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This project comprises of the construction of a technological city 15 Kilometers from Moscow that will bring together Russian scientists, multinational companies, financial institutions and government bureaucrats (Freeland, 2011). The intent is to reduce bureaucracies, eliminate visa requirements and other limitations on foreigners, and provide an environment that supports innovation with entrepreneurship in order to propel Russia to the position it deserves as an international leader. MIT, Intel, Google and Nokia are among the multinational firms that agreed to cooperate in the Skolkovo project. However, in her review of the project, Freeland (2011) voices the worries of many Russians who suspect the project is more likely to fail rather than succeed. Assuming Russia overcomes all local hurdles pointed out in the Freeland review, the likelihood that resulted Russian Hi-tech products will succeed in the global economy will depend not only on their merits but also on the image of Russia as a source of technologically advanced products. This image is the subject of this paper.

The second half of the 20th century saw the emergence of multinational and even global companies, where a multinational company is one with operations in a Israel D. Nebenzahl is a Professor of Marketing, Dean of the Faculty of the Social Sciences & the Humanities and Head of the MBA Program at Ariel University Center. He has published numerous papers relating to consumer perceptions of brands and countries and a co-authored the book National Image & Competitive Advantage:

The Theory and Practice of Place Branding.

number of countries while maintaining its allegiance to its original home country and a global company has no national allegiances. Given that by now such firms are dominant in the global economy, the question has been raised whether national image still plays a significant role in the global economic arena. This question is answered in a recent special issue of International Marketing Review (2011). It is interesting to note that while the contributors to this special issue argue whether the origin of the product is more relevant or the origin of the product's brand, there is a consensus that perceptions about the country associated with a market offering and its image do impact consumers' attitudes and, eventually, purchase decisions (Usunier, 2011).

Given that Russia intends to be a major player in the global economy, it is essential to consider the image of Russia in the eyes of Western consumers. The purpose of this paper is to shed some light on the concept, and its measurement while reviewing studies that assessed the image of Russia and discuss their ramifications to the Russian economy.

By "national image," "country image (CI)," or "country-of-origin (COO)" we refer to the perceived properties of a country as the origin of a brand or as a source for products and services in the eyes of buyers (consumers or industrial buyers). Such perceptions were shown to influence the demand for the considered products and services (Nebenzahl and Jaffe, 1993). In the following sections we describe how the measurement of CI has evolved. In parallel, we present measures of the relative image of and of Russia and its predecessor, The USSR.

We do not consider the image of a country as a political entity per se, even though the political image may impact a country's image as defined above. It is sufficient to note that following the collapse of the Soviet Union, efforts by the Russian administration, and in particular under the leadership of Putin, to improve Russia's political identity, as perceived by the West, have not succeeded and this image is still negative (Fekliunina, 2008). As a result, if political image of Russia has any impact on the country image as a source for products, it can be only negative.

Measuring Country Image and the Relative Image o Russia Historically, studies that included products made in the USSR and other Eastern European countries have typically rated these countries relatively low. For example, in an early study, Chasin and Jaffe (1979) compared industrial buyers' perceptions of ten product attributes, such as durability, of products made in the USA with those made in a number of Eastern European countries. Only products made in Eastern Europe that actually had presence in the American market were included.

Yet, most responding buyers never considered purchasing Eastern European made products, thus, their rating were based on country image rather than on experience.

While the USSR was rated at par or above the other Eastern European countries, it was rated far below the USA on all measured attributes. The authors conclude that if the USSR intends to increase its market share in the USA, efforts should be made to improve its image.

It has long been debated in the literature whether CI is a summary or a halo construct (Han, 1989). The summary construct assumes that past experience with products of a certain country are summarized in the minds of consumers to form their opinions and attitudes towards the country as a source of such products. Facing a new product, or brand, with which he has no familiarity, the consumer generalizes his past experience to the new product. For example, finding over the years that Japanese products purchased in the past are of high reliability, the consumer will expect an unfamiliar brand made in Japan to be highly reliable. For CI to effect consumers' choice, prior experiences should be consistent. The halo construct assumes that past experience is not required. Instead, the consumer projects his overall impressions about a country to its products. For example, a consumer who perceives Japan to be a highly developed country will assume that its products are of high quality. Jaffe and Nebenzahl (2006) claim that both constructs are valid, depending on the prior knowledge of the consumer. Following the halo construct, when the consumer has no prior knowledge about the true attributes of products made in a certain country, he will still form his attitudes on the basis of his overall impressions about that country.

As products made in that country become available in the market place, consumers gain experience and given reasonable consistency, attitudes change to be consistent with experience and the summary construct dominates.

Considering the discussion above, it is clear that CI as a summary, which results from actual experience, is more objective than when it is based on halo alone and will be harder to change. It is, therefore, important to assess the image of Russia where its products have been available. Finland, which traditionally has served as a bridge between the East and the West with extensive imports from Western as well as Eastern countries, is, therefore, an ideal location for assessing the relative image of Western and Eastern countries. This advantage was recognized by Wood and Darling (1993) who conducted a longitudinal study, from 1975 to 1990, of Finnish consumer attitudes toward Western countries as well as toward the USSR. It is not unreasonable to assume that consumers' perceptions of Russia will follow those of the USSR. It is, therefore, disturbing to note that on all measures assessed, the image of the USSR was found to be far below those of the other countries included in the study and with a declining trend (Wood and Darling, 1993). For example, Figure 1 below shows Finish consumers' preference to buy and use products imported from each of the studied countries.

Source: Wood, Van R. and Darling, J. R. (1993). The Marketing Challenges of the Newly Independent Republics: Product Competitiveness in Global Markets. Journal of International Marketing, 1(1), p. 95.

Figure 1: Consumers' Preference to Buy and Use Imported Products.

We now turn to the economic ramifications of country image. If a country is perceived as being a better source of a certain product line than others, we would expect its products to be more desirable, that is, have a higher market price, and vice versa. Do we have any evidence that price is sensitive to levels of CI in practice? The answer can be found in the following study of the tractors market in the USA.

In December 1991 the Soviet Union collapsed and from here on we focus our attention to Russia. Johansson et. Al (1994) studied the country-of-origin effect of "Soviet Russia" on the Belarus brand of tractors in the USA farmers market. Their empirical study was conducted in 1990. By that time, the USSR had lost already its central control over its republics, which led the researchers to use "Soviet Russia" as the country cue. The study compared 8 brands of tractors, including the Russian Belarus, that were available in the Virginia, USA market. They also measured the country image of 9 countries, including Soviet Russia, as producers of tractors.

Results are presented in Table 1. It can be seen that the Belarus brand had the lowest rating on quality and familiarity while Soviet Russia was rated lowest as a source for tractors. These negative attitudes were balanced by a very low price of Belarus tractors which was about 50% of comparable tractors, yielding a relatively higher score on "value for the money" among farmers familiar with the Belarus brand. In this case poor brand and country images required 50% discount for Belarus to be at par with the higher image competition.

Source: Johansson, J. K., Ronkainen, I. A. and Czinkota, M. R. (1994). Negative Country-of-Origin Effects: The Case of the New Russia. Journal of International Business Studies, 25(1), p. 166.

In an empirical study conducted in the USA, Nebenzahl and Jaffe (1996) measured the country images of Japan, USA, Russia, Hungary and Poland as well as the brand image of Sony and GE as producers of home electronic products. They also assessed the impact of shifting production among these countries have on their respective CI. Table 2 summarizes these ratings.

Using a 13 items 6 point semantic differential scale, results range from a low of 2.57 for Sony made in the USSR to a high of 4.88 for Sony made in Japan. It is interesting to compare the ratings of the developed countries with those of the Eastern block. Japan receives the highest rating, in the 4.58-4.66 range and is followed closely by the USA with 3.81-3.99 range. In contrast, the three Eastern European countries are rated far below, all in the 2.57-2.84 rage.

It should be noted that the marginal value of Russia, computed from the rating of Sony and GE made in Russia is much higher than the image of Russia when measured independently. Indeed, the joint (brand)x(country) image is between the image of the brand and that of the country. It can be concluded that the image of a country can be improved by associating it with brands having a stronger image.

