: Edward Elgar, pp. 85 - 100.

Even the media no longer denies that corporations rule the world. There are many transcontinental corporations, but how independent are they from each other? We think that they are all on their own, competing with each other, going bankrupt, expanding. Is everything as it appears on the surface? Our investigation will begin with Apple. Is its cost equal to the budgets of several European countries combined? Who owns this company?

The quote from RBC clearly and clearly states that the main shareholder is a certain Carl Icahn, an eccentric billionaire, a cynical business shark, a famous raider and extortionist, a brawler and much more. In fact, it is he who is most often mentioned in the media as the main shareholder and newsmaker. There is also Tim Cook, the CEO of Apple (gay), but he is a figure appointed by the shareholders, that is, he is not the owner in any way.

However, after carefully studying the situation, we discover an amazing fact - the billionaire Carl Icahn owns just one (1) percent of Apple shares. Of course, the cost of even one percent is a huge amount, but it’s only one hundredth!

Who bit off the rest Apple?

The question is not so much hidden, but in the example of the same RBC, it is not only hushed up, but also openly falsified in the media.

Is there open and completely official data from the register of shareholders? There is nothing simpler, and we can easily do it ourselves:

Vanguard Group, Inc. (The) 5.68%

State Street Corporation 4.11%

BlackRock Institutional Trust Company, N.A. 2.72%

Bank of New York Mellon Corporation 1.42%

Northern Trust Corporation 1.39%

BlackRock Fund Advisors 1.21%

An amazing discovery, but Carl Icahn is not even among the top ten largest shareholders of Apple! Who are these mysterious real owners?

In first place is Vanguard Group - for the uninitiated reader, and for many economists, the name is unfamiliar, although in any reference book you can find information that the company controls assets of as much as 2 trillion dollars ($2000 billion). This is three times the cost of the same Apple! These are such modest people. In fact, the amount of assets under their control is several times larger, but we will look at this later.

Before moving on to further analysis of the shareholder structure and ownership, we should make a short digression.

The ideals of democracy(C) and the media image that serves as a screen for the true owners do not sit well with the fact that all of the world's largest companies are owned by the same few people. How to hide this obvious contradiction? Everything is very simple - you need to create the appearance that there are supposedly many owners (shareholders) and they are all “different”.

Indeed, how can the “masters of the world” have a measly 5-6% of shares? Any liberal will laugh in your face if you tell him this. The fact that these “measly six percent” are worth forty to fifty billion dollars does not bother anyone - with such a modest package it is already guaranteed to appoint its own CEO. For complete control of a company with a turnover of hundreds of billions of dollars, twenty percent is required - no more is needed, since it is impossible for competitors to collect a packet of more than 20% (it will cost under a hundred yards).

And suddenly, some Chinese will buy as much as seven percent of the shares and they will be able to run everything in the largest American company?

“This shouldn’t happen!” - the real masters of the world decided a long time ago and hedged their bets.

We are looking for shareholders of shareholders

To understand how they exercised total control and maintained the appearance of the absence of one owner, we return to our list of shareholders. In second place is the company:

State Street Corporation - owns 4.11%

And who are they, the ordinary reader will ask?

And again Google (yahoo) helps us:

And who are its largest shareholders?

1.Massachusetts Financial Services Co (Canadian insurance company - who owns it confusingly)

2.Price (T.Rowe) Associates Inc - 7%

3.Vanguard Group (where would we be without him!) - 6%

1. BlackRock (coming soon!) - 5%

Let's take an even deeper look at who is the shareholder of Price (T. Rowe) Associates Inc

and we see the same acquaintances: Vanguard and BlackRock (remember this name, it often appears, going hand in hand with our main character)

That is, in exactly the same manner, the monster Vanguard controls the second main shareholder of Apple! A simple trick and ten percent of the apple's shares are already in your pocket. But that's not all!

In the top ten there are two companies with a similar name BlackRock &BlaBla and the third time the name BlackRock is mentioned in State Street shareholders. (By the way, Vanguard has dozens of such subsidiaries - so it’s not a fact that we can count all of their holdings even approximately - even the largest ones).

