The SySTem of IndIcaTorS Theof Sy eSTuraemSI an of IndInTegraIcaTorTIonS of euraSIan InTegraTIon The SySTem of IndIcaTorS of euraSIan InTegraTIon The SySTem of IndIcaTorS of euraSIan InTegraTIon 2009 УДК 336 ББК 65.262.1 S 98 The System of Indicators of Eurasian Integration 2009. – Almaty, 2010. – p. 160 ISBN 978-601-7151-03-4 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. In April 2009 Armenia has completed all the admission procedures and became the third full member of the Bank. Next, in June 2009 Tajikistan joined the Bank. The Agreement on Establishing the Eurasian Development Bank has come into force for Belarus, it is in the process of finalising the required admission procedures. Electric power, water and energy, transportation infrastructure and high-tech and innovative industries are the key areas for Bank’s financing activity. УДК 336 ББК 65.261 The Authors: Evgeny Vinokurov, Team leader, EDB Aleksandr Libman, Frankfurt School of Finance and Management Philippe De Lombaerde, United Nations University Natalia Maqsimchook, EDB Yerzhan Moldabekov, EDB ISBN 978-601-7151-03-4 © Eurasian Development Bank 2010 Coordinator: Gulnaz Imamniyazova, EDB Address: Eurasian Development Bank Panfilov St. 98, Almaty, 050000, Republic of Kazakhstan Tel.: +7 (727) 244 40 44, ext. 6146 Fax: +7 (327) 244 65 70, 291 42 63 E-mail: [email protected] http://www.eabr.org Design, layout, and printing: RUAN Publishing Company Circulation: 1000 copies No part of this publication may be reprinted or reproduced or utilized in any form, including reprinting and recording of any kind, without due reference to this publication. Contents Foreword 7 Acknowledgements 8 Greetings 9 Main Conclusions 12 1. Introduction 27 1.1. Objectives of SIEI 27 1.2. Project Work and Plans 28 1.3. Integration Organisations in Post-Soviet Space 29 2. SIEI Methodology 32 2.1. Regional Cooperation and Integration 32 2.2. Measuring Regional Integration: Existing Approaches 34 Market Integration 34 Economic Convergence 36 Institutional Integration 37 International Experience in Developing and Applying Systems of Monitoring Regional Indicators 39 Technical Aspects of Monitoring Indicators 43 3. Elements and Calculation of SIEI 48 3.1. SIEI Elements 48 3.2. SIEI Calculations 0 Integration of Markets 0 Economic convergence 2 Consolidated indices 3 Calculation Period 4 Regional Cooperation and Institutional Integration ThE SYSTEM oF IndicatoRS oF EURASIAN IntegratioN CoNTENTS 4. Regional Integration: Results 4.1. Integration of Markets Trade Labour Migration 2 Electric power Agriculture 8 Education 72 Conclusions 7 4.2. Economic Convergence 78 Macroeconomics 78 Monetary policy 81 Financial policy 84 Fiscal policy 88 Country-to-Region Convergence: “Weighted Indices” 91 Conclusions 94 4.3. Consolidated Indices 94 Integration of Individual Countries with CIS-12 94 Integration in CIS-12 9 5. Assessment of Qualitative Aspects of Institutional Cooperation 97 .1. Assessment of Performance of Integration Organisations: Analysis of Documents 97 .2. Evaluation of Activities of Integration Organisations: an Expert Poll 10 .3. Integration Processes: Depth, Dynamics and Obstacles 114 References 117 Annex 1: Indicators of Regional Integration in 1999–2007 123 Annex 2: Data Sources 144 Annex 3: Investment Cooperation in CIS 14 Authors 148 Bank and Its Information and Research Publications 10 List of Abbreviations 12 Index 13 ThE SYSTEM oF IndicatoRS oF EURASIAN IntegratioN Foreword What is the System of Indicators of Eurasian Integration for? CIS countries are a natural zone of common interests. The integration of the former Soviet countries is driven by objective economic reasons. In the recent past, these countries albeit notable differences, formed a single political, economic and cultural space. Much of their сommon heritage has been preserved. The current financial and economic crisis hit hard the region’s economic development and regional integration alike. However, apart from the expansion of protectionist policies, which is a cause of growing concern, there were some positive developments. Particular mention should be made of the establishment of the Customs Union of Belarus, Kazakhstan and Russia, the decision to move toward the Common Economic Area of these three countries by 2012, the establishment of the EurAsEC’s Anti-Crisis Fund, and the negotiations over the proposed Grain Pool. The crisis forced all countries to take a more careful stance in their foreign affairs and pursue a more pro-active foreign trade policy. In this context, efficient monitoring and evaluation of integration dynamics and trends becomes a priority. By