Moscow, 24 January 2012. The Russian Academy of Sciences’ Institute of Economic Forecasting, the Ukrainian National Academy of Sciences’ Institute for Economics and Forecasting and the Eurasian Development Bank’s (EDB) Centre for Integration Studies have undertaken a joint research into the macroeconomic effects of various forms of economic cooperation between Ukraine and the countries of the Customs Union and of the Common Economic Space within EurAsEC.
The research aimed to assess the macroeconomic effects of the creation of the Customs Union and the Common Economic Space of Russia, Belarus and Kazakhstan, to analyse the condition and prospects for the development of integration ties between Ukraine and the Customs Union countries, and to find the most efficient forms and ways to advance integration processes in the four countries.
For the first time in two decades, the research has provided a model complex to forecast economic development and assess integration effects for Russia, Kazakhstan, Belarus and Ukraine. The forecasting complex includes intersectoral models of these four economies and a trade model, which together allow analysing various integration scenarios at both macroeconomic and sectoral levels.
Effects were assessed for various forms of Ukraine’s integration with the Customs Union, including the free trade zone, Ukraine’s joining the Customs Union, technological alignment, and sectoral agreements. In addition, the research has provided brand new data on the macroeconomic effects of the Customs Union and the Common Economic Space of Belarus, Kazakhstan and Russia.
“The economic cooperation between our countries is an important strategy with a prominent anti-crisis content,” Igor Finogenov, Chairman of the EDB Executive Board, said. “The research has shown that deeper integration within the Common Economic Space of Russia, Kazakhstan and Belarus, through the development of trade links, the cooperation between industries, and the alignment of the technological level, would produce a long-term macroeconomic effect of a 2.5% additional growth in the aggregate three countries’ GDP. Ukraine’s participation in this cooperation will help its economy attain a 6% additional growth in the period under study.”
The aggregate accumulated effect of the Common Economic Space is estimated to reach $900bn (in 2010 prices) in 2011-2030 for its members if Ukraine does not join or at over $1.1T if it does.
At the same time, if Ukraine does not take part in the development of integration processes in the post-Soviet space, this will lead to the conservation of the sectoral structure of its economy and, consequently, a potential slowdown of its economic growth. The reason for that could be a lack of opportunities to speedily increase exports in a number of industries and sectors that are important to the country.
The research has shown that the most dynamic changes in the structure of the Ukrainian economy in favour of the sectors with higher processing levels could be attained if the country joined the Common Economic Space and then ensured technological alignment with other countries. In this case, mechanical engineering’s share in Ukraine’s gross output is expected to increase from 6% to 9%.
The total positive effect of this integration option for Ukraine is estimated at $219bn (in 2010 prices) in 2012-2030, or $12.2bn a year.
Broken down by countries, the integration effects of the possible deep economic integration of the four countries are expected to approximate 14% of GDP for Belarus, 6% for Ukraine, 3.5% for Kazakhstan, and 2% for Russia.
The full version of the report is available at the EDB’s website at: https://eabr.org/analytics/
Additional Information
The Institute of Economic Forecasting of the Russian Academy of Sciences is a specialist economic research institution. It was established in 1986. The institute’s main activities are to produce comprehensive forecasts for the country’s economic development in the short, medium and long term; to prepare strategies for the advancement of regions in line with the priorities of the general economic development; and to provide forecasts and research for Russia’s large-sized businesses and governmental bodies.
The Institute for Economics and Forecasting of the Ukrainian National Academy of Sciences is a successor to the Institute for Economic Forecasting of the Ukrainian National Academy of Sciences, which was set up in 1997 to provide strategic forecasts and prepare socioeconomic development programmes for Ukraine. The institute’s main activities are fundamental and applied research with a view to developing the directions and methods for economic advancement, strategic forecasts, and economic development programmes for Ukraine.
