Efficiency of trade integration in the Customs Union Efficiency of trade integration in the Customs Union of the Eurasian Economic Communityof the Eurasian Economic Community

November November 14-1514-15,, 2012 г 2012 гBishkekBishkek

Prof. Bulat D. KHUSAINOVProf. Bulat D. KHUSAINOV,, Head of Department, Head of Department,

Globalization and Regional Globalization and Regional Integration Studies,Integration Studies,

Institute of Economy, MES of RKInstitute of Economy, MES of RK

Regional conference: “Influence of Russia’s joining the World Trade Organization on the Central Asia”

TableTable 1 – 1 – Dynamics of the external trade changeDynamics of the external trade changefor the countries – members for the countries – members of the Customs Unionof the Customs Union, 2001-2011 (, 2001-2011 (inin % % to to

the previous yearthe previous year))

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Belarus

Total 100,0 108,7 125,7 140,0 108,6 128,7 125,9 136,7 68,9 120,6 143,2

Kazakhstan 100,0 105,3 126,1 141,1 89,8 126,1 130,8 131,1 68,5 117,7 138,8

Russia 100,0 184,1 150,1 44,0 523,4 53,2 516,4 74,5 101,5 223,0 88,1

Kazakhstan

Total 100,0 112,0 134,1 155,3 138,7 137,3 124,8 149,1 60,7 131,9 141,3

Belarus 100,0 129,4 161,3 150,8 144,7 151,5 147,8 108,0 74,4 205,3 88,1

Russia 100,0 87,0 129,7 145,7 124,4 134,6 126,9 123,1 62,3 62,4 166,3

Russia

Total 100,0 107,9 124,9 134,6 132,3 129,1 125,7 133,2 64,3 137,3 117,6

Belarus 100,0 107,7 126,1 141,8 89,4 126,0 130,7 131,5 68,3 119,0 138,5

Kazakhstan 100,0 90,7 132,3 140,6 120,6 131,2 126,1 121,8 65,2 119,0 129,4

Source: According to data of the UN COMTRADE database and National statistics services of the countries – members of the Customs Union.

TableTable 2 – 2 – Share of the external trade of the countries – members of the Share of the external trade of the countries – members of the Customs UnionCustoms Union, 2001-2011 , 2001-2011

Share of Kazakhstan and Russia in trade with Belarus

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Kazakhstan 0,19 0,32 0,38 0,12 0,57 0,24 0,97 0,53 0,16 1,44 0,89

Russia 59,74 57,85 58,05 58,50 48,38 47,39 49,24 47,23 47,01 45,90 44,49

Share of Belarus and Russia in trade with Kazakhstan

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2001

Belarus 0,30 0,35 0,42 0,40 0,42 0,46 0,55 0,40 0,49 0,76 0,47

Russia 27,01 20,97 20,29 19,03 17,07 16,73 17,00 14,04 14,40 6,81 8,02

Share of Belarus and Kazakhstan in trade with Russia

Belarus 6,48 6,48 6,53 6,88 4,65 4,54 4,72 4,67 4,96 4,30 5,06

Kazakhstan 3,38 2,84 3,01 3,15 2,87 2,92 2,93 2,68 2,72 2,35 2,59

Source: According to data of the UN COMTRADE database and National statistics services of the countries – members of the Customs Union.

TableTable 3 – 3 – Level of trade integration of the countries – members of the Level of trade integration of the countries – members of the Customs UnionCustoms Union, 2001-2011 , 2001-2011

Source: According to data of the UN COMTRADE database and National statistics services of the countries – members of the Customs Union.

NOTE: Preference coefficient is calculated on the basis of the formula: К1 = Ti / Tw,where Ti – stare of trade partner in the trade with any state;Tw – share of trade partner in international external trade.