So far we discussed the impact of CI by measuring it on perceptual scales.

Johansson and Nebenzahl (1986) suggested that the effect on the expected product price of production shift from country Y to country Z can be measured by asking consumers the following question: "Assume that you decided to purchase BRAND X product made in COUNTRY Y at a price C. How much, more or less, are you willing to pay for the same BRAND X product made in COUNTRY Z instead of COUNTRY Y?" For example, "Assume that you decided to purchase a Sony VRC made in Japan at a price of $200. How much, more or less, are you willing to pay for the same Sony VRC made in South Korea instead of Japan?" Using this technique they showed that shifting production of passenger cars from the USA to Mexico would require a significant decline in the market price of the vehicles in the American market.

Source: Nebenzahl, I. D. and Jaffe, E. D. (1996). Measuring the joint effect of brand and country image in consumer evaluation of global products. International Marketing Review, 13(4), 5-22.

Table 2: The Image of Countries, Brands and Joint Country x Brand Nebenzahl and Jaffe (1993) extended the analysis of the cost of production shifts by estimating quasi demand functions. Assuming that a consumer who is satisfied by a certain price is willing to purchase at that or lower, the vertical axis represents cumulative proportion of respondents while the horizontal axis is price discount or premium. Figure 2 shows the results of shifting Sony VCRs and Sanyo microwave ovens from Japan to South Korea and West Germany. When production is shifted to Germany, more than 80% of the respondents were willing to pay the base price or more. In contrast, when production is shifted to South Korea, more than 90% of the respondents expected to get some price discount.

Source: Nebenzahl, I. D. and Jaffe, E. D., "Estimating Demand Functions from the Country-ofOrigin Effect," Papadopoulos and Louise A. Heslop, (eds.), Product-Country Images: Impact and Role in International Marketing (New York: The Haworth press; 1993), p. 173.

Figure 2: Proportion of Respondents Willing to Purchase at a given price or Most studies described above considered CI as a uni-dimensional scale. Thus, all items included in a scale were averaged to a single scale value. Being a perceptual concept, it is reasonable to assume it is multi-dimensional. This hypothesis was tested by Nebenzahl and Jaffe (1996).

Relaxing the uni-dimensional tacit assumption, Nebenzahl and Jaffe (1996) factor analyzed the 13 scale items, by country-brand combination. Similar two dimensions (factors) were found in all runs, albeit with different factor values. Figure 3 presents the resulted location of each country-brand combination in the "product value" and "market presence" two dimensional space. Sony made in Japan stands alone in the high product valuehigh market presence quadrant, indicating it has the best image. GE made in the USA stands alone in the high market presencelow product value quadrant, indicating GE has high presence in the market, but not as a top-of-the-line brand. All products sourced in Eastern European countries are located in the low product valuelow market presence quadrant, with GE to the left and above Sony, indicating that consumers are more likely to accept the sourcing of GE in Eastern countries, albeit, at a greater loss in product value and therefore, at a significant price discount. Finally, Russia, is located between Hungary and Poland in one dimension while being worst on the second, depending on the brand sourced. If GE is sourced, its image is between the other two Eastern countries in terms of product value, but with less market presence. The opposite holds for Sony. In either case, the image of Russia is still far behind the quality image of the USA and Japan.

Source: Nebenzahl, I. D. and Jaffe, E. D. (1996). Measuring the joint effect of brand and country image in consumer evaluation of global products. International Marketing Review, 13(4), 5-22.

Figure 3: A Two-Dimensional Space of Brand by Country Image.

A country may excel in the production of certain product lines and not in others. Identifying which products are associated with a country can, therefore, be another indication of the image of the country. Table 3 presents the association between some consumer product lines and the corresponding countries identified as production leaders.

Considering the top three associations, Germany is associated with 5 product lines, namely, sport shoes, cameras, consumer electronics, luxury cars and beer; the USA is associated with 4: sport shoes, cameras, computers and mobile phones; Japan is associated with 4: cameras, consumer electronics, computers and quality watches;

UK with 3: luxury cars, computers and fashion/accessories; and France with 3: sport shoes, quality watches and fashion/accessories.

Source: Time, Inc. Country Images II 1997.

Table 3 Top Countries Associated with Product Categories Thus, each of the leading Western countries is considered a quality source of a number of consumer products. Furthermore, some product lines, such as computers and consumer electronics, require similar competencies so that following the halo effect excelling in one improves the country image as a source of the other. In contrast, Russia is associated with just one product line: vodka, which is low in technology and is unlikely to be generalized to other product lines. Evidently, the association of Russia with Vodka is well known to the point that it is regularly used in the CI literature as an example for countries that consumers associate with a single product (Fetscherin, 2010). Fetscherin (2010) also asked respondents which are the best known brands of each product. The leading Vodka brand was found to be Smirnoff, a brand founded in Russia but that is presently owned and produced by a British company (Wikipedia).

So far we considered the image of the "made in" country. In addition, one can consider other roles, such as country of design, country as a source of components, and the like (Jaffe and Nebenzahl, 2006). Dzever and Quester (1999) studied the country-of-origin effects on the perceptions of Australian purchasing agents with regard to country of design and country of assembly of finished products (machine tools) or a source of component parts. Their study included three groups of countries, developed: Japan, France, USA, Sweden, Germany, UK and Norway, newly industrialized countries: South Korea, Singapore, Taiwan and Hong Kong, and industrializing countries: Brazil, Mexico, India, Russia, Thailand and the Philippines.

As can be seen in Table 4, Russia ranked last on all dimensions. It is disturbing to note that the image of Russia was found to be below those of India and Thailand.

Country Machine Tool Component parts Machine Tool Component parts Source: Adapted from: Dzever and Quester (1999). Country-Of-Origin Effects on Purchasing Agents Product Perceptions: An Australian Perspective. Industrial Marketing Management, 28 (2), 166.

Table 4: Mean quality Scores of Countries as country of design (COD) and country of assembly (COA) of finished machines and component parts In recent years, a new approach has been to consider a country as a brand, regardless of its products, and compose country brand indexes. The first index, Nation Brand Index (NBI), developed by Anholt (2003), is composed of six dimensions: exports, tourism, investment, immigration, governance, culture & heritage, and people. Each dimension, in turn, is composed of multiple perceptual questions. In deriving the country indexes, 20,000 respondents are interviewed in countries. More recently Fetscherin (2010) suggested a Country Brand Strength Index (CBSI), an index based on the first five dimensions of Anholt, but instead of measuring respondents' perceptions, Fetscherin (2010) relies on data readily available from secondary sources, such as a country's total annual per capita exports. It should be noted that both indexes are biased in favor of small developed countries. For example, small countries with limited natural resources must rely on imports and in order to maintain a balanced balance of payment, they must develop exports. On the other hand, large countries are less dependent on international trade. Yet, the overall rank of a country does provide an estimate of its CI as a brand.

Source: Fetscherin, M., (2010). The determinants and measurement of a country brand: the country brand strength index. International Marketing Review, 27(4), p. 474.

Figure 4 shows that there is a high correlation between the NBI and CBSI with two clusters of countries, leading developed Western countries in the top right quadrant having a positive value on both indexes and developing countries in the third quadrant, having negative values on both indexes. Russia is found in the second cluster, having a relatively high position among the weak countries, yet far below the leading Western countries with whom it intends to compete.

Discussion The short review of the country-of-origin literature leads to a number of observations. First, The "country of origin" may refer to the place of production, place of design, place of assembly or the place identified as the source of the brand of the product. Thus, the perceived image of a given product may be influenced by image of one or more countries. Second, the image of a country as source may be based on experiencethe summary effect. But experience is not required for the formation if CI. In the absence of experience, consumer perceptions are based on unrelated knowledge and impressionsthe halo effect. Thus, images are formed even in the absence of any true objective knowledge. Third, the image of a branded product is a function of the source country image as well as the brand image. Fourth, both CI and brand images impact the relative economic value of the related products.

Companies can charge a premium when their products are associated with high image countries and may have to provide a discount when association is with low image ones. Fifth, it takes decades to improve the image of a country.

