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INTEGRATION OF KAZAKHSTAN ECONOMY: ISSUES AND PRIORITIES
OF ITS IMPLEMENTATION
Seisinbinova A,
Senior lecturer of the department “Management”
L.N. Gumilyov Eurasian national university,
Astana, Kazakhstan
[email protected]
Mukhtarkhan A,
Student of specialty“5B050700-Management”
L.N. Gumilyov Eurasian national university,
Astana, Kazakhstan
[email protected]
The idea of the Eurasian economic integration, brought to the world by the
President of the Republic of Kazakhstan Nursultan Nazarbayev in 1994, is based
primarily on the political interests of the state and its citizens. The treaty about
establishing the Eurasian Economic Union was signed by Nursultan Nazarbayev,
Vladimir Putin and Alexander Lukashenko on May, 29 in Astana. The main objective
of this agreement is to increase affordability and quality of life of citizens in those
countries. The agreement contains three main goals it has to achieve: equality,
economy tempered with pragmatism, respect for the sovereignty of countries. The
effectiveness of this alliance will depend on how the public and business
communities of the three countries react to changes mentioned above. According to
the treaty, it will create business opportunities for entrepreneurs affecting almost 170
million markets with 2 trillion US dollars, thus enabling development in business and
economies of the countries [1].
Four key points: transportation of goods, services, investments and labor
resources will allow Kazakhstan together with partners to become unite in
international economic relations, as well as significantly improve consumer standards
and quality of life of our citizens. The necessity of such integration is based on
common economic and political interests, sharing similar historical, cultural and
ethnic roots of its people. Another reason is that all those countries are somehow
connected due to the specific nature of development and placement of productive
forces, natural, labor, transport and economic relations, formed over the years of
administrative-command system in the integrity of the economic space. Eurasian
Economic Union may also be called a global project, and a major regional project as
the European Union, NAFTA - represents many advantages to be a major regional
economic alliance aimed at solving the problems of our countries.
A
trading bloc, also known as an economic community, is a group of
nations within a geographical region that have agreed to remove trade barriers with
one another. The six major trading blocs are the NAFTA nations, the European
Union, the APEC countries, the ASEAN countries, the Mercosur, and CAFTA.
Next, we describe the major organizations promoting trade [2]:
- Formed in 1994, the North American Free Trade Agreement (NAFTA) is a
trading bloc consisting of the United States, Canada, and Mexico, encompassing 435
million people. The agreement is supposed to eliminate 99% of the tariffs and quotas
among these countries, allowing for freer flow of goods, services, and capital in
North America. Trade with Canada and Mexico now accounts for one third of the
U.S. total, up from one-quarter in 1989. Is NAFTA a job killer, as some have
complained? In Mexico, it has failed to generate substantial job growth and has hurt
hundreds of thousands of subsistence farmers, so that illegal immigration to the
United States remains a problem. As for the United States, nearly 525,000 workers,
mostly in manufacturing, have been certified by the U.S. government as having lost
their jobs or had their hours or wages reduced because of NAFTA’s shifting of jobs
south of the border. It also spurred a U.S. trade deficit-$74 billion with Mexico and
$65 billion with Canada in 2007. However, supporters insist NAFTA ultimately will
result in more jobs and a higher standard of living among all trading partners.
- Formed in 1957, the European Union (EU) consists of 27 trading partners in
Europe, covering 455 million consumers. Nearly all internal trade barriers have been
eliminated (including movement of labor between countries), making the EU a union
of borderless neighbors and the world’s largest free market. B y 2002, such national
symbols as the franc, the mark, the lira, the peseta, and the guilder had been replaced
with the EU currency, the euro. There has even been speculation that someday the
euro could replace the U.S. dollar as the dominant world currency. However, for a
period in 2010, Greece’s shaky finances revealed an inherent weakness of the unionthat both weak and strong economies were expected to coexist. Perhaps, says one
writer, “just as the Great Depression forced the U.S. to impose a tighter federalism,
today’s economic crisis will likely force Europe into a closer political union.”
- The Asia-Pacific Economic Cooperation (APEC) is a group of 21 Pacific Rim
countries whose purpose is to improve economic and political ties. Most countries
with a coastline on the Pacific Ocean are members of the organization, although there
are a number of exceptions. Among the 21 members are the United States, Canada,
and China. Since the founding in 1989, APEC members have worked to reduce tariffs
and other trade barriers across the Asia-Pacific region. APEC member countries are
highlighted below.
- The Association of Southeast Asian Nations (ASEAN) is a trading bloc
consisting of 11 countries in Asia: Brunei, Cambodia, China, Indonesia, Laos,
Malaysia, Myanmar (Burma), the Philippines, Singapore, Thailand, and Vietnam.
Like other trading blocs, ASEAN is working on reducing trade barriers among
member countries. When China was admitted at the beginning of 2010, ASEAN
became one of the largest free-trade zones, encompassing 1.9 billion people.
- The Mercosur is the largest trade bloc in Latin America and has four core
members - Argentina, Brazil, Paraguay, and Uruguay, with Venezuela scheduled to
become a full member upon ratification by other countries-and five associate
members: Bolivia, Chile, Colombia, Ecuador, and Peru. Besides reducing tariffs by
75%, Mercosur nations are striving for full economic integration, and the alliance is
also negotiating trade agreements with NAFTA, the EU, and Japan.