publishing this first Report on the System of Indicators of Eurasian Integration (SIEI), we hope to lay the foundations of a new long-term project. It is expected that from now on the EDB will collect data and calculate the indicators on an annual basis. The respective reports will be made available to state bodies, international organisations, scientific circles, the mass media and the general public. The benefits and the “media effect” of the SIEI will be multiplied even further if these calculations are produced on a systematic basis over a lengthy time span. The data presented in this first edition of the SIEI illustrates the dynamics of integration between 1999 and 2008. This period is used as a benchmark in studying the development of post- Soviet countries after the “Big Bang” of the 1990s. Another important challenge that we have set ourselves is to trace and demonstrate the main trends of integration of the rapidly evolving post-Soviet economies and societies, the activities of integration institutions, and the effect of integration initiatives and decisions. We hope that the comprehensive picture of the EDB’s SIEI based on an elaborate measurement and evaluation method will be well received and prove instrumental, not only as an academic exercise, but also as a tool for formulating internal and external policies, thus assisting integration in Eurasia. Director for Strategy and Research, Vladimir Yasinskiy Member of the Executive Board, EDB ThE SYSTEM oF IndicatoRS oF EURASIAN IntegratioN 7 Acknowledgements We are grateful to the regional organisations - the Commonwealth of Independent States (CIS), the Eurasian Economic Community (EurAsEC) and the Collective Security Treaty Organisation (CSTO), and, directly the heads of these organisations - Sergei Lebedev, Tair Mansurov and Nikolay Bordyuzha - for their information input, without which the SIEI project would not be possible. Special thanks are due to the CIS Statistics Committee whose data has become an integral part of the SIEI. On this occasion, we also would like to express sincere respect for our colleagues from these regional organisations who devote their best efforts to the implementation of integration initiatives. The authors’ team thanks Igor Finogenov, Chairman of the EDB Executive Board, and Vladimir Yasinskiy, Director for Strategy and Research, for their moral and practical support over the past two years. Over the last two years the Bank’s management has provided enduring support for our long-term, work-intensive project. We would like to make special mention of the achievements of our colleagues – the members of an international working group who during six months in 2008 laid the foundations of the SIEI methodology based on the best international experience in regional integration measurements. Our gratitude is also due to all the experts who gave their time to answer our enquiries, which enabled us to gain insight into aspects of the integration process not covered by statistics. We acknowledge high-quality services of our interpreter, Stanislav Myong, our proof-reader, Jonathan Elliott , and design and printing services of our long-standing partner, Ruan Publishing House. Editor of the Report, Evgeny Vinokurov Deputy Head of Strategy and Research Department, Eurasian Development Bank 8 ThE SYSTEM oF IndicatoRS oF EURASIAN IntegratioN Greetings Dear friends, The Eurasian Development Bank is pleased to present the results of its first full-scale research project, the System of Indicators of Eurasian Integration. The objective of this project was to develop a tool for measuring the dynamics of Eurasian integration, and it occupies a special place among the Bank’s research products. This tool for comprehensive monitoring and systematic evaluation of integration dynamics is now available. To the EDB, this project is of particular importance because of its strategic goals of assisting integration of its member states and becoming an analytical centre on integration problems. The project’s success and follow-up will principally depend on support from integration groups that possess the data forming the core of the SIEI. The project involved a great deal of work by experts from the CIS, EurAsEC, an international working group, and the Bank. Our constructive interaction with the key integration groups reached new heights. We are counting on continuing support for our project and expanding cooperation with our partners. We hope that, with the help of our colleagues, the cause of Eurasian integration will be advanced, and the proposed system of indicators will become a useful tool for formulating strategies and policies