Since the late 1970s until the late 1990s in practically all reported empirical studies that included the USSR and later Russia, their image was found to be relatively low and even the lowest among the studied countries. Furthermore, vodka is the only product identified as being Russian. Since the turn of the 21st century, Russia has not been considered to be important enough to be included among the countries whose image is studied. It had simply been ignored. Thus, the production of innovative, technologically advanced products by Russia is a required but not a sufficient condition for a Russian success in the evolving global economy. If Russia is to become a successful player in the global market for Hi-Tech products, it must improve its image. Past experience of other countries provides some clues as to how this can be done.

Jaffe and Nebenzahl (2006, 111-176) devoted two chapters of their book to a review of recent attempts by countries, ranging from New Zealand through Germany to Great Britain, to influence their respective country image. They conclude that national efforts to influence country image by conducting branding campaigns have not succeeded as yet. They explain these results by lack of cooperation by all stakeholders, inconsistent product quality levels, insufficient campaign funding and the observation that national image change is a long, rather than short term process.

Indeed, countries that initiated long-term processes, as distinct from branding campaigns, have a better track with Japan having the best record in this regard, followed by Israel.

For the first two post-war decades, Japans image was that of a source for cheap imitations of Western products. Forty years later, the image of Japan was that of a highly developed country that is the world leader in innovative high quality consumer products. This change in image is attributed to the Japanese quality control programs. Quality control was introduced to Japan in 1950 by Edwards W. Deming.

It became a national strategy that was promoted, supported and controlled by the Japanese government. The Japanese Ministry of International Trade and Industry was heavily involved in setting quality standards and monitoring the quality of exports.

By the end of the 1960s, the quality of Japanese products in terms of overall reliability reached or exceeded Western standards. The 1970s were devoted to total quality management (TQM); extending quality concepts from production processes to identifying and satisfying customers needs. It took ten more years before the image of Japan caught up and became congruent with the level of products it brought to the international market.

The Israeli image transformation is still in process. Until the 1990s Israel was perceived to be a source of agricultural produce and polished diamonds. Today it is considered, by those involved in hi-tech industries, to be a high-tech center that even challenges Silicon Valley. This change can be attributed to a number of government programs, including participation in the costs of R&D, support of technological incubators and the provision of venture capital. Leading multinational companies, including IBM, Digital, Motorola and Intel were lured by these programs and opened R&D facilities in Israel. Provision of land, participation in investment and tax breaks convinced companies such as Intel to open production facilities in the country. The association with these leading names played a major role in changing the Israeli image within these industries. This new image has probably not filtered down to the international consumer level because consumers are not aware of the connection between Israel and these brands.


The conclusions of Jaffe and Nebenzahl (2006, p. 176) can provide guidelines to Russia in its attempt to become a technological leader. First, it should be recognized that a change in country image is a slow long-term process that takes decades rather than years. Second, there should be consistency in those image attributes that are to be communicated. Third, it takes concerted effort by all involved to lead a successful change in the image of a country. Cooperation and coordination between industry, trade associations and the government are required. Last but not least, a prevailing change in country image must be preceded by corresponding actual changes in products and services. Advertising and public relation campaigns can only support real improvements in products and services by bringing them to the attention of the target markets. They cannot, by themselves, bring about a significant change in attitudes.

Considering the Skolkovo project, it should be taken as the first steps in the right direction. It is designed to lead to real improvements in Russian technological products; it is a long term project; and it is developed with the cooperation of technological leading global brands. What is still needed are additional steps that will bring these real changes and the association between the well known global brands with Russia to the attention of the global consumer market in order to improve the image of Russia. Only after improving its image, Russia would be able to reap economic premium from the new products to be developed in Skolkovo.

Bibliography Anholt, S. (2003), Brand New Justice. The Upside of Global Branding, Butterworth-Heinemann, London.

Chasin, J. B. and Jaffe, E.D. (1979). "Industrial Buyer Attitudes towards Goods Made in Eastern Europe". Columbia Journal of World Business, 14(2), Dzever, S. and Quester, P., (1999). "Country-Of-Origin Effects on Purchasing Agents Product Perceptions: An Australian Perspective". Industrial Marketing Management, 28 (2), 165-175.

Fekliunina, V. (2008), "Battle for Perceptions: Projecting Russia In the West," Europe-Asia Studies, 60 (4), 605 629.

Fetscherin, M., (2010). The determinants and measurement of a country brand:

the country brand strength index. International Marketing Review, 27(4), 466-479.

Freeland, C., (2011). "The Next Russian Revolution". The Atlantic Han, C. M. (1989), Country Image: Halo or Summary Construct? Journal of Marketing Research, 26, 222-229.

International Marketing Review (2011), 28(5).

Jaffe, E. D. and Nebenzahl, I. D. (2006) National Image & Competitive Advantage: The Theory and Practice of Place Branding. Copenhagen: Copenhagen Business School Press.

Johansson, J. K. and Nebenzahl, I. D., "Multinational Production: Effect on Brand Value", Journal of International Business Studies, Vol. 17, Fall 1986, 101Johansson, J. K., Ronkainen, I. A. and Czinkota, M. R. (1994). Negative Country-of-Origin Effects: The Case of the New Russia. Journal of International Business Studies, 25(1), 157-176.

Khalid I. Al-Sulaiti, & Michael J. Baker. (1998). Country of origin effects: a literature review. Marketing Intelligence & Planning, 16(3), 150-199.

Nebenzahl, I. D. and Jaffe, E. D., (1993). "Estimating Demand Functions from the Country-of-Origin Effect," Nicolas Papadopoulos and Louise A. Heslop, (eds.), Product-Country Images: Impact and Role in International Marketing (New York:

The Haworth press), 159-176.

Nebenzahl, I. D. and Jaffe, E. D. (1996). Measuring the joint effect of brand and country image in consumer evaluation of global products. International Marketing Review, 13(4), 5-22.

Time, Inc. Country Images II 1997.

Usunier, Jean-Claude (2011), "The Shift from Manufacturing to Brand Origin:

Suggestions for Improving COO Relevance," International Marketing Review, 28(5), 486-496.

Wood, Van R. and Darling, J. R. (1993). The Marketing Challenges of the Newly Independent Republics: Product Competitiveness in Global Markets. Journal of International Marketing, 1(1), 77-102.



, . II . --, , .

In article management questions by an investment portfolio of bank taking into account the international agreements Basel II are analyzed. Influence of principles of agreements on operational and market risks of banks is disassembled. It is proved that application theories of portfolio will promote decrease in risks and performance Basel II. In article recommendations about application theories of portfolio of Elton for the purpose of management of investment risks of bank are resulted.

The first international convergence of banking capital, also known as Basel I, was accepted in 1988. However, Basel's capital requirements were not virtually sensitive to risk, and it became their basic lack. Contradictions, therefore, originated in portfolios and banking capital management practice.

Thirteenth principle of "Core principles for effective banking supervision" is read as follows: "Banking supervisors must be satisfied that banks have in place a comprehensive risk management process (including appropriate board and senior management oversight) to identify, measure, monitor and control all other material risks and, where appropriate, to hold capital against these risks".

The final edition of capital requirements system was bound in June, 2006, also known as Basel II. The basic element of the new convergence is minimal capital Marina V. Pusanova, The financial director UralstroyGroup, Russia, email: mvpuzanova@gmail.com Alexander N. Nepp, Associate professor, International Business Department, Ural Federal University named after the First President of Russia Boris N. Yeltsin, Russia, PhD, email: anepp@inbox.ru requirements as well as Basel I. But in the new document these requirements are considered through a prism of the risks that banks assume. This important improvement gave impetus to the business process perfection in banking activity by means of banking risk-management higher-ranking.

The banking investment activity is one of the risk direction which is necessary build on foundation of Basel II. Banks are minimize risks by means of portfolio theory and competent management of investment portfolio [4]. This is characteristic of another institutional investors including insurers, non-governmental pension funds, investment funds. [5] At present financial institutes are use The International Convergence of Capital Measurement and Capital Standards: a Revised Framework.

The convention includes three parts: the minimum capital adequacy requirements, the supervisory process, the disclosure of information to support market discipline.

The minimum capital is depend on value of risks which are taken by banks, thereby a bank is cover unexpected losses by own funds [5], so the ratio of aggregate capital to assets is not to be below 8%.