Naturally, among the owners of BlackRock we find all the same people:

Add another four percent and we already get 14% of all Apple shares held by one company - Vanguard! And again, that's not all.

What else is left among the fake owners of Apple?

FMR LLC (Fidelity Management and Research), Fidelity Investments, similarly, we will find exactly identical names among the shareholders: Blackrock, Vanguard, State Street, and so on.

That is, Fidelity is again controlled by Vanguard Group!

Total: a “modest” 17% in the piggy bank.

Remarkable mutual ownership and cross-shareholding scheme. And if any of the shareholders seems not to be directly connected with Vanguard, then its shareholders are definitely under their control, and even in the third iteration (level) the same will happen.

That is, Vanguard:

1. Officially, Apple is the main shareholder. For comparison, the clown who publicly portrays Apple’s largest shareholder, Carl Icahn, has only 1% of the shares, which is five times less than this one package.

Vanguard also has the largest stakes in almost every other company that owns large shares of Apple. But even that is not enough!

Vanguard not only owns the largest blocks of shares, but also controls the shareholders of the companies from point 2.!!!

Other major corporations

This is the picture that has emerged so far in the investigation. The largest companies in the world are banks:

• Bank of America
• JP Morgan
• Citigroup
• Wells Fargo
• Goldman Sachs
• Morgan Stanley.

Let's see who their largest shareholders are

Bank of America: State Street Corporation, Vanguard Group, BlackRock, FMR (Fidelity), Paulson, JP Morgan, T. Rowe, Capital World Investors, AXA, Bank of NY, Mellon.

JP Morgan: State Street Corp., Vanguard Group, FMR, BlackRock, T. Rowe, AXA, Capital World Investor, Capital Research Global Investor, Northern Trust Corp. and Bank of Mellon.

Citigroup: State Street Corporation, Vanguard Group, BlackRock, Paulson, FMR, Capital World Investor, JP Morgan, Northern Trust Corporation, and Fairhome Capital Mgmt and Bank of NY Mellon.

Wells Fargo: Berkshire Hathaway, FMR, State Street, Vanguard Group, Capital World Investors, BlackRock, Wellington Mgmt, AXA, T. Rowe and Davis Selected Advisers.

Then check for yourself. The largest financial companies are completely controlled by ten shareholders, from which a core of four companies can be distinguished, present in all cases and in all decisions:

• Vanguard,
• Fidelity
• BlackRock
• State Street.

They all 'belong together', but if you carefully balance the shareholdings, it turns out that in reality Vanguard controls all of these partners or ‘competitors’. It turns out that the world is ruled by 4 corporations, but this is not the complete truth, because the most important of them is Vanguard.

Now let's look at the "tip of the iceberg"

That is, several selected as the largest companies in various industries controlled by these 'Big Four', and upon closer examination - simply Vanguard Corporation:

• Alcoa Inc.
• Altria Group Inc.
• American International Group Inc.
• AT&T Inc.
• Boeing Co.,
• Caterpillar Inc.
• Coca-Cola Co.,
• DuPont & Co.,
• Exxon Mobil Corp.,
• General Electric Co.,
• General Motors Corporation
• Hewlett-Packard Co.,
• Home Depot Inc.
• Honeywell International Inc.
• Intel Corp.,
• International Business Machines Corp.,
• Johnson & Johnson
• JP Morgan Chase & Co.,
• McDonald's Corp.,
• Merck & Co. Inc.,
• Microsoft Corp.,
• 3M Co.,
• Pfizer Inc.
• Procter & Gamble Co.,
• United Technologies Corp.,
• Verizon Communications Inc.
• Wal-Mart Stores Inc. Time Warner,
• Walt Disney,
• Viacom, Rupert Murdoch's News Corporation,
• CBS Corporation
• NBC Universal...

We have not identified the names of the people, but we have figured out the names of their legal entities a little.

It’s great to live in the 21st century when you don’t have to hunt for food or look for dead wood in the forest to heat your hut. It's much easier to get companies to do all the dirty work for us. Of course, in the modern world there are giant corporations and enterprises, and in conspiracy theories, some companies rule the world. Which of them really have a huge scope?

