Attaining sustainability of industrial production based on environment focused innovations
This paper looks into the need for building up a concept and mechanism of environment focused management of industrial production development. It is critical to start using a concept of environmentally focused development, which has to replace a conventional concept of economic development, based on...
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Інститут економіки промисловості НАН України
2014
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| Цитувати: | Attaining sustainability of industrial production based on environment focused innovations / I.A. Bryzhan, R.M Lepa // Економіка промисловості. — 2014. — № 2 (66). — С. 5-15. — Бібліогр.: 26 назв. — англ. |
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irk-123456789-771962015-02-24T03:01:42Z Attaining sustainability of industrial production based on environment focused innovations Bryzhan, I.A. Lepa, R.M. Макроекономічні та регіональні проблеми розвитку промисловості This paper looks into the need for building up a concept and mechanism of environment focused management of industrial production development. It is critical to start using a concept of environmentally focused development, which has to replace a conventional concept of economic development, based on the extensive consumption of natural resources and great imprint on the environment. Instrumentally innovations are to become one of state regulation subjects within this concept, which will allow bringing the system under regulation into a new development phase. These innovations have to be environmental focused on nature and for mitigating ecodestructive impact, while promoting energy-saving technologies. To secure environmental focused anti-recessionary management of industrial production development the national economy has to adopt a sustainable development model, which can be achieved thorough designing an effective anti-recessionary state policy. The first part of the paper focuses on the theoretical background and overview of research results related to economic development processes of national economy with allowance for the ecological factor. The key element of economy is production; hence, securing a continuous industrial growth is among major issues addressed by economic science. The second part of the paper offers a mechanism of environmentally focused anti-recessionary management of industrial production development which includes seven complementary functional directions: marketing, diagnostics, forecasting, strategic goal-setting, tactical planning, organization and control. Implementation of the proposed mechanism will create sustainability of industrial production due to green innovations. Досліджується необхідність розробки концепції екологічно орієнтованого управління розвитком промислового виробництва, яка має на меті замінити традиційну концепцію економічного розвитку, засновану на екстенсивному споживанні природних ресурсів і великому техногенному навантаженні на навколишнє середовище. Реалізація запропонованої концепції надасть можливість забезпечити стабільність роботи промислового комплексу на основі впровадження екологічно орієнтованих інновацій. Исследуется необходимость разработки концепции экологически ориентированного управления развитием промышленного производства, которая имеет целью заменить традиционную концепцию экономического развития, основанную на экстенсивном потреблении природных ресурсов и большой техногенной нагрузке на окружающую среду. Реализация предложенной концепции позволит обеспечить стабильность работы промышленного комплекса на основе внедрения экологически ориентированных инноваций. 2014 Article Attaining sustainability of industrial production based on environment focused innovations / I.A. Bryzhan, R.M Lepa // Економіка промисловості. — 2014. — № 2 (66). — С. 5-15. — Бібліогр.: 26 назв. — англ. 1562-109Х http://dspace.nbuv.gov.ua/handle/123456789/77196 338.45:330.341.1:504 en Економіка промисловості Інститут економіки промисловості НАН України |
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Digital Library of Periodicals of National Academy of Sciences of Ukraine |
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Макроекономічні та регіональні проблеми розвитку промисловості Макроекономічні та регіональні проблеми розвитку промисловості |
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Макроекономічні та регіональні проблеми розвитку промисловості Макроекономічні та регіональні проблеми розвитку промисловості Bryzhan, I.A. Lepa, R.M. Attaining sustainability of industrial production based on environment focused innovations Економіка промисловості |
| description |
This paper looks into the need for building up a concept and mechanism of environment focused management of industrial production development. It is critical to start using a concept of environmentally focused development, which has to replace a conventional concept of economic development, based on the extensive consumption of natural resources and great imprint on the environment. Instrumentally innovations are to become one of state regulation subjects within this concept, which will allow bringing the system under regulation into a new development phase. These innovations have to be environmental focused on nature and for mitigating ecodestructive impact, while promoting energy-saving technologies. To secure environmental focused anti-recessionary management of industrial production development the national economy has to adopt a sustainable development model, which can be achieved thorough designing an effective anti-recessionary state policy. The first part of the paper focuses on the theoretical background and overview of research results related to economic development processes of national economy with allowance for the ecological factor. The key element of economy is production; hence, securing a continuous industrial growth is among major issues addressed by economic science. The second part of the paper offers a mechanism of environmentally focused anti-recessionary management of industrial production development which includes seven complementary functional directions: marketing, diagnostics, forecasting, strategic goal-setting, tactical planning, organization and control. Implementation of the proposed mechanism will create sustainability of industrial production due to green innovations. |