- The Central America Free Trade Agreement (CAFTA-DR), which involves the
United States and Costa Rica, the Dominican Republic, El Salvador, Guatemala,
Honduras, and Nicaragua - is intended to reduce tariffs and other barriers to free trade
Let’s consider the positive effects of Globalization. Is a global economy really
good for the United States? “Ultimately, the medium- to long-term benefits of
globalization are positive for everybody,” says the CEO of Infosys Technologies in
India. “Let me give you an example. As our industry has increased economic activity
in India, it’s becoming a bigger market for American exports. Today you can’t find
any soft drinks in India except Coke or Pepsi.” In addition, foreign firms are building
plants in the United States, revitalizing parts of industrial America. Indeed, foreign
direct investment makes up 15% of the country’s gross domestic product (total value
of all goods and services). Companies based overseas provide jobs for approximately
10% of the U.S. workforce [2]. When the recession ends, suggests Gregg
Easterbrook, author of Sonic Boom: Globalization at Mach Speed, worldwide
economic growth will pick up, “creating rising prosperity and higher living standards.
The world will be far more interconnected, leading to better and more affordable
products, as well as ever better communication among nations.”
However, global economic interdependency can also be dangerous. Financial
crises throughout the world resulted in vast surplus funds from global investments
flowing into the United States and being invested badly in a housing-and-credit
bubble that burst (the so-called subprime mortgages meltdown), leading to the 2008–
2009 Great Recession that hurt so many people. Another negative effect is the
movement, or outsourcing, of formerly well- paying jobs overseas as companies seek
cheaper labor costs, particularly in manufacturing. Soaring new U.S. skyscrapers, for
example, are more apt to have windows made in China than in Ohio, a glassmaking
state. Some economists fear that many jobs lost through the recession and off shoring
may simply never come back. Indeed, while “the horizon has never been brighter,”
says Easterbrook, “we may not feel particularly happy about it.” The reasons: “Job
instability, economic insecurity, a sense of turmoil, the fear that even when things
seem good a hammer is about to fall-these are also part of the larger trend. As world
economies become ever more linked by computers, job stress will become a 24/7
affair. Frequent shakeups in industries will cause increasing uncertainty.” But the
global economy isn’t going to go away just because we don’t like some of its
destabilizing aspects.
According to the Eurasian Economic Commission, imports from Russia to
Kazakhstan in 2010 increased from $ 12 billion to $ 18 billion in 2013. The exports
from Kazakhstan to Russia in 2013 amounted to 5.7 billion US dollars, and even
decreased slightly compared to the previous year. In 2014, imports from Russia fell
by 20% largely due to the devaluation of February, but also exported to Russia also
fell by approximately 20%. Even more revealing is the situation with the exportimport balance in relations between Astana and Minsk. Imports from Belarus in 2010
rose to $ 700 million in 2014, while exports from Kazakhstan to Belarus fell from
100 million to 90 million US dollars [3].
Eurasian Economic Union countries statistics (2013 est.)
GDP
(Purchasing GDP-per
Population(m power
capita
Countries
illions)
parity,
(thousand
billion US US dollars)
dollars )
Russia
142.5
2113.0
14.8
Belarus
9.6
69.2
7.2
Kazakhstan 17.7
224.9
12.7
Source - CIA World Factbook
Net
trade
Unemploy
Inflation
balance
ment
rate(%)
(billion US
rate(%)
dollars)
6.8
19.0
5.8
5.8
0.0
5.3
174.0
-3.1
35.2
In the near future, the fate of the EAEC will mostly depend on ability of the
Union, and especially Russia, to control the effects of the economic sanctions of the
West. Tough sanctions measures have begun to appear everywhere: in production
(slowdown in business activity, the lack of critical components for high-tech
production, the risk of recession), in the sphere of consumption (mainly due to the
Russian embargo on food), in the retail and banking services (reduction of passenger
traffic, demand for hotel and restaurant services, credit crunch, bank bailouts), in the
field of investment (due to the outflow of foreign and domestic capital). In the future,
their appearance becomes more severe, accompanied by a liquidity crisis, excessive
emission of money, inflation, devaluation and successive crisis in the social sphere.
Such problems in the economy are shown by huge decline in energy prices, which
have not so much opportunistic and structural (shale revolution) way in the long term.
Underestimation of these risks can lead to the weakening of the Union integration.
On the other hand, sanctions mentioned above have a slight chance to encourage
Belarus and Kazakhstan to increase their exports to Russia and to replace a part of the
nearly 500 billion Russian imports [4].
Our main priority - economic development and Kazakhstan is guided by its
long-term interests. We have the resources and have an understanding of where we
aim: to integrate into the global economic system. Nowadays, it is clearly impossible
to not to be a part of the global economy, so Kazakhstan is going to integrate its
economy and build relations with European Union, China, and other countries as
well.
In spite of the fact that there are many obvious difficulties, which follow
integration process, it is undoubtedly a splendid path to develop our economy.
The very first and most definite step is to remove hindrances between the
countries and promote delivery of goods, services, funds and labor. Thus, free
economical and more effective territorial and regional structure of the division of
labor is formed. This provides significant gains to all participating countries in the
level of productivity, scale of production, reduction in cost and control over foreign
economic relations.
BIBLIOGRAPHY AND REFERENCES:
1. Евразийская экономическая интеграция: 20 наиболее часто задаваемых
казахстанцами вопросов (по материалам СМИ, социальных сетей, срезов
общественного мнения, экспертных опросов) // Астана, 2014 /
www.nurotan.kz
2. Angelo Kinicki, Brian K. Williams. Management: a practical introduction. –
5th ed. HD31.K474 2011. 658-dc22
3. Будущее
ЕАЭС:
Cложный
поиск
равновесия
и
роста.
Макроэкономический анализ стартовой ситуации в ЕАЭС / Берлин
Иришев,
Михаил
Ковалев/
http://www.ratel.kz/perimeter/buduschee_eaes_slojnyiy_poisk_ravnovesiya_i_
rosta/
4. Деловой Казахстан/ №5 (452), 13 февраля 2015 г/ http://dknews.kz/wpcontent/uploads/2015/02/Binder-13.pdf