The Basel II is define operational risk as a risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

The framework outlined below presents three methods for calculating operational risk capital charges in a continuum of increasing sophistication and risk sensitivity: the Basic Indicator Approach; the Standardised Approach; and Advanced Measurement Approaches (AMA).

Basel Committee is define market risk as the risk of losses in on and offbalance-sheet positions arising from movements in market prices, including interest rates, exchange rates and equity values.[2] The basic thrust of the proposals is to require capital requirements for open positions in debt securities, equities and foreign exchange. Committee of Banking Supervision must have determination authorities of limits or capital requirements covering of market risk. Capital requirements for market risk are analyze according to operation which are entered on banking trading accounts.[1] Basel II make changes conserving trading portfolio operation with according capital assessment. Valuation methodologies:

1. Marking to market (marking-to-market is at least the daily valuation of positions at readily available close out prices that are sourced independently.

Examples of readily available close out prices include exchange prices, screen prices, or quotes from several independent reputable brokers);

2. Marking to model (where marking-to-market is not possible, banks may mark-to-model, where this can be demonstrated to be prudent. Marking-to-model is defined as any valuation which has to be benchmarked, extrapolated or otherwise calculated from a market input. When marking to model, an extra degree of conservatism is appropriate);

3. Independent price verification (independent price verification is distinct from daily mark-to-market. It is the process by which market prices or model inputs are regularly verified for accuracy. While daily marking-to-market may be performed by dealers, verification of market prices or model inputs should be performed by a unit independent of the dealing room, at least monthly. It need not be performed as frequently as daily mark-to-market, since the objective, i.e. independent, marking of positions, should reveal any error or bias in pricing, which should result in the elimination of inaccurate daily marks.

Valuation risk of the investment project can be according to market risk Banks, thereby, must create capital reserves to afford liquidate valuation risks of investment portfolio. Attrition of frozen and low-profit assets have a positive result on a banks velocity and profit.

Usage of portfolio theory in portfolios investments formation does not save banks of portfolio daily revaluation, but it does not append complexity to a technical servis.

The Second Pillar Supervisory Review Process. The supervisory review process of the Framework is intended not only to ensure that banks have adequate capital to support all the risks in their business, but also to encourage banks to develop and use better risk management techniques in monitoring and managing their risks.

Supervisors are expected to evaluate how well banks are assessing their capital needs relative to their risks and to intervene, where appropriate. This interaction is intended to foster an active dialogue between banks and supervisors such that when deficiencies are identified, prompt and decisive action can be taken to reduce risk or restore capital. Accordingly, supervisors may wish to adopt an approach to focus more intensely on those banks with risk profiles or operational experience that warrants such attention.

Usage of portfolio methodic and banking portfolio investment management will permit to shift into low gear of market risks. It will become a cause to nonraising of the supervisors minimal requirement to a banking capital reserves.

The purpose of Pillar 3 market discipline is to complement the minimum capital requirements (Pillar 1) and the supervisory review process (Pillar 2). The Committee aims to encourage market discipline by developing a set of disclosure requirements which will allow market participants to assess key pieces of information on the scope of application, capital, risk exposures, risk assessment processes, and hence the capital adequacy of the institution. The Committee believes that such disclosures have particular relevance under the Framework, where reliance on internal methodologies gives banks more discretion in assessing capital requirements.

The introduction of the Basels foundations is offer definite complexity.

The positive influence, thereby, of portfolio methodics to a banking market risks, value of capital reserving, relationship between banks and supervisors, investor and customer is in the lap of the future.

Stocks quotes on the Moscow Interbank Stock Exchange are accepted as the initial data from January, 01st on March, 31st 2009.

Stocks were selected to analyze from the investment portfolio of one of the Urals bank as of 2009. One week was accepted for a step of calculations.

The information about banking investment portfolio for the first quarter composed of forward echelon stocks is demonstrated in figure 1 (blue chips).




Figure 1. Portfolio structure at the beginning of April, 2009.

Portfolio yield for the first quarter 2009 is 76,06%, portfolio risk is 1,822%.

Lets find the portfolio structure by mean of Elton-Gruber-Padberg algorithm.

It is necessary to specify the risk-free return for carrying out of calculations Bondequivalent yield is called risk-free with some assumption. In the capacity of yield we accepted average rate of return of government bonds and bonds of the most reliable issuers on the Russian securities market (11 %), therefore. Lets examine a question of Eltons portfolio drawing up.

a) Equity are placed in the ordered of decreasing ratio yield to beta coefficient (RVOLi):

ri expected rate of return i-bond;

r0 risk-free rate;

iI beta coefficient.

b) Senior stock of (RTKMP) get the greatest Trejnors value.

As from this stock we will add stock one by one and formula evaluation value i 2I dispersion of a market index;

2I variance of random error.

c) Comparing sizes i with corresponding RVOLi until i less RVOLi, we will get that since i = 6 this parity changes on the opposite. Stock from 1 to 5 will not have zero specific gravity in a portfolio and the others zero. Thus, 5 is the cuttoff rate for the Trejnors ratio.

d) After that its necessary to define in what shares stock are presented in this portfolio:

Values Zi for i = k + 1..., n rely equal to zero.

To define specific gravity of the first 5 stock will enter to portfolio it is necessary to calculate sizes Zi. Values Zi for i = 6..., 10 rely equal to zero.

e) Having divided everyone Zi into sum Zi, we will get specific gravity of stock which will include into portfolio. Getting values are shares of stock in the portfolio.

Table 1. Coefficient of Elton-Gruber-Padberg algorithm [3] The structure of portfolio is represented on the figure 2.

The biggest share is assigned to 뻒s senior stock 31,6%. The s stock are next 24,4%. It is obvious, that this portfolio isnt diversified. Only 33,2% portfolios funds are invested to non-oil sector, thats why portfolios value is depend on oil price basically. Such allocation of assets is sufficiently dangerously, even issuers are reliable. Therefore in practice portfolios managing directors often neglect theoretical calculations to avoid a narrow diversification on branches. They are operate based on own intellectual conclusions.

Figure 2. The portfolios structure by Elton-Gruber-Padberg algorithm [3] The portfolios expected rate of return is calculate as a weight average value of expectation portfolio yield, on condition that the share of stock investment rate are taken as a weigher. That Eltons portfolio return is 167.7% annual. Many management companies and mutual funds would envy such value but forecast have a striking feature. They are fail. The portfolios beta coefficient is weight average value of all beta coefficients of this portfolio on condition that the share of stock investment rate are taken as a weigher. The cumulative beta coefficient, thereby, of derived portfolio p is 0,68. Its indicative that the portfolio return change is slowly than a market return The portfolio like this is conservative.

Portfolios value generated on the basis of the classical portfolio theory, has increased in a greater degree, than banking portfolio value. In spite of the fact that the bank has get impressive 76 % annual, following to theoretical calculations would lead to more considerable of 98 % annual.

This results from the fact that, first, the banking portfolio was more diversified unlike the others. After all, at formation of Eltons portfolio and Markowitzs portfolio the fundamental analysis is not considered. Results of change of portfolio value are tabulated.

The banking portfolio rate of return for the first three months 2009 has made 76,06 % annual. As we see, portfolio value changes in a step with change of an index of RTS to what factors a portfolios beta coefficients close to unit testify.

For working out of recommendations on banking portfolio investment, it is necessary to structure and subject to the analysis the committed errors. As we wrote above, the reason of errors and rate of return losses together with the increased risk of a banking portfolio, was the factor of increase of risks. Absence of actions the Savings Bank means. At purchase of actions of other bank by the recommendation the increase in efficiency of interaction between divisions of bank for the purpose of control of the risks connected with decrease of settlement value of the capital could serve.

Banking portfolio The following recommendation is strict following to results of model. The factor of subjective intervention will be reflected in increase of risks of banking portfolio management. Using portfolios theories will allow to lower banking portfolios risks, and, hence, its market risks.

According to the international convergence Basel II it will allow to lower size of the banks capital reserve according to a Part I of agreement.

