Download INTEGRATION OF KAZAKHSTAN ECONOMY - G

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 union-that 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 export-import 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.)
Countri Populat GDP
es
ion(mill (Purcha
ions)
sing
power
parity,
billion
US
dollars
)
Russia 142.5
2113.0
Belarus 9.6
69.2
Kazakh 17.7
224.9
stan
GDPInflatio
per
n
capita
rate(%)
(thousa
nd US
dollars)
Unempl Net
oyment trade
rate(%) balance
(billion
US
dollars)
14.8
7.2
12.7
5.8
0.0
5.3
6.8
19.0
5.8
174.0
-3.1
35.2
Source - CIA World Factbook
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 longterm 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
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_rost
a/
4. Деловой Казахстан/ №5 (452), 13 февраля 2015 г/ http://dknews.kz/wpcontent/uploads/2015/02/Binder-13.pdf