| format |
Article |
| author |
Bryzhan, I.A. Lepa, R.M. |
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Bryzhan, I.A. Lepa, R.M. |
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Bryzhan, I.A. |
| title |
Attaining sustainability of industrial production based on environment focused innovations |
| title_short |
Attaining sustainability of industrial production based on environment focused innovations |
| title_full |
Attaining sustainability of industrial production based on environment focused innovations |
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Attaining sustainability of industrial production based on environment focused innovations |
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Attaining sustainability of industrial production based on environment focused innovations |
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attaining sustainability of industrial production based on environment focused innovations |
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Інститут економіки промисловості НАН України |
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2014 |
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Макроекономічні та регіональні проблеми розвитку промисловості |
| url |
http://dspace.nbuv.gov.ua/handle/123456789/77196 |
| citation_txt |
Attaining sustainability of industrial production based on environment focused innovations / I.A. Bryzhan, R.M Lepa // Економіка промисловості. — 2014. — № 2 (66). — С. 5-15. — Бібліогр.: 26 назв. — англ. |
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2025-07-06T01:30:47Z |
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2025-07-06T01:30:47Z |
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–––––––––––––––––––––– Економіка промисловості Экономика промышленности ––––––––––––––––––––––
ISSN 1562-109X 5
2014, № 2 (66)
УДК 338.45:330.341.1:504 Iryna Bryzhan,
PhD in Economics
Poltava National Technical
Yuri Kondratyuk University,
Roman Lepa,
Doctor of Economics, professor
The Institute of the Economy of Industry
of the NAS of Ukraine, Donetsk
ATTAINING SUSTAINABILITY OF INDUSTRIAL PRODUCTION BASED
ON ENVIRONMENT FOCUSED INNOVATIONS
Today mankind faces many problems that
can not be resolved with in individual states.
The signs of civilization crisis caused by envi-
ronmental, socio-demographic, and economic
factors appear more clearly. Continued eco-
nomic development has created a series of envi-
ronmental problems - loss of biodiversity and
ecosystem services; contamination of soil, at-
mosphere, and ground and underground water
with chemicals; production of large amounts of
hazardous industrial and domestic waste; ex-
haustion and loss of fertile land.
Ukraine is not an exception; despite the
positive economic and social impact of indus-
trial production, its recovery and growth have
increased the pressure on the environment.
Moreover, the main contribution to economic
growth was made by metallurgy, chemical in-
dustry, fuel, energy and agriculture sectors
which exerted excessive pressure on the envi-
ronment in large scale and caused deterioration
of the ecological situation in Ukraine resulting
in the deterioration of human health and oppor-
tunities for further development. Today Ukraine
is among the top ten countries by the extinction
rate of people; Ukraine ranked 124th out of 194
countries in life expectancy (the average life
expectancy is 69 years). In 2011 Ukraine ranked
102 among 132 countries in the annual ranking
of countries by the index of environmental sus-
tainability taking into account the country's suc-
cess in reducing the impact of environmental
pollution as a result of economic activity on
human health and natural ecosystems. Current
ecological and economic problems become
global. Due to the large scale of the world econ-
omy ecological system became ecological and
economical and has been holding hostage by
human activity. Therefore, identifying the cha-
racteristics and factors of development, mana-
ging the balance of environmental and economic
goals becomes more important.
Economic growth and development are
among the key issues addressed in the macro-
economic studies of foreign and domestic re-
searchers. Numerous researchers have studied
the nature and causes of economic development,
wealth growth and accumulation. R. Nelson and
S. Winter [1] must be the first authors to men-
tion among the contemporary foreign resear-
chers of macroeconomic development. Consti-
tuents and prerequisites of economic growth of
the countries leading in the global economic
development were examined by M. Yershov [2].
Understanding of a strong destructive relation-
ship between the growth of global population,
increased scale of material production, coupled
with irrational consumption patterns and pro-
gressive depletion of the life-supporting poten-
tial of the planet, contributed to a range of stu-
dies addressing socio-economic and ecological
trends of global development. The following
works are among the trendiest: R. Carson’s trea-
tise “Silent Spring” [3]; marginal global de-
velopment models formulated within the Club
of Rome [4-7] kept on the traditions of
T. Malthus’s theory [8]; E. Schumacher’s trea-
tise “The small is fine: economics for man” [9];
technologic optimism models [10].
A positive relationship of technical pro-
gress and economic development is examined in
the endogenous economic growth models.
МАКРОЕКОНОМІЧНІ ТА РЕГІОНАЛЬНІ ПРОБЛЕМИ
РОЗВИТКУ ПРОМИСЛОВОСТІ
©I. Bryzhan, R. Lepa, 2014
–––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––
6 ISSN 1562-109X
2014, № 2 (66)
R. Solow [11] indicates in his works that the
governing factor of economic development is
technical progress rather than capital. B. Twiss
emphasizes the need for efficient, profit-
oriented, management of scientific and technical
innovations [12]. Therefore, it is important to
investigate the nature and specificity of an im-
pact that the innovation constituent has on sus-
tainable economic development.