At realization of components II application of offered techniques will have positive consequences: the supervisors will not have bases for increases of the minimal requirements of the banks capital reserve. From the point of view of the agreements component III regulating disclosing of the information, using the portfolios methods will be an original signal for clients and investors about banks care of minimization and risks management. Using the portfolios theories as alternative tools of formation of portfolios will allow achieving growth of efficiency and decreasing the risks of financial institutions investment that will promote of the international agreements performance.

Bibliography 1. (Amendments to the Capital Accord to Incorporate Market Risks), , 1996.

2. . . : - // . 2009. 6. . 49-55.

3. .., .. // . 2011. 3. . 52-57.

4. . : / " - III".

5. . . :

// . 2010. 6. . 3.


Introduction This paper is not strictly about the financial economics, but about the economics of influence in a global setting. The economics of influence is in reference to the issue of using mass media assets to influence foreign publics or at least publics that are physically present beyond Russias national borders. There is increasing competition for the attention and influence of international publics by different countries that traditionally engage in public diplomacy, such as France, United States and the United Kingdom. But new countries are (re)entering the scene, such as Russia and China. This tough competition produces the use of innovative means and techniques, which may not necessarily be utilised on a domestic audience.

The focus of this paper is on the use of traditional mass medium (such as TV and internet) and the more recent advent of social media, to get the official message across to international publics. Often rather innovative and eye-catching campaigns are attempted in order to catch the attention and ultimately influence the opinions and attitudes of consumers. However, ultimately is the effort and expense paying off in terms of achieving a more positive image for Russia?

An initial point of departure needs to clarify, from an official perspective, the issue of information security. This is not only the perspective of information being a potential weapon and threat against the government, but also the other side of the coin where information can be used to shape an environment that would favour them.

The doctrinal aspects and organisational questions, about how to communicate are the next subject to be broached.

There have been a diverse number of means of attempts to carry the governments message abroad. A number of these attempts, using both traditional mass media and social media shall be given, although by no means an exhaustive list.

This shall be used to try to demonstrate the different avenues and tactics that have been used to date. An analysis shall be made of the style and content of these media outlets and social media sites. What is the message of those outlets? And how is the message being relayed?

Information as a Threat and Opportunity Dr Greg Simons, Uppsala Centre for Russian and Eurasian Studies, Uppsala University, Box S-751 20 Uppsala, Sweden When one speaks of information security there is are a number of implications (See Buzan et al, 1998 for a detailed account of securitisation). Firstly, that information is some kind of threat and must be secured. Flowing on from this basic underlying assumption that something is a threat, then there is the other side of the equation, i.e. that there is something being threatened. Therefore two immediate questions need to be asked before proceeding any further, in order to get a clear understanding and perspective. How is information a threat? Another question that stems from this first question is to whom is information a threat?

It should be noted that the institution that is responsible for defining and declaring a security threat is most often the state. By the state I am referring to the work of a countrys parliament in terms of debate, declarations and laws passed.

However, in determining what is to be judged a threat and what is not, is somewhat subjective and bound to the interests of the ruling power, rather than to the national interest or in the interest of the people. Although a perceived threat is often framed as being something that will harm the national interest or peoples interest, rather than as harming the interests of the incumbent political power as this is more easily sold to the public.

One can deduce that a security threat is something that can potentially threaten the continued existence of a political entity (for the emphasis in this work is on political rather than social or economic entities), and in particular a political entity that at the time holds power. Where does information security fit into the process then? Its importance lies in the tenant that perception is more important than reality.

(Louw, 2001: 1-35) That is, people (the public) tend to react upon what they perceive as being reality rather than what may actually be the real case. Thus ones communication potential, assuming that the prerequisite tangible and intangible assets are present, is geared toward information dominance. That is, in the market place of idea, to crowd out potential competitors in order for ones own message and vision to gain the upper hand and influence the target audience.

Mass media help to shape people opinions and values through bringing what may often be events that are remote from a vast majority of a countrys population.

As such, the mass media sphere is a hotly contested arena that transcends a number of planes the political, the social, the educational and business. It is a mechanism that can unite these diverse sites and bring a common meaning. This becomes of even greater importance during times of political and economic instability.

There can be said to be, in a general sense, an association between security and stability. What is meant by this is that with security comes stability. The stability being sought and desired can be measured in both economic and political terms. For an entity seeks to be in a stable environment, which it is best adapted to, in order to maximize its chances of survival as changes to the environment entail adaptation.

And when an entity is unable to adapt to a changing environment it can be substituted by another entity that is more suited and able to make the necessary modifications.

Although at times it is necessary to embark on a course of change in order to survive.

Whether it is to ensure a stable political environment or to embark upon a course of change, an incumbent political entity needs to be able master the situation and to guide it. This is more often than not requiring that entity to control symbolism and perception, in order to first give meaning and understanding to an event as it unfolds and then to guide (or at least predict) the reaction of the public to those events. The penalty for failing to master this difficult and unpredictable process is very well illustrated by the events of Mikhail Gorbachevs Perestroika reforms in the late 1980s. Gorbachev lost control of both the symbolism and the perception of the process, the result being not only the collapse of a political system, but an entire country too. Therefore, to some extent, information cannot be regarded as being something that is strictly neutral in nature, but somewhat ideological instead.

In connection with these different aspects, which have been described above, an overarching motivation for controlling the information sphere is that a belief exists that in doing so there is greater chance of regime survivability and that political, social and economic goals are more readily realizable. These assumptions being derived from the view that by being able to determine the reality of an event by massaging public perception there is a greater possibility of being able to predict and determine events and reactions. Thereby this creates the idea that having greater control over shaping the process can be achieved through exercising a degree of communication management.

The Doctrine of Information Security (For an English translation of this policy document please see Nordenstreng, K., Vartanova, E. & Zassoursky, Y. (editors), Russian Media Challenge, Helsinki, Kikimora Publications, 2001, pp. 251-292), which was approved in September 2000, recognised that the Russian government needed a consistent approach, message and access to media outlets in order to influence domestic and international publics. Existing media outlets have been remodelled and new ones established in this regard.

Organisational Questions in Communicating the Message Public Diplomacy is Government to People communication (G2P) and not government to government. It is a foreign public and not a foreign government that is the intended object of influence. for public diplomacy to be effective there needs to be sufficient physical and psychological means to convey the desired image for the effect that is desired. By physical, this means the tangible assets that are required to send messages, TV, radio, newspapers, the internet etc. With regard to psychological means, it is those intangible assets that are required in order for a message to be successful (considering the senders agenda in this instance). Intangible assets include issues like reputation, trustworthiness, brand and message recognition.

A Russian expert in Public Diplomacy, Igor Panarin of the Russian Foreign Ministrys Diplomatic Academy proposed a five-step programme for improving Russias international image (Igor Panarins website (in Russian) can be found at http://panarin.com/. He also has a blog (in English) on Twitter http://twitter.com/i_panarin). This strategy is posted on his website, the steps include:

1) creating a new presidential advisory position that would coordinate all public information coming from the presidential administration, the government, Foreign Ministry and Security Council; 2) to create a new presidential administrative office of information analysis, and an agency for foreign political news sponsored by the state and business; 3) establish a state commission for public diplomacy, which would be composed of senior state officials from the presidential administration, government, State Duma, national media outlets and leading politicians; 4) restore to Foreign Ministry supervision Voice of Russia (radio) and RIA Novosti (news agency) from the Culture Ministry; 5) the establishment of a number of Russian NGOs, with the aim of pursuing Russias foreign policy objectives. (Yasmann, 2006) These innovations to the Russian system would theoretically allow for a greater control of the flow of information and messages to and from the state structures. This in turn may allow for a more consistent message and image coming from the government. Panarins comments seem to contradict President Medvedevs remarks about the state divesting itself of media assets. How these suggestions could be used to further Russian foreign and economic policy could prove to be somewhat problematic (owing in no small part to very diverse publics and issues).

According to World System Theory, which was developed by Immanuel Wallerstein, the world is divided into three different zones core, peripheral and semi-peripheral nations. The specific area to apply this theory is in the area of the production of high and popular culture (films, art, literature, music, TV entertainment and sport). Core nations are considered to be those that are capital intensive, high wage, high technology production involving lower labour exploitation and coercion.