Preference coefficients (K1) of Belarus in trade with Kazakhstan and Russia

Preference coefficients (K2) of Kazakhstan in trade with Belarus and Russia

Preference coefficients (K1) of Russia in trade with Belarus and Kazakhstan

Kazakhstan

Kazakhstan

Russia

Russia

Belarus

Belarus

FigureFigure 1 – 1 – Mutual preferenceMutual preference coefficients coefficients ((КК22) ) in external trade for Belarus, in external trade for Belarus,

Kazakhstan and RussiaKazakhstan and Russia, 2001–2011, 2001–2011

Source: According to data of the UN COMTRADE database and National statistics services of the countries – members of the Customs Union

Belarus and Kazakhstan Kazakhstan and Russia Belarus and Russia

K2 = (average K1ij, K1

ji ),

where K1ij – preference coefficient of i-country for j-country , and K1

ji - preference coefficient of j-country for i-country

FigureFigure 2 – 2 – Timing difference between export per capita (on the basis of the Timing difference between export per capita (on the basis of the purchasing power parity)purchasing power parity) in Kazakhstan and Russiain Kazakhstan and Russia, 1990-2010, 1990-2010

0

500

1000

1500

2000

2500

3000

3500

4000

время

по

сто

ян

ны

е д

ол

ла

ры

20

00

г. п

о П

ПС

Казахстан Россия

more than 11 years

Index 150

In 2010, the Russia index in USD equivalent exceeded the Kazakhstan index by 150%

In 2010, Kazakhstan fell behind Russia on the index “export per capita with regard to the purchasing power parity” by more than 11 years

Source: Hereinafter, according to data of the UN COMTRADE database and National statistics services of the countries – members of the Customs Union.

Kazakhstan Russia

TIME

Co

nstan

t do

llars, 2000 – accord

ing

to th

e pu

rchasin

g p

ow

er parity

Co

nstan

t do

llars, 2000 – accord

ing

to th

e pu

rchasin

g p

ow

er parity

FigureFigure 3 – 3 – Timing difference between export per capita (on the basis of Timing difference between export per capita (on the basis of the purchasing power parity)the purchasing power parity) in Kazakhstan and Belarusin Kazakhstan and Belarus, 1990-2010, 1990-2010

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

время

по

сто

янн

ые

до

лл

ары

200

0 г.

по

ПП

С

Беларусь Казахстан

In 2010, the Belarus index in USD equivalent exceeded the Kazakhstan index by 164%

more than 13 years

Index 164

In 2010, Kazakhstan fell behind Belarus on the index “export per capita with regard to the purchasing power parity” by more than 13 years

Co

nstan

t do

llars, 2000 – accord

ing

to th

e pu

rchasin

g p

ow

er parity

Co

nstan

t do

llars, 2000 – accord

ing

to th

e pu

rchasin

g p

ow

er parity

TIME

KazakhstanBelarus

FigureFigure 44 – – Timing difference between export per capita (on the basis of Timing difference between export per capita (on the basis of the purchasing power parity)the purchasing power parity) in Kazakhstan and Russiain Kazakhstan and Russia, , 2010-20302010-2030

0

2000

4000

6000

8000

10000

12000

14000

время

пост

оянн

ые

дол

лар

ы 2

000

г. п

о П

ПС

Казахстан Россия

In 2020, Kazakhstan on “export per capita with regard to the purchasing power capacity” will fall behind Russia by more than 12 years. By 2030, retardation may exceed 16 years.

More than 16 years

Index 266

By 2030, excess of the Russia’s index in USD equivalent may increase in 2.66 times.

Темп роста = 6,2%

Growth rate = 3,2%

Growth rate = 6,2%

Co

nstan

t do

llars, 2000 – accord

ing

to th

e pu

rchasin

g p

ow

er parity

Co

nstan

t do

llars, 2000 – accord

ing

to th

e pu

rchasin

g p

ow

er parity

Kazakhstan Russia

TIME

FigureFigure 55 – – Timing difference between export per capita (on the basis of Timing difference between export per capita (on the basis of the purchasing power parity)the purchasing power parity) in Kazakhstan and Belarusin Kazakhstan and Belarus, , 2010-20302010-2030

0

2000

4000

6000

8000

10000

12000

14000

время

по

сто

янн

ые

до

лл

ары

200

0 г.