Economic growth is related to a growing
impact on the environment. With this in view, it
is significant to identify key factors of economic
growth and the harmony which exists between
the economic and ecological systems [13]. The
ecological situation in numerous emerging coun-
tries is complex: the high pollution level of all
natural resources and deteriorating quality of
ecological services reflect the exacerbation of a
crisis in the interaction of society and environ-
ment; subordination of environmental interests
is allowed in order to gain economic benefits.
Excessive consumption of natural resources
keeps growing, gradually resulting in destruc-
tion of ecosystems, waste accumulation, con-
tamination of all nature components, and cli-
matic changes (UNEP Report) [14]. Existent
negative processes threaten the health and life of
population.
So, at this stage the considerable range of
theoretical and methodological guidelines and
practical recommendations for the improvement
of management and quality of economic deve-
lopment taking into account the environmental
aspects of management is accumulated in the
scientific literature. This paper looks into the
need for ensuring effective environmentally ori-
ented investment and innovation activities as a
tool of anti-crisis policy, which is very impor-
tant in consideration of economic and ecological
situation in Ukraine.
Therefore, the aim of the article is to de-
velop effective tools for managing the develop-
ment of industrial production at the level of state
social and economic institutions and at the micro
level of individual enterprises, thus achieving
the tasks of high-tech and environmental devel-
opment of the industry in the long run.
The ecological situation in Ukraine is the
most critical in Europe. In spite of the signifi-
cant decrease in the production in the industry
and agriculture the general ecological situation
in the country remains at the unsatisfactory
level. Such indices as resource expenditures per
unit of gross national product and pollution per
unit of output are several times higher in
Ukraine than in the industrially developed coun-
tries.
The main ecological problem of Ukraine
is its huge out-of-date industrial complex, which
was got as the inheritance from USSR. The de-
preciation in industry is 65%. The greatest de-
gree of depreciation of machinery and equip-
ment is in non-ferrous metallurgy (76,7%), ma-
chine building and metalworking (71,4%),
chemical and petrochemical industry (about
71%). For comparison, the degree of deprecia-
tion of fixed assets in the developed countries of
the European Union does not exceed 25%.
Table 1
The degree of depreciation of fixed assets in Ukraine, % 14
2000 2005 2006 2007 2008 2009 2010 2011 2012
Total 43,7 49,0 51,5 52,6 61,2 60,0 74,9 75,9 76,7
Agriculture, hunting and forestry 47,3 52,2 48,2 46,2 45,7 39,6 40,8 32,6 34,6
Industry 48,8 57,9 58,6 59,0 58,0 61,8 63,0 56,8 57,3
mining industry 41,8 49,6 49,9 49,8 52,9 46,1 47,8 56,3 54,1
processing industry 52,0 59,2 60,0 59,7 57,3 64,9 66,8 56,8 57,2
energy, gas and water production
and distribution
46,6 60,6 60,9 62,2 62,0 62,2 60,7 57,0 58,4
Education 40,5 59,7 61,6 57,4 57,8 62,4 62,5 43,7 43,6
Transport and communications 50,5 48,5 60,4 66,9 82,4 83,9 94,4 95,6 96,0
Health care and social assistance 37,8 47,4 45,7 44,0 43,3 46,7 50,8 42,4 42,2
Communal and individual service,
activities in culture and sport 45,5 46,6 45,8 45,5 44,2 48,5 47,4 47,1 46,7
–––––––––––––––––––––– Економіка промисловості Экономика промышленности ––––––––––––––––––––––
ISSN 1562-109X 7
2014, № 2 (66)
Industrial complex, which is placed
mainly in the east of Ukraine, annually makes
millions tons of industrial gases, millions cubic
meters of the polluted water, poisoned with
chemicals, and billions tons of industrial wastes.
Ukraine is suffering a lot of environ-
mental problems. There are many consequences
of damaging environment. One of them is the
water pollution. In total, in 2012 8,081 million
m3 of waste water was discharged into the sur-
face water bodies, which is 37 million m3 more
than in the year 2011. The discharge of waste
water according to its pollution category was
as follows: polluted water – 1,521 million m3
(91 million m3 less than in 2011) including un-
treated polluted water – 292 million m3.
