Presentation on Regional economic integration as a gateway to economic modernization in Eurasia by Aleksei Kuznetsov (June 2017)

1. Senior economist, EDB
Aleksei Kuznetsov
June 2017
Regional economic integration as a gateway
to economic modernization

2. 2
Inequality in economic integration
Global economic integration favouring the more advanced and better
positioned economies
Geography is one of the fundamental limitations faced by developing nations
in integrating into the global economy
distance of countries to
international markets,
coastlines,
major ports
Landlocked
developing
country
higher transportation costs,
slower growth,
lower external trade
In this respect looking at the scale of integration of landlocked developing
nations into the global economy may be the right litmus test of the inequities in
globalization

3. 3
The uniqueness of Eurasia’s geography

4. 4
What landlocked status implies for development and growth
Land-locked countries have on average 30% lower trade
turnover than countries with access to the sea
Continentality reduces a country’s growth rate by 1.5% as
compared to coastal countries
20 out of 54 low-income countries have no access to the sea, while only 3 out of
35 high-income countries are land-locked
Share of transportation costs in total imports may reach
10–20% for countries without access to seacoast, while for
developed countries and the US - 4.7% and 2.2%

5. 5
Countering geographical limitations: Eurasian integration
Lowering the
costs of borders
and customs
Increases
labour and
capital mobility
Connectivity to
ports and other
key infrastructure
outlets
Improving
investment
cooperation
Standardization
and simplification
of transport
regulation
Pooling
resources
Strengthening of
integration in the
Eurasian land space
Integrate into global
logistical chains and
mega-regional blocs

6. 6
Role of development institutions
2 460 2 447
1 543
1 329
53 40 28 25
0
500
1 000
1 500
2 000
2 500
3 000
ADB EDB EBRD WB EIB IBC AIIB BSTDB
Source: The official IFI data sites
The volume of approved IFIs financing in 2016,
 Financing of transport and energy infrastructure projects
 Financing of investment projects aimed at developing economic ties
between regional economies, supporting mutual investments and trade
 Nearly half of all projects in EDB’s current investment portfolio are
integration projects
mln US dollars

7. 7
Implications for macroeconomic policy
 Stable environment for attracting investment
 System of economic policy rules
 Economic diversification
 Low inflation as an important anchor of stability
 Effective migration policy
 Development of port infrastructure, as a way of bolstering Russia’s growth
 Co-ordination of economic policies among countries of the region

8. 8
Thank you for your attention!