National champions
National champions are corporations which are technically private businesses but due to governmental policy are ceded a dominant position in a national economy. In this system, these large organizations are expected not only to seek profit but also to "advance the interests of the nation"; the government sets policies which favor these organizations. The policy is practiced by many governments, in some sectors more than others (such as
As the policy is the collective form of inequality of opportunity, it is irreconcilable with the paradigm of the neo-liberal (or “laissez faire”) economy. It was a major part of the dirigiste policy of 1945–1975 France.
Definition
Under a national champion policy, governments expect one domestic corporation or an
As the policy is a form of enforced inequality of opportunity, it is irreconcilable with the paradigm of the liberal economy advocated by 18th century economist Adam Smith, considered to be the intellectual father of modern capitalism.[2]
European national champions
Academics often cite post-
The risk involved with such policies is exemplified by the unsuccessful challenges to IBM's period of dominance of the innovative computer market by UK's ICL, France's Bull, and Italy's Olivetti during the 1970s. Successful and rewarding challenges however are shown to be possible in recent years, as exemplified by European aircraft champion Airbus, and Chinese train champion CRRC.
Chinese national champions
In support of Jiang Zemin's aggressive promotion of overseas foreign direct investment as part of "going out," China's State Council assembled a team of 120 state-owned industry groups to be national champions between 1991 and 1997.[4] The state-owned national champions received high levels of protection, state financial support, political advice and governmental support for operating in foreign environments, and special rights of management autonomy, profit retention, and investment decisions.[5] The Chinese government also brokers partnerships between foreign investors and China's national champions.[6] In addition to CRRC, notable examples of Chinese national champions include Huawei, Bank of China, and SINOPEC.[7] Consistent with China's Belt and Road Initiative, national champions "going out" remain a Chinese government priority.[8]
During the tenure of Chinese leader Xi Jinping, China has encouraged mergers in of its state-owned enterprises, motivated by a desire to create larger and more competitive national champions with a bigger global market share by reducing price competition among SOEs abroad and increasing vertical integration.[9]
China has promoted its national champions particularly strongly since 2017, with a focus on national champions in the technology sector.[10]: 93
State-owned national champions in nonfinancial strategic sectors like energy, civil aviation, infrastructure, and strategic minerals are overseen by the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC).[11]: 79
Russian renewal
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The policy is evident variously in the 21st century: Russia is its maximal exponent among the world's
Russian President Vladimir Putin has made "national champions" a central axis of his policy. The concept was introduced by Putin in his 1997 dissertation "Strategic Planning of the Reproduction of the Resource Bases". Putin, in turn, may have gotten the idea from a textbook by University of Pittsburgh analysts William King and David Cleland.[13] Putin later expanded on the subject in an article published in 1999 in the Journal of the St. Petersburg Mining Institute.[14]
Charles de Gaulle had also advocated similar ideas when he was the president of France in the 1950s.[13]
Vertical integration
In his dissertation, Putin wrote: "The process of restructuring the national economy must have the goal of creating the most effective and competitive companies on both the domestic and world markets."
Putin's 1999 article proposes that the state should closely regulate and develop the natural resources sector through creating companies with close links to the power vertical, making the firms big enough to compete with multinationals. These companies would become "national champions", representing the state's interest in international commerce.[14]
Most national champions are likely to be 50% or more owned by the Russian government, but there is no reason why predominantly private companies could not also serve as national champions, given the right guidance and pressure.[13]
Advancing national interests
Instead of allowing the country's oligarch-controlled corporations to focus exclusively on making profit, Putin proposed that they should be used instead to advance the country's national interests, suggesting that Russia should reclaim some of the assets that were privatized during Yeltsin, and integrate them vertically into industrial conglomerates so they could compete better with Western multinational corporations.
Regardless of who is the legal owner of the country's natural resources and in particular the mineral resources, the state has the right to regulate the process of their development and use. The state should act in the interests of society as a whole and of individual property owners, when their interests come into conflict with each other and when they need the help of state organs of power to reach compromises when their interests conflict.
— Vladimir Putin[13]
One example of the concept is that energy corporations such as Gazprom should keep the prices inside Russia low, as a form of subsidy for the public, and only strive for maximal profit in foreign countries.[13]
See also
- Corporatism
- Flag carrier
- National oil company
- State capitalism
- Nationalization
- East Asian model
- Economic nationalism
- Intellectual property
- Barriers to entry
- Chaebol
References
- ^ Mariana Mazzucato (June 25, 2013). "The Myth of the "Meddling" State". Public Finance International. Retrieved January 5, 2014.
- ^ Eric Aaron, What's Right? (Dural, Australia: Rosenberg Publishing, 2003), 75.
- . Retrieved 14 September 2019.
- OCLC 1249712936.
- OCLC 1249712936.
- OCLC 1345216431.
- OCLC 1249712936.
- OCLC 1249712936.
- OCLC 1354535847.)
{{cite book}}
: CS1 maint: others (link - OCLC 1348572572.
- JSTOR jj.2915805.
- ^ background note in OECD roundtable on "competition policy, industrial policy and national champions" (PDF). Paris: OECD. 2009.
- ^ ISBN 978-0-19-534073-0.
- ^ a b Crotty, Ivor (2009-10-06). "The Stereotypical Champion". Russia Profile. Archived from the original on 2009-07-11. Retrieved 2009-07-03.