Table 2
Dynamics of waste water discharge into surface water bodies in Ukraine, million m3 15
2000 2006 2007 2008 2009 2010 2011 2012
Amount of waste water 10964 8824 8917 8655 7692 8141 8044 8081
polluted 3313 3891 3854 2728 1766 1744 1612 1521
without treatment 758 1427 1506 616 270 312 309 292
The biggest volume of polluted waste wa-
ter was discharge by water users of Donetsk re-
gion – 554 million m3 (36% of total amount of
polluted waste water), Dnipropetrovsk region –
471 million m3 and Odessa region – 117 million
m3. Major water polluters are industrial enter-
prises – 910 million m3 (mainly, by effluents
discharged by electric power producers, steel
metallurgy and coal industry in the cities such as
Zaporizhzhia, Dnipropetrovsk and those of the
Donetsk region) as well as by the housing sector
and municipal utilities – 596 million m3. It
should be noted that the quality of waste water
largely does not meet established standards for
MAD (maximum allowable discharges), and in a
number of regions substandard operation of
sewage treatment works is observed, and some-
times they do not function at all. The Dnipro and
other rivers are in danger. They are filled with
poison: industrial waste, all kinds of chemical
elements and pesticides. Industrial enterprises of
large cities discharge harmful substances into
river and sea waters. Most of waste water treat-
ment facilities in Ukraine are outdated and work
with low efficiency of removing nitrogen and
phosphorus. Ukraine releases polluted water,
heavy metal, organic compounds, and oil-related
pollutants into the Black Sea.
Another problem is air pollution. An in-
dustrial and intensively farmed country, Ukraine
contains some of the most polluted landscapes in
Eastern Europe. Coal-using industries, such as
metallurgical coke-chemical plants, steel mills,
and thermal power plants are major sources of
high levels of uncontrolled emissions of sulphur
dioxide, dust, unburned hydrocarbons, and other
harmful substances. In 2012 the total emissions
of pollutants and toxic substances into the at-
mosphere were 6821,1 thousand tons including
4335,3 thousand tons from stationary sources
(various businesses), and 2485,8 thousand tons
from mobile sources (vehicles) (figure 1).
Mining industry and energy production
are the main pollutants of the atmosphere. Met-
allurgical enterprises are accounting for 35% of
the total emissions (figure 2).
Presented information proves that the en-
vironmental situation in Ukraine is complicated:
high pollution of all natural resources and reduc-
tion of quality environmental services reflect the
deepening crisis in the interaction between the
society and environment, the subordination of
the environmental interests to economic bene-
fits. Excessive exploitation of natural resources
continues to increase gradually leading to the
destruction of ecosystems, the accumulation of
waste, pollution of all components of nature and
climate change. Negative processes in the envi-
ronment threaten the health and life. That’s why
current system of recourse use management,
protection and reproduction of resources, the
efficient of functioning of which is a necessary
prerequisite for ensuring environmental security,
sustainable economic and social sectors deve-
lopment, needs to be reformed in Ukraine. The
reforms are needed due to the fact that in the
past large-scale transformation of natural
resources systems, use of significant volumes
–––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––
8 ISSN 1562-109X
2014, № 2 (66)
Figure 1. Trends in emission of harmful air pollutants in Ukraine
(calculated by the authors based on 14)
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2000 2001 2002 2004 2005 2006 2007 2009 2010 2011
Agriculture, hunting and
related services
Forestry and related services
Fishing
Minning industry
Processing industry
Water, energy and gas
production and distribution
Construction
Transport and
communication
Other activities
Figure 2. Dynamics of air pollution in Ukraine, thousand ton 14
of natural resources for the economy, water and
air pollution caused deterioration of the natural
resources availability potential of Ukraine. Sig-
nificant anthropogenic pressure led to further
deterioration of the conditions of ecosystems
and decrease of living quality.
An increased number of strategic studies
aim to overcome aggravating problems associ-
ated with the ecological confines of economic
growth and promote a sustainable development
concept to increase production efficiency,
change the consumption pattern towards opti-
mized use of resources, and depart from mate-
rial-intensive economic growth and maximal
reduction of waste accumulation [16]. In other
words, the basis of sustainable development is
the ‘greening’ of economy, creation and devel-
opment of the so-called ‘green’ markets. The
following priority directions of the sustainable
y = 30,622x + 4083,3
y = 65,072x + 1862,1
0
1000
2000
3000
4000
5000
6000
7000
8000
тис.т .
Years
Emissions of
pollutants
from stationary
sources
Emissions of
pollutants
from mobile
sources
Linear
approximating
curve
–––––––––––––––––––––– Економіка промисловості Экономика промышленности ––––––––––––––––––––––
ISSN 1562-109X 9
2014, № 2 (66)
economic growth concept that need concerted
actions at the international level are identified:
1) promotion of more rational (thrifty) use
of energy and natural resources, which will
equally reduce the imprint and improve the
competitiveness of the industrial sector of econ-
omy;
2) maximum possible reduction of waste
generation at the all stages of the product life
cycle. First, it can be achieved by decreased
production waste ‘at source’ by developing and
implementing more advanced technologies with
lesser yield of by-products, and applying more
efficient, state-of-the-art approaches to utilizing
‘end-of-pipe’ waste; second, at the expense of
utilizing consumption waste – waste products,
equipment and materials when service life is
expired;
3) development of rational consumption
patterns and improvement of ecological stan-
dards of management through target public con-
tracts and procurement, which is especially topi-
cal for countries with dominating command and
administration leverage of environmental man-
agement;
4) development of economic instruments
to motivate behavioural responses of economic
entities (both producers and consumers) by im-
plementing the policy of environment focused
on pricing, taxation, lending and deposit refund
system as additional incentives;
5) implementation of environment legal
norms in the system of social values, which will
focus people on efficient consumption priorities
with the help of educational, information and
awareness raising programs, as well as market-
ing campaigns promoting an ecological lifestyle.
