EDB: Regional integration institutions' sustainability improves with their development and for this reason the EAEU member states should support and protect the union at its early stages

St. Petersburg, 26 April 2016. Comprehensive support by the member states is particularly important at the early stages to ensure stability and efficiency of the Eurasian Economic Union (EAEU) and its institutions. At the same time, for the EAEU to maintain credibility, its accountability and transparency need to be ensured. These are the findings of the EDB Centre for Integration Studies’ report Regional Organizations: Typology and Development Paths, based on a detailed review of sixty organizations.

The report also presents a designed typology of regional integration organizations, which helps to analyse regional integration strategies for the EAEU and other integration projects. The key findings of the report and the recommendations for the EAEU development include the following:

1. The key success factor is the advancement of national growth policies. Sustainable, long-term economic growth produces demand for efficient regional organization. Long-term economic development should take priority over proliferation of current trade and economic ties with other countries that will have only short-term positive effects.

2. For the EAEU to maintain credibility, its accountability and transparency need to be ensured. The clearer its objectives, functions, budget and organization for the general public and politicians are, the less probable it is that its development will be determined by bureaucratic inertia. For the EAEU development it also means that its economic participants will address the EAEU institutions (for example, the EAEU Court) more often to achieve their goals. This in its turn will help to strengthen the Eurasian integration project.

3. The development of an integration project should not follow the principle “expansion for the sake of expansion.” This approach will lower the efficiency of the regional organization. Any expansion should be governed by meaningful objectives.

4. Comprehensive support by the member states is particularly important at the early stages to ensure stability and efficiency of the EAEU and its institutions. “Organizations build their sustainability with time,” Evgeny Vinokurov, Director of the EDB Centre for Integration Studies and one of the authors of the report, says. “The longer the EAEU exists as an active integration project, the higher the probability is that it will remain such in the future. In other words, regional integration institutions are more vulnerable at early stages of their development. This suggests a practical conclusion that the EAEU needs to be cared for in the near future by any means necessary. It will be easier in the longer run.”

Overall, as part of the project the following typology of organizations was designed: an “Alive and Kicking” regional organization is the one that achieves its objectives, to a significant extent; an “Alternative Path” organization is the one with a mandate in the process of amendment; an “Integration Rhetoric” organization is an organization having, as its main objective, imitation of integration activity in domestic and foreign policy purposes; a “Talking Club” is a platform for high- and top-level meetings and discussions; a “Zombie” is an institution existing due to internal inertia only; and a “Coma” is an organization that has not been dissolved officially, but does not function even at a minimal level.

The following conclusions can be made based on the above typology of regional integration organizations:

— The main factor promoting the formation of active organizations is the level of economic development of its members: wealthier countries are more likely to set up a regional organization of “Alive and Kicking” type than poorer countries. A US $1,000 increase in GDP per capita increases the probability that a regional organization will become the “Alive and Kicking” one by 1.5%.

— The expansion of trade and economic ties between the member states of a regional organization (for example, intra-regional trade) does not assure the formation of “Alive and Kicking” regional organization. Only when the level of economic development is rather high the growing cross-border cooperation necessitates the creation of an active regional organization. The latter will ensure the functioning of common markets and establishment of a common infrastructure, regulations and standards.

— The “Talking Club” type of regional organizations is typical of organizations with numerous members. “Talking Club” comprises sixteen countries on average while other types of regional organizations have ten members. Each additional member state increases the probability that an organization will transform into a “Talking Club” by 1.5%.

— Economic crisis is one of the key factors in regional organizations’ evolution. The degree of protectionism often grows during crises, negatively affecting regional integration. However, the contrary, when a crisis encourages integration projects, is also quite possible.

The project’s core is the EDB Centre for Integration Studies’ Regional Integration Database (RID), which is updated regularly and includes 92 regional organizations. Each one is measured by up to 130 parameters (basic macro indicators, trade flows, investments, foreign exchange, financial and institutional indicators). The RID database may be used to produce a comprehensive picture of advantages and disadvantages of different integration models. It is the free access database and it is available at EDB’s website.

The e-version of Regional Organizations: Typology and Development Paths report is available online.

Additional Information

Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. EDB’s charter capital totals US $7 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.

The Centre for Integration Studies is a specialist research centre of Eurasian Development Bank. The Centre organises research and prepares reports and recommendations on regional economic integration. Read more about the Centre’s projects and publications at www.eabr.org/r/research/analytics/centre/

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