Head of EDB: the Common Economic Space of Russia, Kazakhstan and Belarus is aimed at improving business climate for investors
Almaty, 21 May 2012. The main objective of the Common Economic Space (CES) is to foster improvements in business environment for investors and entrepreneurs from the three countries and other states through the promotion of the free movement of goods, services, capital and labour. Igor Finogenov, Chairman of Eurasian Development Bank’s (EDB) Managing Board, said this on Saturday at the session Russia, Kazakhstan, Belarus: New Investment Opportunities within the Common Economic Space (CES) at the EBRD Annual Meeting in London.
The head of EDB reminded that the CES member states had already adopted a number of agreements that coordinate their macroeconomic and financial policies, labour migration, the power sector, and technical regulation. Although significant mutual efforts and time are needed to implement them there are a number of arguments that the development of the CES will lead to improvements in business environment and foster economic growth.
This is primarily about the long-term effects of the CES on its member countries. According to a comprehensive assessment undertaken by the EDB Centre for Integration Studies in cooperation with Russian and Ukrainian researchers, the effect of the creation of the CES and Ukraine’s subsequent joining it can reach US $1 trillion for the four countries before 2030. This effect will produce an additional growth in Belarusian GDP of 14%, Ukrainian GDP of 6%, Kazakh GDP of 3.5%, and Russian GDP of 2%. Belarus, Ukraine and Kazakhstan are expected to benefit from integration to the greatest extent in terms of per capita effects and Russia in absolute terms.
Overall, the aggregate annual GDP of Russia, Kazakhstan and Belarus in the event of deeper integration within the CES is expected to be 2.5% higher than in the non-integration scenario. This will become possible due to greater accumulation of fixed capital, mutual investments and better competitiveness of the economies (because of a reduction in the share of primary resources in GDP), as well as the growth in trade within the CES and with its partners.
The adoption of a uniform migration policy will be a critical step in integration within the CES. «This is a key issue for the region’s economies,» Igor Finogenov said. «For example, today labour migrants produce up to 6% of the Russian gross product.»
In addition, the CES will promote improvements in technical standards and technical regulation in the three countries, which will assist in their technological integration with the global economy. «There are 46 new regulations in the pipeline, a third of which have been already developed and adopted,» the head of EDB continued. «These are „new-generation“ regulations and standards that are compulsorily compliant with the WTO requirements and often harmonised with the standards of the European Union.»
Finally, further promotion of regional integration can result in the creation of a free trade zone between the CES and the EU, which will be of benefit to all its members due to the removal of barriers to the trade in goods and services, labour and capital flows, and intellectual property protection. «Its uniqueness and synergistic potential are based on the unprecedented size of such a regional union, which will unite the markets of thirty-one countries with a population of about 700 million and a GDP of more than US $18 trillion,» Igor Finogenov concluded.
Additional Information
Eurasian Development Bank 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 exceeds US $1.5 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. Read more at https://www.eabr.org.