The main prerequisites to sustainable de-
velopment are resource-saving and environment
clean technological innovations, as well as envi-
ronment institutional rules of business [17]. Sus-
tainable development is defined as continuous
long-term crisis-free development, and timely
introduction of innovations with an allowance
for the environment focused management vec-
tor. Environment focused innovativeness, initia-
tive and loyalty of entrepreneurship are a deci-
sive force in the formation of a socio-economic
structure that meets dominating ideas of sustain-
ability to optimize balance of economy and na-
ture. This conclusion brings us back to the con-
cept of an initiative innovative entrepreneur,
developed by J. Schumpeter [18], and the in-
vestment theory of economic cyclicality origi-
nated by P. Samuelson [19] and J. Hicks [20],
i.e., to the issue of inevitable exhaustion of loan
capital stock in accordance with cyclical devel-
opment.
The works of numerous researchers who
examined the aspects of economic development
address cyclical issues. It stems from the cyclic
nature of the development process which is ac-
companied with constant crisis phenomena and
processes. Cyclic trends of global economic de-
velopment necessitate the diagnostics of market
fluctuations and the timely response by govern-
ments to potential threats of macroeconomic
balance disturbance. The adoption of the con-
cept of an endogenous and cyclic nature of cri-
ses in the economic theory promoted the emer-
gence and development of a specialized direc-
tion of research, namely design of an anti-
recessionary policy. Developments in this field
primarily aim at preventing (where it is possible)
or mitigating such destructive consequences
of crises as inflation, unemployment and
bankruptcy of companies [21]. The variety of
available anti-recessionary programs and actions
aimed at smoothing economic system departures
from equilibrium can be combined within two
main approaches – Keynesian and neoliberal,
which are opposed by the free competition
mechanism for balancing the economic system,
and expedite state regulation of economy
through fiscal policy.
As the experience of many developed
countries (Japan, South Korea and France) sug-
gests, state regulation is the most effective
method. The majority of studies have been fo-
cused on the object of the regulation process
(i.e., labour and capital). The regulation process
has been reduced to selection of scopes and
directions of investment. Empiric studies, how-
ever, have indicated that it is the ecological fac-
tor that has become a considerable constraint for
efficient growth since the middle of the 20th cen-
tury. The factor manifests itself in reduced natu-
ral resources and deteriorated quality of conven-
tional factors (specifically labour).
The effect of economic depression is now
accompanied with the longer and acuter eco-
logical crisis. The drop in financial reserves of
–––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––
10 ISSN 1562-109X
2014, № 2 (66)
companies due to economic stagnation results in
the cost reduction of both current financing of
environmental activities and investment in de-
velopment and introduction of ecological inno-
vations. Social problems (unemployment) and
maintenance of competitiveness of domestic
producers are the priorities. Environmental ac-
tions and environment focused developments are
generally financed on the residual principle (es-
pecially in developing countries). This leads to
conservation of obsolete technologies (resource-
intensive and faulty) and total wear of fixed as-
sets, including those that are environmentally
targeted, and to the degradation of the techno-
logical base. As a result, in spite of the reduced
rate of environmental pollutant emissions in
physical terms directly during the economic cri-
sis, the yield of emissions per unit in specific
terms is growing. Due to the lack of financial
and technological capabilities, an increase in
production capacities in the future will aggra-
vate the environmental pollution situation. Thus,
to secure sustainable (continuous, crisis-free)
economic development the following tasks have
to be addressed:
reduction or elimination, if possible, of
the economic slack: time compression, contrac-
tion of peak-to-peak fluctuations;
focus on the process of innovative
changes in technological patterns according to
the development of ecological (green) economy.