The European Union and the United States are examples of core nations. Peripheral nations are labour intensive, low wage, low technology production involving high labour exploitation and coercion. Many African countries and large parts of Asia fit into this category. Semi-periphery nations display both core-like and periphery-like activities. China, India and Russia are representatives of semi-periphery nations.

(McPhail, 2010: 24-26) Core nations are able to influence the other two categories of nations through their cultural and popular production, through exporting the values and attitudes that are expressed in those products. In addition, they are able to influence the opinion and perception of core nation audiences about semi-peripheral and peripheral nations by generating news and information on them. In this instance the information is being imported for a domestic audience by core nations. Therefore, the audience is influenced by images and perceptions imposed upon the subject, if it is covered at all.

For instance Walt Disney and Astrid Lindgrens stories influenced children around the world. (McPhail, 2010: 27) The Soviet Union did possess a potential level of influence in terms of popular and cultural production, which was significantly and adversely affected by the Soviet collapse in 1991.

Outlets and Means of Mass Communication There were three key issues in particular that were being promoted for the Russian government health, education and energy security. Ketchum introduced a number of innovations in trying to get the message across to a global audience. One of these innovations occurred with the use of social media and a blog on the popular site Twitter - http://twitter.com/modernrussia. This page has attracted 1327 followers as of 9 February 2011. The page contains a number of different visual symbols for the reader, including the Russian state emblem (double headed eagle) and an outline of the Russian Federation. Modern Russia states its business and objectives as being to bring News, analysis, commentary on economic, political and social modernization of Russia from Ketchum. (From the ModernRussia page on Twitter, http://twitter.com/modernrussia, accessed 8 February 2011) The news feeds relate almost exclusively to economic and commercial matters. Issues that relate to national and international politics do not appear to be introduced.

State/owned companies and the Russian government have been hiring foreign PR companies in order to target specific audiences. One of those audiences is the business community, which is being targeted with the message that Russia is a safe and profitable country to invest. An additional message is the reliable energy supplier message, which intersects with the business community. (Kupchinsky, 2009) The nature and means of Ketchums message seems to imply that the business community is the intended target audience.

Not all efforts for improving Russias international reputation and image have been carried out by foreign PR companies. There have been a number of Russian projects that include such events as the Valdai Club, where foreign guests are invited to mingle with influential Russian policy makers and discuss a variety of subjects.

The Valdai Club website (http://www.valdaiclub.com/) describes itself as being a global forum for the worlds leading and best-informed experts on Russia to engage in a sustained dialogue about the countrys political, economic, social and cultural development.(Front page of the Valdai Club, http://www.valdaiclub.com/, February 2011) A motto appearing on the website reads fostering a dialogue about Russia. This particular project has been running since 2004. It seems to be intended to function, in terms of influencing publics, by firstly affecting the perception and opinion of key influencers who in turn (theoretically) influence a wider audience by virtue of their social/public position in their home society.

The Russia Now campaign was another attempt to influence foreign publics through the mass media. Articles were placed in mass media outlets, such as the Outpost of Change article appearing in the Washington Post. (Levchenko, 2010) This article gave the impression to the reader of openly expressed public discontent as being a model for constructive dissent in Kaliningrad. This is opposed to the more often seen and read stories featuring conflict between police and protestors during the Marches of Dissent (organised in part by the National Bolshevik Party) and the underlying theme of lack of opportunity in the freedom of expression.

As with Ketchums Modern Russia campaign that appeared on Twitter, Russia Now also uses social media as part of its means of influence and getting the message across. The Russia Beyond blog on Twitter - http://twitter.com/russiabeyond - unlike Modern Russia does actually bring up political topics and issues. As of 9 February 2011 there were a total of 620 followers of the blog. There is a much broader range of topics, everything from foreign news, culture, politics, sport, history to technology and much more. No Russian state symbols appear on the margins of the blog page, and it appears visually to be quite plain.

Russia Beyond the Headlines (part of this PR campaign) also appears on Facebook - http://www.facebook.com/russianow?v=wall. It has a following of some 3276 people (as of 9 February 2011). This is an expanded upon version (in terms of amount of content) of what appears on the Twitter blog, with some articles being generated in the mainstream mass media and being reposted. Many of the articles are drawn from the Russia Beyond the Headlines website (http://rbth.ru/).

RIA Novosti (http://en.rian.ru/) a government owned news agency operates in some 45 countries in some 14 different languages. (RIA Novosti, 2011) In 2009 RIA Novosti partnered with the Washington DC, London and Zurich based consultancy called RJI Companies. The primary contract involved organising a high-level conference on the Arctic in Moscow in November 2009. Intended messages from the event were Russia as a good international actor in terms of their environmental and energy policy. Similar conferences were planned to take place in the Middle East and the Far East. (Rettman (B), 2009) This appears to use the redefine strategy combined with transformation tactics. Russian government policy is trying to be shown as being progressive and open in two high profile issue areas.

RJI Companies also stated that there was a second contract in the making with RIA Novosti, which was to generally improve the image of Russia abroad. This included helping to portray Russia as a benign great power entitled to negotiate with the likes of the US, China and the EU on global security and energy issues. As part of this effort, it was intended to create the perception of historical precedent and a sense of legitimacy in Russia influencing neighbouring countries for the good of the world. This included creating a positive impression of the Soviet Union before and after World War Two. (Rettman (B), 2009) For this to have any chance of succeeding the messenger needs to have credibility, a believable message, a wide interest/appeal and reach (to the audience).

The creation of the English language (and later Arabic and Spanish) Russia Today (http://rt.com/) was intended to fill one of the gaps identified in the Doctrine of Information Security, the states capability to directly broadcast to an international audience. Russia Today also has a presence on social media - Twitter, Facebook and You Tube. The TV channel was launched in 2005, and now boasts having coverage on some five continents and over 100 countries. Their promotion/differentiation is the ability to show you how any story can be another story altogether. On their website is the claim to have an audience of about 200 million paying viewers among pay-tv subscribers. (Russia Today, 2011) The format of the programming appearing on Russia Today is tailored for an international (Western) audience. Figures for the potential viewership are impressive, with a very large pool of a global audience to influence. The sense of familiarity of format is intended to be the means of getting the message received with less resistance. This is tempered by an expressed suspicion that Russia Today is a propaganda tool under the control of the Russian state.

Other new ways and means are under constant development and implementation. One of these came in to existence very recently when RIA Novosti opened a new page on the social media site Facebook, called The RealRussia (http://www.facebook.com/TheRealRussia?sk=app_197936773558886). This page is in the process of being developed at the present time, and there seems to be more material on the way. According top the statistics on this page there are some people like the page and a further 6685 are talking about it (as of 22 October 2011).

The page is also is also available in Russian language (previous link is to the English language site), and this can be found at the following address http://www.facebook.com/MyCountryRussia.

According to those in RIA Novosti that are responsible for this project there is the intention to publish five to seven news items daily, which will be selected from different sources, including ministries official websites, popular media outlets and blogs. There is also the stated goal to be more interactive and responsive to those using the site. Darya Penchilova, director of RIA Novostis Internet and Social Networking Projects Promotion Division stated that RIA Novosti will be the first global news agency in Russia to launch a country page on Facebook. The main aim of the project is to supply the readers with the most interesting and up to date information a mix of tourist, sport and cultural news which is an absolutely new concept of country pages on Facebook. RIA Novosti Editor-in-Chief Svetlana Mironyuk said that if you are proud of your country, you feel you just have to tell other people about it at great length in whatever way you can. The Russia brand page will be popular because it will feature all the most significant events happening in Russia and those that directly concern it.1 Thus the site avoids more controversial as well as negative aspects and topics, such as politics. Instead there is the deliberate choice and strategy to focus on soft cultural and sporting themes as a means of generating a sense of curiosity and attraction.


Information and the mass media are viewed simultaneously as being a threat and an opportunity by the government. With the Russian government gradually recovering from the shock (economic and political) of the Soviet collapse, there was a desire, and perhaps even a need to re-engage international publics with modern public diplomacy means. The Doctrine of Information Security in the year 2000 was a tangible sign by the government of the broad information strategies to be introduced, but also to political will for doing so.

