Economists Define the Way to Improve the Quality of Life in Countries with Different Income

RUDN University economists have identified how conditions of UN Sustainable Development Goals differ in high and low-income countries. The researchers offered recommendations to increase the quality of life by 45-95%. The results are published in Risks.

Newswise — In 2015, the UN set the Sustainable Development Goals (SDGs). This concept combines an economic, social, and environmental approach and is designed to create a “better and more sustainable future for all”, that is, to improve the quality of life. SDGs imply that entrepreneurs will implement them in their corporate strategies, including innovative standards, such as corporate social responsibility. However, such innovations can have a negative effect on the consumer (for example, the cost of goods will increase). RUDN economists have studied this effect for countries with different levels of economic development and formulated recommendations.

“Innovative activity focused on the consumer market cannot be universal. Flexible consideration of the specifics of different societies is required, primarily their income levels. We decided to study the specifics of innovation risk management in entrepreneurship focused on the consumer market in countries with different income levels,” said Julia Ragulina, Doctor of Economics and the Head of the Compliance and Controlling Department of the RUDN University.

Economists compared two groups of countries depending on gross national income according to the World Bank. Gross national income is defined as the total value of goods and services produced in the country per year (GDP), plus factor incomes earned by foreign residents, minus income earned in the domestic economy by nonresidents. Countries with high GNI (more than $12,695 per capita) were in the first group, with an average ($1 046–$12 695) GNI comprised the second group. The data were examined statistically using regression analysis. It allows you to determine the influence of several independent variables on one parameter. For each group of countries, the RUDN economists identified two regression dependencies — the dependence of the quality of life on competitiveness and corporate responsibility and the dependence of competitiveness and corporate responsibility on the level of innovation. The corresponding global indices were used for the estimates.

It turned out that in countries with high GNI, corporate social responsibility does not determine the quality of life. From the point of view of achieving the SDGs, only competitiveness matters in the entrepreneurship of these countries. In countries with an average level of GNI in this area, neither competitiveness nor social corporate responsibility are decisive. This proved that the approach of the SDGs should be different in countries with different levels of GNI. In addition, this makes it possible to formulate recommendations separately for two groups of countries. For example, in countries with high GNI, it is recommended to increase the global innovation index by 42.33%, and in countries with average GNI – by 247.67%. If these recommendations are followed, the quality of life should rise by 44.95% and 98.69%, respectively.

“Our recommendations are aimed at improving the risk management of innovative activities focused on the consumer market. Their practical implementation should increase the quality of life index by 44.95-98.69%,” said Julia Ragulina, Doctor of Economics and the Head of the Compliance and Controlling Department of the RUDN University.