Both tasks require a highly professional
coordination of actions, concentration and effec-
tive management of investment and intellectual
resources at the macro level of the national in-
dustrial complex and at the micro level of indi-
vidual companies. Introduction of innovations at
the growing phase of the economic cycle in-
creases its duration and reduces the recession (or
crisis) period. The waves of similar frequency
(length) and coinciding phases create a resultant
wave with the same frequency but multiplied
amplitude [22]. The result of superposed waves
with different frequencies depends on the degree
of discordance between the cycle phases. The
greater the phase difference the smaller the re-
sultant shift, and the closer the phases the larger
the shift. Consistent and timely introduction of
innovations secures continuous sustainable de-
velopment of the economic system in the longer
term 23. Optimal management of available
production, human, financial and intellectual
resources must support high rates of sustainable
economic development in order to maximize the
efficiency of their application in time. Reducing
the risks of uncertainty and fallaciousness of
managerial decisions, as well as avoiding un-
necessary costs related to misallocation of the
production potential, determine theoretical and
methodological provisions and practical recom-
mendations for improvement of mechanisms and
instruments of crisis management for industrial
production development.
Environment focused crisis management
of industrial production development is the tran-
sition of a national economy to a sustainable
development model that can be achieved
through the design of an effective anti-reces-
sionary state policy that secures operational sta-
bility of industrial production from a continuous
environment focused technological progress or
green innovations. The main managerial tasks at
the macro level have to be as follows:
creation of a favourable institutional envi-
ronment for ecologically focused investment and
innovation activities in the industrial sector of
economy and development of green market of
commodities and services;
control over observance of ‘ecological
norms of special nature management’ (i.e. in
commercial quantity) as a compulsory minimum
established at a legislative level by all actors of
the commodity-money relations as well as over
adequate operation of relevant economic and
social institutes in the field of environmental
management;
regulation of the economic and ecological
system with the help of ‘built-in stabilizers’,
‘fine tuning’, and ‘indicative planning’ during
recession phenomena in order to mitigate their
negative impacts.
The aim reflects a general idea of results
at which the formation and application of a
mechanism of environment focused anti-
recessionary management of industrial produc-
tion development is a target for effective man-
agement of industrial production development
securing its continuity, sustainability, and envi-
ronmental friendliness. The mechanism of envi-
ronment focused anti-recessionary management
of industrial production development is shown
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ISSN 1562-109X 11
2014, № 2 (66)
in Figure 3.The overall structure of the mecha-
nism includes:
social and economic institutes which pro-
vide for its organizational form and are man-
agement subjects that operate the mechanism
of environment focused anti-recessionary
management of industrial production develop-
ment;
management instruments – evolutionary
methodology, economic and mathematical
methods, indicative planning and market man-
agement instruments which secure the achieve-
ment of the goal of sustainability and environ-
mental friendliness of industrial development;
management objects – intellectual capital,
financial capital, time – resource support to the
eco-innovative type of industrial production de-
velopment. The given mechanism is created and
employed to exert a targeted influence on these
objects.
Figure 3. Mechanism of environment focused anti-recessionary management
of industrial production development
Social and economic institutes of envi-
ronment focused anti-recessionary management
of industrial production development include:
specialized public institutions (ministries
and departments) that shape and implement the
national economic policy including the indus-
trial, fiscal, and environmental policies. Such
national institutions in Ukraine include the
Ministry of Economic Development and Trade
of Ukraine, the Ministry of Ecology and Natural
Resources of Ukraine, the Ministry of Revenue
and Duties of Ukraine as well as their subor-
dinate establishments and departments. The
management subjects at the regional level are
Oblast State Administrations, City Administra-
tions and territorial subdivisions of specialized
public institutions;
international, national and regional deve-
lopment banks – specialized public (and some-
times private) investment as well as financial
and credit institutes engaged in long-term len-
ding to industry;
Mechanism of environment focused
anti-recessionary management
of industrial production development
INTELLECTUAL CAPITAL
FINANCIAL CAPITAL
TIME
MARKETING
DIAGNOSTICS
FORECASTING
STRATEGIC TARGETING
TACTICAL PLANNING
ORGANIZATION
Subject to
management
CONTROL
ADJUSTMENT
Methodology
Instruments
Methods
GROUP ECOPSYCHOLOGY
ECO-TECHNOLOGICAL DETERMINISM
CYBERNETIC EVOLUTIONISM
INDICATIVE PLANNING
SIMULATION MODELING
SCENARY PREDICTION
MARKET STABILIZERS,
PROGRAMS, PLANS, STRATEGIES
ECONOMIC AND MATHEMATICAL
MODELS, FORECAST, SCENARIOS
Functional
directions
Institutions
BANKS OF DEVELOPMENT
RESEARCH CENTERS
ECONOMIC AND ENVIRONMENTAL
STATE INSTITUTIONS
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12 ISSN 1562-109X
2014, № 2 (66)
research centers specialized in develop-
ment and testing of environment friendly inno-
vations.