1.Comcast

For those who don't know, Comcast Corporation is an American telecommunications giant that claims to be the world's largest broadcast and cable television company. According to the American NASDAQ exchange, Comcast has an impressive market value of $147.8 billion. In addition, its users include more than 22 million people.

2. PepsiCo

Headquarters of PepsiCo, Inc. is located in Purchase, New York, and when you walk into a supermarket in the United States, almost every snack or drink on the shelves is owned by this one company, although it is known primarily as a rival to Coca Cola. However, if Coca Cola remained stuck in the beverage market, PepsiCo's investment outside of that market has certainly paid off, as the company makes more profit from its food brands than from Pepsi-Cola. And this makes the company the world's second largest food and beverage manufacturer.

3. Nestlé

Guess how many brands belong to the Swiss company Nestlé. 500? 1000? 2000? In fact, in total, Nestlé owns more than 8,500 food brands in more than 80 countries, making the Swiss company the number one company in the food industry. Nestlé owns bottled water companies around the world, from American favorites Poland Spring and Deer Park to Perrier in Italy and Theodora in Hungary. If you go to any country in the world and buy a bottle of water, there's a good chance it's from Nestlé. They say that you are what you eat. By this logic, you are Nestlé.

4. Kraft Heinz

In 2015, two companies, Kraft and Heinz, joined forces to create one super-conglomerate of food products. Outside the US, their food empire is less widespread, although they are making very active inroads into foreign markets. In February 2017, the company attempted to make the largest takeover of a British company in history, offering $143 billion for Unilever, but was unsuccessful. However, the Kraft Heinz alliance is clearly up to something very big.

5.Saudi Aramco

Oil companies rule the world. But do you know which one is really in charge? Saudi Arabia's state-owned Saudi Aramco is the world's largest oil company, and the supplier giant's numbers are almost unreal. Saudi Aramco is worth about $2.5 trillion. Trillions! That price makes the company four times more expensive than Apple and five times more expensive than the world's largest oil producer, ExxonMobil.

6. CME Group

The Chicago Mercantile Exchange and the Chicago Board of Trade, collectively known as the CME Group, operate the largest options and futures exchanges in the world. CME Group owns the Dow Jones stock and financial indices and has a presence in everything from agricultural commodities to rare and valuable minerals. However, most people don't even know that CME Group is one of the most dominant companies in the world.

7. ICBC

Do you know which bank is the most powerful in the world? This is the Industrial and Commercial Bank of China (ICBC). It has undergone a period of eye-popping growth, with ICBC's brand value rising 32% year-on-year and now valued at nearly $48 billion. Thanks to him, China can become the leading banking country in the world. ICBC Bank has approximately $2.95 trillion in assets and has 108 branches worldwide.

8. Internet Architecture Board (IAB)

The Internet may be a bastion of freedom and information, but such a valuable invention is also carefully controlled. And this organization is called the Internet Architecture Council. The official description of its activities sounds too complicated, but from it it can be understood that the IAB, as well as every other behind-the-scenes organization, somehow controls the Internet. In fact, the Council itself states that it strives to make the Internet a reliable means of communication with complete privacy and security.

Country: Latvia
Publication: Baltic News Network
Date of publication of the article: April 27, 2012

10 corporations that rule the world

Turns out, Most of the goods we buy are produced by just ten of the world's most powerful corporations. The huge selection is just an illusion, writes Business Insider.

For example, Unilever produces everything from Dove soap to Klondike chocolate. In its turn Nestle owns shares in L’Oreal, which offers not only cosmetics, but also Diesel jeans.

Despite the wide range of brands, in the end all sales revenue ends up in the hands of ten giant enterprises.
Original article

Corporations that rule the world

RB.ru tried to collect TNCs that have the greatest influence on the global economy

The influence of transnational corporations (TNCs) on the economies of various countries around the world is constantly growing. Today, the largest corporations can dictate terms not only to their competitors, but also to entire states - thanks to their financial power and political lobbying at the highest levels. The income of these corporations exceeds the GDP of many countries in the world, they create millions of jobs in each state, some of them are already state-forming from an economic point of view.

