Almaty, 6 September 2011. The EDB Centre for Integration Studies, together with the Institute of Economic Forecasting at the Russian Academy of Sciences and the Institute of Economics and Forecasting at Ukraine’s National Academy of Sciences, began joint research into macroeconomic effects of Ukraine’s deep economic cooperation with the member states of the Customs Union and the Common Economic Space (CES) within EurAsEC.
The objective of the research is to determine the integration links that connect Ukraine with Russia and its Customs Union partners and prospects for their development, and to find the most efficient forms and areas for the advancement of integration processes, including the free trade zone and various sectoral agreements.
The project prepares a model for forecasting economic development and assessing effects of economic integration of Russia, Kazakhstan, Belarus, and Ukraine, which will be based on intersectoral and other balances, universal balance principles, and an expanded production function.
“I have no doubts that economic integration on the basis of the CES will be of benefit to all its member states,” says Viktor Ivanter, Director of the Institute of Economic Forecasting at the Russian Academy of Sciences. “However, a reliable assessment of its long-term effects should be based on thorough calculations with the help of modern forecast and research tools. We are now developing these tools together with the EDB, using intersectoral and interstate macroeconomic models which are used by our institute and the Institute of Economics and Forecasting at Ukraine’s National Academy of Sciences.”
The research analyses the prospects for Ukraine’s participation in the creation and functioning of the CES, taking into account Ukrainian exporters’ access to growing CES markets with 170 million of population. This can produce a 1:4 returns to scale with respect to population and a 1:12 returns to scale with respect to GDP, as well as an increase in investments from CES member states in Ukraine and from Ukraine in CES countries.
The Centre for Integration Studies’ researchers believe that one of the key advantages of approaches used in the research is that it takes into account possible effects that structural and technological changes in the countries under review can have on mutual trade, enhanced production cooperation, and interstate specialisation, as well as on increases in labour migration and tourist flows.
A preliminary analysis showed that Ukraine’s joining the Customs Union can cause an increase in the country’s balance of payments by US $6-9 billion a year. A rise in just exports of Ukrainian products, primarily metallurgical and mechanical engineering items, to Russia can be as high as US $5-8 billion.
“In the past two years, the EDB was paying particular attention to research into regional economic integration in Eurasia, the practical beginning of which was the creation of the Customs Union between Russia, Kazakhstan, and Belarus, and the formation by the Customs Union member states of the Common Economic Space from 1 January 2012,” said Vladimir Yasinsky, EDB’s Head of Research. “Integration processes in various sectors are accompanied by researches that are initiated by us and conducted with the help of leading scientific and expert centres from various countries.” To coordinate this work, the EDB opened the Centre for Integration Studies in St. Petersburg in June 2011.
The research into prospects for Ukraine’s economic integration with the Customs Union countries is expected to be completed by the beginning of 2012.