One of the neglected facets of such ventures to try and communicate an image to a target public is the role of the intangible assets (such as reputation and brand), in favour of the tangible assets (such as media outlets and the means to send the message). New and innovative communication techniques are being launched with much fanfare and high expectations. However, these tend to ignore a basic fact and limitation of communication by mass media alone. Mass media have a tendency to reinforce existing stereotypes and images in an audience and are much more problematic in being used as a means to bring about changes in opinions and attitudes of an audience.

As the number of different media outlets show, both traditional mass media and social media, there has been a lot of effort and creative energy going into the creation of the tangible aspects of the communication effort. Given the introduction RIA Novosti launches Russia brand page on Facebook, RIA Novosti, http://en.rian.ru/agency_news/20111011/167568347.html, 11 October 2011 (accessed 22 October 2011) of the Doctrine of Information Security, a coherent policy that is guiding general policy in this sphere is also present in the governments programme. Thus there has been a sustained and coordinated approach to the policy and means of communicating messages to the outside world. Russia Today is one such example of plugging the perceived gaps in the international communication sphere with ones own means, rather than relying (hoping) that the international mass media shall carry the message that they intended. The formats and styles of media content is much more oriented to an international audience than a domestic one. This has to some extent been a trial and error process, which has seen the need to refine the style in order to be seen as more credible and less propagandistic.

However, there seems to be a lack of a coherent and coordinated communication strategy, in terms of the key values, images and topics to be conveyed. Panarin suggested the need for a high level of coordination, and to move public diplomacy efforts and concentrate them in the Ministry of Foreign Affairs, in order to achieve a better effect (in terms of influence). RIA Novosti seems to be gaining one of the leading roles in regard to leading the communication programme, but there are numerous other outlets, which include efforts that are beyond direct governmental control or in the hands of foreign companies (such as Ketchum). This demonstrates the basic fact that national image (its shaping and creation) is not the sole preserve of the national government concerned. To make matters more complicated, Russia is operating in a global information environment, which is increasing more competitive and therefore there is very little to no room for error.

How have all of these diverse and various attempts served the cause of improving Russias international image? Has it worked at all, or has the exercise been a waste of time and money? A number of polls and their results have appeared in the news lately, with a somewhat mixed result. In the BBC World Service Poll (held annually), which is conducted by GlobeScan, found that Russia rose from 29th place in the previous poll to 13th place. This ranking is made in terms of thoughts and feelings of respondents on different countries influence upon the global stage. Therefore, there maybe some positive results for the Russian government and their attempts to create a more positive image of Russia. Now comes the question of whether the effort versus result ratio is ideal or not.

Bibliography Bernays, E. (Introduction by Miller, M. C.), Propaganda, New York, IG Publishing, 2005 (original 1928) Bignell, J., Media Semiotics: An Introduction, Manchester, Manchester University Press, Buzan, B., Waever, O. & de Wilde, J., Security: A New Framework for Analysis, Boulder, Lynne Rienner Publishers, Views of US Continue to Improve in 2011 BBC Country Rating Poll, World Public Opinion.Org, http://www.worldpublicopinion.org/pipa/articles/views_on_countriesregions_bt/680.php?nid=&id= &pnt=680&lb=, 7 March 2011 (accessed 22 October 2011) Cutlip, S. M., Center, A. H. & Broom, G. M., Effective Public Relations, 8th edition, Upper Saddle River, Prentice Hall, Ewen, S., PR!: A Social History of Spin, New York, Basic Books, Fairclough, N., Media Discourse, London, Arnold, Lippmann, W. (foreword by Ronald Steel), Public Opinion, New York, Free Press Paperbacks, 1997 (original 1922) Louw, P. E., The Media and Cultural Production, Thousand Oaks, Sage, McNair, B., The Sociology of Journalism, London, Arnold, McPhail, T. L., Global Communication: Theories, Stakeholders and Trends, 3 Edition, Chichester, Wiley-Blackwell, Nordenstreng, K., Vartanova, E. & Zassoursky, Y. (editors), Russian Media Challenge, Helsinki, Kikimora Publications,



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Nowadays in the situation of fierce competition among banks the increase of profitability of banks loan portfolio depends largely on good management of credit risks that is on management the risks of losses due to non-performance, late performance or incomplete performance of financial obligations. Scoring systems help to assess the degree of credit risk, to implement analysis of the borrower's creditworthiness and to make a decision on granting a loan to a particular individual or legal entity.

The scoring system is an algorithm or technique that allows the bank to assess the credibility of the potential borrower on the basis of his personal data. With the proper use of the optimal scoring system the bank has the ability to reduce the amount of overdue loans and, thus, to improve the quality of its loan portfolio, and hence its financial rates.

The topic of the article, chosen by the authors, is urgent because the problem of overdue loans exists in all banks, involved in lending, this means that their loan portfolios are imperfect and these portfolios need to be optimized to improve the Zalikhovskaya Polina the student of EM 480101 of Department of Management the foreign economic activity of enterprises of the Uralstate Federal University.

Nepp Alexander - Associate Professor of Department of Management the foreign economic activity of enterprises of the Uralstate Federal University, PhD.

financial rates and thus the financial condition of the banking institution. Application of the quality scoring system allows to solve the above-listed problems and improve the quality of its loan portfolio.

There are many different models for assessing the creditworthiness of borrowers, but the authors chose the scoring model of Sberbank for the analysis. This model is integrated, it analyzes the borrower both on the basis of a quantitative assessment of the financial condition and with the help of qualitative analysis.

Therefore the result of assessment is more comprehensive and objective, unlike other models, many of which use only one way to estimate.

Tehnique of compositing the optimal loan portfolio, proposed by the authors, based on the scoring model of Sberbank with the application of Monte Carlo method will allow banking institutions at least partially solve the problem of overdue loans and prevent possible losses on lending.

The purpose of this article is to develop and offer the best example of loan portfolio approbated on Sberbank of Russia, using its scoring model and the Monte Carlo method.

The following tasks were performed to achieve the goal of this research work:

- The nine branches of Russian economy of three groups of quality ("good", "medium" and "bad") were analysed with application of Sberbanks scoring model;

- on the basis of the results of Sberbanks scoring system analysis of brunches with the application of Monte Carlo method was proposed Sberbanks optimal loan portfolio;

- authors own optimal loan portfolio for Sberbank was performed by analyzing six different portfolios with Monte Carlo method application.

Graphically, the proposed by the authors methodology is following:

V. Development of 6 different II. Calculation of the coefficients IV. The calculation of the optimal III. The creditworthiness category Sberbanks loan portfolio with the application of Monte-Carlo Fig. 1 The method of application the scoring system as a tool of optimizing the Sberbank of Russia has developed and applies a method of determining the creditworthiness of the borrower based on the quantification assessment of financial condition and quality risk analysis. In this article, the authors have analyzed some of the branches of Russian economy in terms of quantifying estimation of financial condition.

All industries presented in this article are divided into three classes: "good", "medium" and "bad". Rating of industries is organized according to the rating of RIA- Research (Center for Economic Research) on the basis of 2010 results.

There are the following branches taken of this rating:

1) Extraction of minerals, except fuel and energy minerals, 2nd place 2) Extraction of fuel and energy minerals, 3rd place 3) Metallurgical manufacturing and production of finished metal products, 4th place 4) Chemical industry, 5th place 5) Production and distribution of electricity, gas and water, 6th place 6) Production of food, beverages and tobacco, 8th place 7) Production of transport and machinery, 14th place 8) Textile and clothing industry, 15th place 9) Manufacturing of wood and production of woodware, 16th place.

I would like to note that all of the coefficients in the table are calculated by the authors themselves according to the financial statements of organizations represented at the site of the Federal State Statistics Service1.