Based on the results of 2010, the American business magazine Forbes published a ranking of the two thousand largest and most influential companies in the world. This ranking represents companies from 62 countries. Including 515 companies from the USA, 210 from Japan, 113 from China, 56 from India, 62 from Canada.

The rating was compiled based on an analysis of the work of the world's elite companies, among which are the most successful global giants that set the tone in the industrial economy of the world. The American bank JP Morgan Chase is recognized as the most influential company in the world. The top five also included General Electric, Bank of America, American oil and gas corporation Exxon Mobil and Chinese bank ICBC.

The Partnership for a New American Economy has published an alternative ranking, The New American Fortune - 500. After the Forbes list, this is the second most important corporate ranking. At the end of 2010, it was topped for the second time in a row by the American retail chain Wal-Mart Stores with annual consolidated revenue of $421.8 billion. This is followed by the Dutch Royal Dutch Shell and the American Exxon Mobil - $378.2 billion and $354.7 billion, respectively. For comparison, Germany's budget expenditures in 2011 amounted to 305.8 billion euros (almost $438 billion).

According to experts, the corporations in this rating provided the global economy with 10 million jobs, and their total income exceeds the GDP of any country in the world, with the exception of China and Japan, amounting to $4.2 trillion. The top lines of the ranking are occupied by such companies as Apple, Google, AT&T, Budweiser, Colgate, eBay, General Electric, IBM and McDonald's.

Amazing facts

Of the 100 largest economies in the world, 52 are transnational corporations, the rest are states. Over 2/3 of foreign trade and about half of world industrial production are accounted for by TNCs. They control approximately 80% of technological innovation and know-how.

The total volume of accumulated foreign direct investment exceeds $4 trillion, and the sales volume of TNCs is 25% of the world, with 1/3 of TNC products produced by affiliated foreign structures. The sales volume of foreign structures of TNCs already exceeds all world exports.

For example, half of US export operations are carried out by American and foreign TNCs; in the UK, similar operations are carried out by up to 80% of TNCs, in Singapore - up to 90%.

Transnational banks (TNB), dominating national and international financial markets, are quite capable of changing the mutual parity of any two national currencies.

TNC enterprises employ more than 73 million people, who annually produce products worth more than $1 trillion. Taking into account related industries, TNCs provided jobs for 150 million people.

In terms of basic economic indicators such as turnover, income, number of employees, large corporations are superior to many developing countries. This is precisely the main concern of experts and analysts about the possibility of negative economic and political pressure from companies on small countries.

TNCs control individual commodity markets: 90% of the world market for wheat, coffee, corn, timber, tobacco and iron ore, 85% of the market for copper and bauxite, 80% of the market for tea and tin, 75% of the market for crude oil and natural rubber. and bananas.

Russian corporations are far from world giants

The Russian gas monopolist Gazprom took only 16th place in the latest Forbes list of the most powerful titans of the world market, although it became one of the leaders among the leading companies in the oil and gas sector. According to the publication, Gazprom's profit amounted to $24.3 billion, market value - $133.6 billion.

Russian LUKOIL and Rosneft, according to American journalists, occupy 69th and 77th places in this world ranking. The oil and gas sector is represented in this ranking by 115 companies from around the world.

Russia, like other post-socialist countries, does not play a significant role in the international movement of capital. 96-97% of international capital flows are among developed countries. Developing countries account for only 3-4%.

Impact on the world

Many multinational corporations have monopoly power. Some of them surpass countries in terms of turnover, and the heads of these companies, as a rule, do business directly with heads of state.

Transnational corporations, represented in many countries of the world, are able to influence all spheres of public life. And the largest and most powerful are even able to evade economic and political control. There have been cases in history where foreign investors have sought political support for their actions, regardless of the consequences for the local population and the welfare of the country as a whole.

Typically, such diktat is carried out with serious support from politicians, diplomats and the media. There are many examples of such activities. Thus, in 2003, the American company Halliburton signed a contract for the restoration of infrastructure facilities in Iraq for $680 million.