по

ПП

С

Беларусь Казахстан

At average annual growth rates of 2001-2010, by 2020 Kazakhstan will fall behind Belarus by more than 12 years on “export per capita with regard to the purchasing power capacity”. By 2030, retardation will exceed 17 years.

More than 17 years

Index 271

By 2030, excess of the Belarus index in USD equivalent may increase in 2.7 times.

Growth rate = 5,8%

Growth rate = 3,2%

Co

nstan

t do

llars, 2000 – accord

ing

to th

e pu

rchasin

g p

ow

er parity

Co

nstan

t do

llars, 2000 – accord

ing

to th

e pu

rchasin

g p

ow

er parity

TIME

Belarus Kazakhstan

Conclusions and proposalsConclusions and proposals

1) If in a long-term perspective Kazakhstan will maintain a low index of goods and services export per capita, then the level of citizens wellbeing will considerably lower as compared to Belarus and Russia;

2) At considerable differences between key parameters of national economies development, which are clearly testified by the detected timely retardation, Kazakhstan may become the satellite country of the existing and created regional integration associations – Customs Union, Single Economic Space and oncoming Eurasian Economic Union;

3) Kazakhstan may become in the situation, which occurred during the Soviet Union period, being a primary attachment to well-developed economies. As is known, such situation was typical for all republics of the Central Asia. It should also be noted that further growth of absolute and timely retardation of the key economic indices of Kazakhstan, as compared to Belarus and Russia, may cause enhancement of social strain, including anti-integration moods in the Kazakhstan society, and as a consequence, unpredictable effects;

4) Without serious change of the competitive positions structure in export of Kazakhstan, which mainly form the national economy structure, considerable growth of the goods and services export index per capita should not be expected. This provides the necessity in immediate development of efficient trade policy, including the national export program, aimed at elimination of the strained primary structure of Kazakhstan export. It should also include the national import program, reflecting factual needs of the national economy and reducing dependence on import of production, which may be produced on the territory of the country.

Conclusions and proposalsConclusions and proposals

5) During development of the trade policy, it is necessary to make an emphasis on the mechanisms, providing balanced economic growth mainly due to export at simultaneous reduction of dependence on the foreign capital inflow. Also, it should be noted that the national export program should be developed with regard to application of new technologies by Kazakhstan’s companies as well as to consumer preferences, because statistically significant value of the export activity’s influence on innovation processes does not cause doubts and is confirmed by numerous researches.

6) Alongside with the trade policy, it is necessary to develop the national industrial policy, aimed at considerable change of the production structure, including considerable increase in the share of the processing sector of the industry. At that, trade and industrial policies should be associated and related to each other.

7) Within the framework of the Customs Union, it is necessary to develop the single foreign trade policy both within and beyond the integration formation, which may be based on principles of the single trade policy of the European Union, adjusted in accordance with peculiarities of three states. This will promote improvement of competitiveness of export potential on external markets both for the integration formation and for each country in particular. Solution of this objective lies in the sphere of political and legal decisions as well as goes beyond the scope of the present research. Economic aspects of development of the agreed trade policy by the countries – members of the Customs Union are based on the sphere of balanced usage of traditional instruments – customs and tariff regulation, efficient protectionism and liberalization of trade.

Назарыңызға рахмет!Назарыңызға рахмет!Благодарю за вниманиеБлагодарю за внимание!!Thank you for attention!Thank you for attention!

Republic of the Kazakhstan,

Ministry of the Education and Science,

Institute of Economy

Tel.: +7 (727) 261-21-77; Fax: +7 (727) 272-78-29;

Cell: +7 707 715-2300; +7 701 715-2300

E-mail: BKhusainov@gmail.com; BKhusainov@mail.ru