Table 1 Total score of branches of three groups of quality in Russian http://www.gks.ru/dbscripts/Cbsd/DBInet.cgi#1 - financial statements of the organizations, the site of the Federal State Statistics Service According to the implemented analysis of branchess creditworthiness with application of Sberbanks model, we can conclude that:

- the branch " Chemical industry " on the basis of 7 year period results applies to the I class of creditworthiness, that means, that there is no doubt about reliability in lending to this branch;

- the branches " Extraction of fuel and energy minerals ","Extraction of minerals, except fuel and energy minerals", "Production and distribution of electricity, gas and water" and "Metallurgical manufacturing and production of finished metal products" refer to the II class credit, that means, that lending to these industries requires a balanced approach, their financial condition is unstable;

- Other analyzed industries, namely: "Production of food, beverages and tobacco ", "Production of transport and machinery", "Textile and clothing industry", " Manufacturing of wood and production of woodware " refer to the III group. That means that the lending to these industries is associated with increased risk, borrowers may be in crisis condition.

There was used a Monte Carlo method to compose an optimal loan portfolio.

With the application of Monte Carlo method there were six different portfolios evaluated and was developed an optimum one with the following scheme: industry, which has the smallest share in the results of the calculations is excluded from the portfolio. Instead excluded branch, the non-added which was provided a loan from Sberbank is adding. Then the calculations are repeated.

The optimal portfolio is the one with the smallest dispersion (dispersion - is the difference in the percentage ratio in presented branches). Such a portfolio according our calculations is a third one that is displayed in Table 2.

The optimality of this portfolio can be explained due to the fact that if for any reason an enterprise of one of the branches will not be able to repay the loan, the bank's losses do not lead to such negative consequences, such as bankruptcy, because the industry doesnt occupy a significant share in the portfolio. Losses from overdue loan of one branch can be overridden in the form of income benefits received from other industries, as well as in the form of own banks reserves.

It can be confidently asserted that the application of this method by banks decrease the amount of overdue loans due to the fact that the loan portfolio will include the least risky, financially stable branches with a good level of liquidity and profitability. On the basis of proposed analysis banks have an opportunity to adjust their loan policies, to develop the future strategy of lending and increase the proportion of the most promising industries in its portfolio.

With the formation of an optimal and balanced loan portfolio the quality of such financial indicators as profitability, liquidity and financial stability increases, therefore the financial condition of the bank also improves, and this, in turn, attracts investors, off-site credit and non-credit institutions, clients to cooperate with the bank. Good financial condition of the bank has a positive effect on its image, increases the possibilities of interaction with clients and, accordingly, enables to improve its profitability.



The world economy is currently on the threshold of radical changes which resulted from ever growing economic potential of emerging countries. We witness distinctive features of the multipolar world structure. The new event shaking the world community was the emergence of the BRIC phenomenon in 2001. That is the union of 4 fast growing economies: Brazil, Russia, India and China. The BRICs format in total is the enormous centre of economic growth and political influence.

Dialog between these countries is developing quite fast while the development prospects of these countries are becoming crucial to the future of worldwide processes and relations. Thats why the BRICs union and its role in the world is a pressing and controversial issue.

The working assumption of the research is that BRIC is an informal international institute requiring the development of the so-called system-forming relations in order to become a real driving force in economic international relations.

Having examined the modern forms of countries integration as well as the origin of the very idea of the BRIC, we came to the conclusion, that currently the BRIC is neither a form of economic integration, nor an international club. There have been analyzed several approaches to understand the nature of the BRIC. They can be classified into 3 categories: economic integration, political and alternative union.

The developing format of BRIC is supposed to be a new modern form of countries association that can be called a dialog-based mechanism. However claiming to be a new driving force this mechanism has to set up a certain system between these countries.

There has been conducted a comparative analysis of the levels of economic development in the BRIC countries. Attachment B contains summary table giving key figures and international indexes. Among BRICs countries China is an unquestionable leader in terms of GDP, and now the country ranks 3d in the world (Table 1.1).

Daria A. Nikiforova student, Faculty of Economics and Management, Ural Federal University named after the first President of Russia Boris N. Yeltsin.

Elena D. Frolova professor, Dr Sc (Ec), Faculty of Economics and Management, Ural Federal University named after the first President of Russia Boris N. Yeltsin.

An export structure reflects the structure of national economy and level of its technical and economic development. Russia demonstrates a single-commodity specialization of export in raw materials (fuel and mineral resources account for almost 70%) while in China the manufacturing industry amounts to 93.5% (Table 1.2). Conditionally BRICs countries can be divided into two groups: China and India producing and exporting goods, Brazil and Russia supplying raw materials.

One of the factors promoting the BRIC fast economic growth is a significant increase in direct foreign investments inflow to these countries up to 2008 (Table 1.3).

Merchandise export, million dollars Including, %:

Agricultural products Including, %:

Iron and steel Machinery and transport equipment Source: Statistical Programm WTO Time Series Upward trends of economic growth in all the 4 countries can be fully admitted, but the rate of this growth considerably differs from country to country. Chinese economy retains the role of the main locomotive; immediately followed by Indian economy. Brazils position is weaker, Russian economy showed its vulnerability lagging behind the others in many aspects.

Since 2008 the aggregate BRICs GDP accounts for more than 20% of the world GDP level (Table 1.4). In 2008 the total share in the growth f world GDP amounted to more than 52% (Table 1.5).


Sources: World Bank World Development Indicators The 4 countries are among the top ten currency reserves holders, their proportion amounts to about 40% of the global reserves. According to IMF the output volumes in 2010 in Brazil, Russia, India and China dramatically exceeded the global level (Table 1.6). BRICs total share in world export of goods and services also demonstrates a steady growth.

Source: IMF World Economic Outlook The prerequisites for setting up an economic block within BRIC do exist. BRICs different export specializations as well as cumulated potential of economic growth lay the foundation for further development of mutual trade.

Having analyzed the current economic level of South Africa we discovered that on the whole South Africa lags behind BRICs countries in terms of growth rate and GDP volume (Table 1.7, Diagram 1.1).

GDP volumes, million dollars, Source: Statistical Programm WTO Time Series In spite of the increasing volume of mutual trade (Table 1.8), its clear that ranking South Africa alongside with the BRIC is quite artificial. However South Africas joining the BRIC may mean the demonstration of political interests and steady growth of BRICs new relations.

Source: South Africa Trade By Countries The BRIC phenomenon was examined on the subject of whether it possesses the principal characteristics of the system. In spite of numerous controversial assumptions on expansion or breakdown of the BRIC (Table 1.9), the BRIC is not breaking down but furthermore throughout the crisis period the relations between these countries have become even closer and since December of 2010 South Africa has become a new member of this group.

Table 1.9 - Different assumption of BRIC expansion or breakdown Membership Expansion Joining its efforts BRIC indeed contribute to reforming and operation of the international structures (Table 1.10). One can clearly see the similarity between BRIC, SCO and trilateral dialog IBSA (Table 1.11). All of them at least support the idea of multipolar international order and acknowledgment of the emerging countries importance. Another crucial BRICs feature is the expansion of BRICs cooperation with other emerging countries.

Table 1.10 - Interaction between BRIC and international organizations appearance unite given strictures BRICs countries demonstrate quite a wide range of similar interests. Each of them prefers to gain more significance in global management bodies and to occupy a worthy place on the economic and political arena. The assumption that BRIC is trying to transform its economic power into political influence is quite evident.

The research examines the present relationships between the BRIC and Sverdlovsk region (Table 1.12). China remains one of the leading trade partners while cooperation with India and Brazil is believed to be full of potential.

We must admit that the current goal of the BRIC is not integration, but defining joined interests and united position in the world. Consequently there is a strong necessity to regard BRIC as a modern driving force. What is more important is to highlight the role of the BRIC and its scope of importance.

In the course of the research the initial working assumption was fully confirmed.

Possessing many features typical of a system, namely progressive development, stability, integrity, hierarchy and joint goals, the BRICs group can be considered as economic system, though it doesnt possess any well-established structure and documentation.

Table 1.12 - Main indicators of international trade of Sverdlovsk region with BRIC countries, Africa In order to become a real driving force in the global economy BRICs phenomenon has to obtain some missing factors (Diagram 1.2). In general all these above-mentioned factors are necessary to call this system sound enough and to speak about its dominant influence on the world economy of 21 century.

Diagram 1.2 - Factors of transforming BRIC into the world dominating economic system 1. Joint goals 2. Interconnection complementarity 4. Progressive development 5. Stability 6. Openness




The papers are published in the original version Times New Roman. 6084 / . . . . 12.5. x.- . . 16.8.


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