How one company was able to raise the personal income of an entire country

In 2003, Bill Gates paid dividends for the first time, which increased Americans' personal income by a record 3.7%. These profits ended up in the pockets of 4.6 million Americans.

Today we have top 10 most valuable companies in the world.

Today, many people will probably recognize the company logo, because Apple Corporation has truly become one of the most successful companies with a market value of more than $720.12 billion.

The company was founded on April 1, 1976 by Steve Wozniak, Ronald Wayne, and Steve Jobs. Initially, the trio began assembling home computers and producing their own PC models, but the greatest success came precisely in the last years of the company, when Apple introduced the world to its line of mobile products - iPhone smartphones and iPad tablets.

Today, the company’s range of products is very wide – smart watches, computers and laptops, tablets and smartphones, etc. But the main feature of the popularity of Apple gadgets was the high quality, stylish design and the smartest marketing program of Steve Jobs.

Today the company includes thousands of representative offices, branded stores and service centers around the world, with a staff of about 132 thousand employees.

The headquarters is located in the USA, in Cupertino, California.

$482.36 billion

Industry: Insurance, finance, railway transport, utilities, production of food and non-food products.

The company is known for its permanent owner, American investor and entrepreneur Warren Buffett. The headquarters is located in Omaha, Nebraska, USA.

The cost of one share of this company is $293,750, making it the most expensive share in the world.

Affiliated companies:

• GEICO (auto insurance);
• General Re (reinsurance);
• Berkshire Hathaway Primary Group (insurance);
• Berkshire Hathaway Reinsurance Group (insurance and reinsurance);
• BNSF - (railway transport);
• Berkshire Hathaway Energy (electricity and gas supply);
• McLane Company (wholesale).

In 2015, the number of participants in the annual meeting of shareholders exceeded 40 thousand people.

For this reason, the company's shareholders' meeting received the humorous nickname "Woodstock for capitalists."

$413.25 billion

Industry: Internet.

Facebook was developed by Mark Zuckerberg in February 2004. Today, the social network Facebook is visited by over 1.86 billion people every day. For one Internet project, with a market value of 413.25 billion dollars, this is simply an astronomical indicator of popularity and demand.

Today, Facebook generates more than $8 billion in net revenue per year from advertising. In addition, Facebook is the leader among this list in terms of profitability, as it increased its net profit by 54% in the last year alone.

The headquarters is located in Menlo Park, California.

$400.90 billion

Industry: Conglomerate.
Products: Social networks, instant messaging, mass media, web portals, etc.

Tencent is a venture capital firm, conglomerate, investment holding company, and one of the largest companies in the gaming industry.

This Chinese multinational investment holding company was founded in 1998. Today it ranks 7th in the ranking of the most valuable companies.

Its many services include social networking, mobile gaming, music, web portals, payment systems, e-commerce, Internet services, smartphones and massively multiplayer online games, which are among the largest and most successful in the world in their respective categories.

Tencent Seafront Towers (also known as Tencent Binhai Mansion) is headquartered in Nanshan District, Shenzhen.

$392.25 billion

Industry: Internet.
Products: E-commerce, online auction hosting, online money transfers, mobile commerce.

Industry: Banking.

JPMorgan Chase is the largest commercial bank in the United States and the 6th largest commercial bank in the world by assets.

The nucleus for the formation of JPMorgan Chase was Chemical Bank, from which it inherited its headquarters and stock price history.

Brand J.P. Morgan, historically known as Morgan, provides investment banking services, asset management, private banking, and wealth management.

Location: USA, New York, Manhattan, 270 Park Avenue.

Market capitalization as a method of estimating the value of a company

Market capitalization, along with annual income and the sum of all assets, is one of the methods for assessing the investment attractiveness of a company.

Using market capitalization to represent company size is important because company size is a major determinant of various characteristics that investors are interested in, including risk.

Being the product of the number of shares and their price, market capitalization is not the price at which the owner will necessarily sell his company.

Despite the fact that companies can be overvalued by the market or, on the contrary, undervalued, in order to obtain the real value of a company it is necessary to consider its activities from a fundamental point of view.