Eurasian intEgration YEarbook annual publication of the Eurasian Development bank Eurasian Integration Yearbook Annual publication of the Eurasian Development Bank УДК 338 ББК 65.9 Е 91 Eurasian Integration Yearbook 2012. – Almaty, 2012. – p. 360 ISBN 978-601-7151-30-0 Annual publication of the Eurasian Development Bank Edited by Evgeny Vinokurov The Eurasian Development Bank is an international financial institution established to promote economic growth and integration processes in Eurasia. The Bank was founded by the intergovernmental agreement signed in January 2006 by the Russian Federation and the Republic of Kazakhstan. Tajikistan, Belarus, Armenia and Kyrgyzstan joined the Bank in 2009- 2011. Electric power, transportation infrastructure and high-tech and innovative industries are key areas for Bank’s financial activity. In line with its charter, the Bank views information and research support for integration in Eurasia as a priority of its analytical work. ISBN 978-601-7151-30-0 УДК 338 ББК 65.9 © Eurasian Development Bank, 2012 Eurasian Development Bank Address: 220, Dostyk ave., Almaty, 050051, Republic of Kazakhstan, Telephone: +7 (727) 244 40 44, Fax: +7 (727) 244 65 70, 291 42 63 E-mail: [email protected] http://www.eabr.org Coordinator: Gulnaz Imamniyazova, EDB Design, layout, and printing: RUAN Publishing Company The EDB’s special acknowledgements go to Tatyana Ossennikova, Ekaterina Kopylova, Hannah Dyson and Jonathan Elliot Stephany Droop for translating and editing materials for the Yearbook in English. No part of this publication may be reprinted or reproduced or utilised in any form, including reprinting and recording of any kind, without due reference to this publication. The views expressed in this publication are those of author and do not necessarily reflect the views of the Eurasian Development Bank. Eurasian Integration Yearbook Annual publication of the Eurasian Development Bank Edited by Evgeny Vinokurov, EDB Advisory Council: Sailau Baizakov, Insitute for Economic Research, Astana Michael Emerson, Centre for European Policy Studies, Brussels Valery Geets, Institute for Economic Forecasting, Kyiv Ruslan Grinberg, Insitute of Economy RAS, Moscow Ivan Korolev, Institute for World Economy and International Relations RAS, Moscow Luk Van Langenhove, United Nations University, Bruges Johannes Linn, Brookings Institute, Washington Liu Huaqin, Chinese Academy of International Trade and Economic Cooperation, Beijing Katlijn Malfliet, Catholic University of Leuven Ivan Samson, University of Grenoble II Leonid Vardomskiy, Institute of Economy RAS, Moscow Vladimir Yasinskiy, EDB, Almaty CONTENTS Contents List of Figures and Tables 6 List of Abbreviations 10 GREEtINGS Igor Finogenov, Eurasian Development Bank 12 Tatyana Valovaya, Eurasian Economic Commission 13 Introduction 14 CuStoMS uNIoN AND tHE SINGLE ECoNoMIC SpACE 1. The Economic Effects of the Creation of the Single Economic Space and potential Accession of ukraine 19 Viktor Ivanter, Valery Geets, Vladimir Yasinskiy, Alexander Shirov, and Andrey Anisimov 2. Eurasian Economic Integration: origins, patterns, and outlooks 42 Tatyana Valovaya 3. Assessing the Economic Effect of Kyrgyzstan’s Accession to the Customs union 62 Alexander Pavlov 4. Commentary on the article: Assessing the Economic Effect of Kyrgyzstan’s Accession to the Customs union 76 Nazik Beishenaly tHE ECoNoMICS of tHE poSt-SoVIEt AND EuRASIAN INtEGRAtIoN 5. Eurasia and Eurasian Integration: Beyond the post-Soviet Borders 80 Evgeny Vinokurov and Alexander Libman 6. Central Asian Regional Integration and Cooperation: Reality or Mirage? 96 Johannes Linn 4 EDB Eurasian Integration Yearbook 2012 CONTENTS 7. The Impact of Global financial and Economic Instability on the CIS 118 Elvira Kurmanalieva, Konstantin Fedorov 8. Monitoring Mutual Investments in CIS Countries 129 Alexey Kuznetsov 9. Monitoring social moods in the post-Soviet space: EDB Integration Barometer 150 Igor V. Zadorin ADVANCED ECoNoMIC CoopERAtIoN IN SECtoRS AND INDuStRIES 10. Developing Air transport potential of the EurAsEC Countries 164 Aigul Absametova 11. Integration processes in the Electric power Sectors of the EDB Member States 186 Aigul Absametova 12. Water and Energy problems in the Basins of transboundary Rivers in Central Asia and prospects for the Development of Hydropower Resources 217 Vladimir Yasinskiy, Alexander Mironenkov, Tulegen Sarsembekov 2011: DAtA AND REVIEWS 13. Chronicle of Eurasian Regional Integration 2011 229 Natalia Maqsimchook 14. CIS Countries: primary Macroeconomic Indicators 295 Elvira Kurmanalieva, Konstantin Fedorov 15. Multilateral and Regional Development Banks in Northern and Central Eurasia: overview of Activities in 2011 311 Ella Baibikova Information for Authors 344 Index 346 Eurasian Development Bank 5 LIST OF FIGURES AND TABLES List of figures and tables fIGuRES Figure 1.1. Effects of SES creation on Belarus 23-24 Figure 1.2. Effects of SES creation on Kazakhstan 24-25 Figure 