The methodology of environment focused
anti-recessionary management of industrial pro-
duction development is underpinned by the fol-
lowing assumptions:
1) eco-technological determinism – abso-
lute priority of environment clean equipment
and technology as crucial determinants of trans-
forming a technological pattern that is traditio-
nally antagonistic to nature and securing sus-
tainable (environmentally friendly) development
of socio-economic structures in the long term;
2) group eco-psychology – creation of a
pro-ecological active nucleus of socially respon-
sible business, which represents the industrial
sector of economy and acts in commodity-
money relations as well as introduces and adopts
environment based institutional rules of market
management as generally accepted principles of
business culture 24;
3) cybernetic evolutionism – manageabi-
lity of a process of gradual (rather than spas-
modic) qualitative transformation of cause and
effect relations in industrial production, similar
to closed cycles of substances and energy, and
waste-free reproduction of wildlife based on
ecologically clean symbiosis of biotic as well as
electronic and mechanical systems.
Mechanism of environment-oriented anti-
recessionary management of industrial produc-
tion development includes seven complementary
functional directions. Management process of
modernization and greening of the industrial
sector and effective positioning on investment,
innovative and consumer markets is provided by
conducting functional directions: marketing,
diagnostics, forecasting, strategic goal-setting,
tactical planning, organization and control.
Functional component ‘marketing’ for-
med the basis of information survey on the ex-
ternal object management and covered the fol-
lowing spheres 25:
scientific and social programs and other
initiatives on development ecology-oriented in-
novation and reducing anthropogenic influence
on the environment;
environmentally-oriented investment pro-
jects at local, regional, national and international
levels are of high priority for sustainable indus-
trial development;
market of environment focused innova-
tion of all types (raw materials, technology,
equipment, finished product);
market of natural resource, sources of
clean energy, quotas for emissions of pollutants
into the environment;
market and administrative incentives for
ecological industrial modernization (preferential
taxation, loans, mortgage-back system, limits,
etc.).
Functional component ‘diagnostics’ is fo-
cused on collection and analysis of information
on national industrial complex in general and its
sectors with the aim to identify economic and
environmental problems and to find the best
ways to overcome them.
To insure the environment-oriented anti-
recessionary management of industrial deve-
lopment it is recommended to use systematic,
problem-based, normative and situational me-
thodological approaches of diagnostics 26.
The system-based approach should be
used at the initial stage of diagnostics (introduc-
tion). It will provide a comprehensive analysis
of linkage between economic and environmental
components of industrial relations and elements
of industrial complex (branches and enterprises).
After receiving general vision about industrial
complex as a subject to management a proble-
matic diagnostics needs to be done. At this stage
the management situation is examined by mo-
deling of different combinations of economic
and environmental problems which can occur in
the process of the industrial reproduction.
Establishing main interrelations, getting
comprehensive insight into industrial produc-
tion, and fixing a hierarchy of existing problems
impede sustainable and ecologically safe deve-
lopment. The creation (or selection if available)
of an economic and ecological production rela-
tions benchmark secures the optimal reproduc-
tion level by maximizing economic profits while
minimizing ecological losses.Achievement of
this benchmark will be a target of subsequent
strategies and plans of environment focused an-
ti-recessionary management. Thus, the next
stage of diagnostics is identification of devi-
ations of the object state from the standard de-
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ISSN 1562-109X 13
2014, № 2 (66)
termined by established quality indicators – a
normative approach.
After selecting the optimal development
strategy among the available alternatives its
efficiency must be accessed by quality criteria at
check points, which correspond to certain time
periods allocated to implementation of individu-
al programs and activities.It is topical to apply a
contingency approach of diagnostics.The state
of the controlled object is assessed for com-
pliance with specificity of a particular situation,
which is a unique link of a continuous chain of
different management situations that form a
process of environment focused anti-reces-
sionary management of industrial production.
‘Forecasting’ is used for the pre-evalua-
tion of anticipated development prospects and
risks of industrial production, as well as market
trends for the future, by two aspects:
search forecasting of the economic and
ecological state of the management object if the
trends observed in future persist, i.e. according
to the so-called inertial development scenario
which does not imply any outside interference in
the processes;
normative forecasting specifies benefits,
risks, their probability and methods for optimal
achievement of the target economic and ecolog-
ical state of the management object on the basis
of predefined criteria 26.
‘Strategic goal-setting’ of environment
focused anti-recessionary management of indus-
trial production is a complex of economic, so-
cial, and ecological goals and principles, which
meet strategic provisions and the nature of
addressed tasks that reflect the main idea of a
managerial impact. Monitoring of economic
development stages is an important instrument
that secures the achievement of the tasks set.
It is assumed here that an active state policy is
implemented at the downturn and recession
stage, whereas substantial liberalization takes
place during the prosperity and stabilization
periods.
‘Tactical planning’ expresses a strategy
which envisages its refinement: detailed elabora-
tion, specification, adjustment, supplement of
tasks, their execution periods, actual contractors,
volumes of required resources and their alloca-
tion within the time period that is a planning
horizon. This depends on the necessity to adapt
to the changing internal and external environ-
ment of the management object.