1.3. Effects of SES creation on Russia 25-26 Figure 1.4. Integral effect of SES creation on Russia, Kazakhstan and Belarus 26 Figure 1.5. Changes in Ukrainian GDP under various integration scenarios 37 Figure 1.6. Gain in the four countries’ aggregate GDP from creating SES and Ukraine joining it 39 Figure 1.7. Countries’ contribution to the cumulative integral effect of creating SES and Ukraine joining it 39 Figure 3.1. Dynamics of Kyrgyzstan’s foreign trade in 2005-2009 71 Figure 6.1. Global trade flows 98 Figure 6.2. Trade Growth in Central Asia 99 Figure 6.3. Intraregional trade shares in Asia 99 Figure 6.4. Intraregional Trade Shares 101 Figure 6.5. CAREC investment Loans and Grants, by Sector and Date 109 Figure 6.6. Financing of CAREC Programs 109 Figure 7.1. Government bonds yield, 2 years to maturity 119 Figure 7.2. Land prices and real property rentals in China 121 Figure 7.3. Food and oil price indexes 122 Figure 8.1. The geographic distribution of accumulated Russian direct investment in CIS countries and Georgia 139 Figure 8.2. The map of direct mutual investment in CIS countries and Georgia 141 Figure 9.1. Illustrative scheme of the countries’ distribution on geopolitical vectors 157 Figure 10.1. Europe-Asia air cargo traffic in 1991-2010 168 Figure 10.2. Annual growth in EurAsEC’s civil aviation traffic in 2005-2010 169 Figure 10.3. Annual growth of adjusted payload distance in world and EurAsEC civil aviation in 2005-2010 169 6 EDB Eurasian Integration Yearbook 2012 LIST OF FIGURES AND TABLES Figure 10.4. EurAsEC’s international and domestic passenger traffic in 2010 171 Figure 10.5. International passenger traffic through EurAsEC by domestic and foreign airlines in 2010 171 Figure 10.6. EurAsEC’s international and domestic cargo and mail traffic in 2010 172 Figure 10.7. International cargo and mail traffic via EurAsEC airports by domestic and foreign airlines in 2010 173 Figure 10.8. Utilisation of EurAsEC’s aircraft capacity in 2010 173 Figure 10.9. Airspace serviced by EurAsEC’s ATM bodies 177 Figure 12.1. Sangtuda-1 HPP 221 Figure 14.1. World trade 296 Figure 14.2. GDP growth in CIS countries 296 Figure 14.3. Current account of the balance of payments 298 Figure 14.4. Gold and forex reserves: (in months of imports of goods and services) 298 Figure 14.5. State budget: consolidated budget balance 299 Figure 14.6. Monetary sphere: CPI growth 299 Figure 14.7. Azerbaijan: Economic situation 300 Figure 14.8. Armenia: Economic situation 301 Figure 14.9. Belarus: Economic situation 302 Figure 14.10. Kazakhstan: Economic situation 303 Figure 14.11. Kyrgyzstan: Economic situation 304 Figure 14.12. Moldova: Economic situation 305 Figure 14.13. Russia: Economic situation 306 Figure 14.14. Tajikistan: Economic situation 307 Figure 14.15. Turkmenistan: Economic situation 308 Figure 14.16. Uzbekistan: Economic situation 309 Figure 14.17. Ukraine: Economic situation 310 tABLES Table 1.1. Integration scenarios considered 22 Table 1.2. Average annual growth rates of Ukrainian GDP and the main components of the end demand 27 Table 1.3. Production and import of energy resources in Ukraine 28 Table 1.4. Sectoral composition of the Ukrainian economy in constant prices 29 Table 1.5. Change in key macroeconomic indicators compared to the baseline option 29 Eurasian Development Bank 7 LIST OF FIGURES AND TABLES Table 1.6. Change in key macroeconomic indicators compared to the baseline option 30 Table 1.7. Change in key macroeconomic indicators compared to the baseline option 31 Table 1.8. Change in key macroeconomic indicators compared to the baseline option 32 Table 1.9. Change in key macroeconomic indicators compared to the baseline option 33 Table 1.10. Assessment of the gap in economic efficiency and scientific and technological development compared to the OECD countries 34 Table 1.11. Assessment of integration effects at the sectoral level 35 Table 1.12. Sectoral breakdown of the Ukrainian economy, in constant prices 38 Table 3.1. Comparative analysis of the CU CCT and Kyrgyzstan’s CT 66-70 Table 3.2. The structure of Kyrgyzstan’s state budget revenues 73 Table 5.1. Three concepts of Eurasia 86 Table 6.1. CAREC Operations in 2001-2010 109 Table 7.1. Grouping indicators for the CIS countries 123 Table 7.2. Geographical distribution of trade in the CIS countries 127 Table 8.1. Accumulated exported and imported direct investment in CIS countries and Georgia as at late 2010 131 Table 8.2. The geography of accumulated direct investment of CIS countries as at late 2010 132 Table 8.3. The geography of Ukrainian direct investment accumulated abroad (share capital) 133 Table 8.4. Projects involving direct investment in CIS countries and Georgia (as at late 2011) 138 Table 8.5. Accumulated FDI in Russia, by country 140 Table 8.6. The largest FDI pairs in the post-Soviet space not involving Russia 141 Table 8.7. The largest investment projects in the MMI CIS database 142-143 Table 8.8. The key recipients of direct investment 144 Table 10.1.