Such functional direction as ‘organiza-
tion’ governs constant and temporary interac-
tions between structural elements of the indus-
trial complex and socio-economic institutes of
the management superstructure and determines
the procedure and conditions of:
organization of the infrastructure and op-
eration of the market of environment focused
innovations;
reorganization of the current technologi-
cal platform of management and industrial use
of natural resources on the basis of its upgrading
and becoming green.
‘Regulation’ aims to prevent departures of
industrial production from standard operational
conditions, liquidate their adverse consequences
and exert a corrective influence on the manage-
ment object to bring it back to standard. Thus,
regulation of the trajectory and targeting of in-
dustrial production development, with the help
of the proposed mechanism of environment fo-
cused anti-recessionary management, implies
alternation of two interrelated functional direc-
tions: control and adjustment. Both activities
have to be carried out on the basis of transparent
quality indicators to define the level and envi-
ronmental friendliness of industrial develop-
ment.
Resume. In the early 1960s mankind no-
ticed an increased negative anthropogenic im-
pact on the environment and began to actively
discuss consequences of global ecological crises
such as acid rain, smog, ozone holes, green-
house effect, and meltdown of polar glaciers and
loss of biodiversity. The optimal use of natural
resources and mitigation of negative environ-
mental impacts are important for survival of all
people. Researchers then forecasted that wastes
and emissions would have grown 2-3 times by
the early 21st century.
The sustainable development concept for
a well-balanced combination of economic, so-
cial and ecological development secures conti-
nuous economic growth and development. It is
proposed to handle the issue of continuous eco-
nomic growth and development within the
framework of the given concept that implies
effective state regulation of economic processes,
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14 ISSN 1562-109X
2014, № 2 (66)
with account of social and ecological specificity
of individual countries.
The growth continuity process is very
complicated due to the market economy cycli-
cality. This property brings about deceleration
and relapse of many economic processes. There
are two extreme viewpoints regarding the poten-
tiality of continuous growth: the concept of
‘non-interference’ in market processes as well as
state regulation and support of economic
growth. The majority of developed countries
experienced that state regulation is the most ef-
fective method. Public policy must focus on the
efficient use of innovation for economic devel-
opment, support better financing of the research
sector, and promote production and creation of
cooperation centers to successfully overcome
the financial crisis. Allowance for the ecological
imperative in the management of the national
economy has to be a distinctive feature of the
process.
The process to secure sustainable (conti-
nuous, crisis-free) economic development is to
reduce or eliminate economic slack and focus on
innovative changes to technological patterns for
development of an ecological (green) economy.
A mechanism for environment focused anti-
recessionary management of industrial produc-
tion development was elaborated, underpinned
by: the methodology of eco-technological de-
terminism, formation of group eco-psychology,
and cybernetic evolutionism.
Socio-economic institutes must build up
their organizational forms, serve the manage-
ment subject, and ensure high quality manage-
ment by upgrading the processes of the industri-
al sector. They must introduce an effective
orientation on the investment, innovation, and
consumer markets. The following important
functional directions are proposed as a part of
the mechanism for environment focused anti-
recessionary management of industrial produc-
tion development:
environment focused marketing of the
raw material, investment, innovation, and con-
sumer markets;
range of diagnostic approaches: system,
standard, contingency, and problem;
search forecast of the economic and eco-
logical state of the management object, if the
trends under the inertial development scenario
persist, and normative forecast of the target eco-
nomic and ecological state of the management
object based on pre-established criteria;
strategic target setting and tactic planning
of environment focused anti-recessionary man-
agement of industrial production;
organization of constant and temporary
interactions between structural elements of the
industrial complex and socio-economic insti-
tutes of the management superstructure;
regulation of the trajectory and targeting
of national economy industrial sector develop-
ment.
Implementing the proposed state policy of
encouraging environment focused investment in
the long run (over 10 years) will offer an oppor-
tunity to initiate a multiplier effect of emerging
and expanding green innovations among micro
level economic agents. As a result of large-scale
development of unique hi-tech products and
their expansion on the market, coupled with
greening of the life cycle, a conventional re-
source-intensive technological pattern will be
transformed into ‘environment clean’. This, in
turn, will develop a green gross domestic prod-
uct and secure high living standards for the pop-
ulation. In further studies the authors assessed
the long-term trends of economic and environ-
mental development of Ukraine based on the
cognitive and system-dynamic models.
In the future we are going to develop the
set of instruments of ecologically oriented man-
agement of industrial production in Ukraine in-
cluding proposals for creation of a favourable
institutional environment for ecologically fo-
cused investment and innovation activities in the
industrial sector.
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Received on 07.05.2014
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