Economic integration is the future

Economic integration is the future

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Economist Yaroslav Lissovolik — why the BRICS countries could become a suitable platform restart of economic globalization in the new format


Photo: lime/Alex Maishev

The events of the last few years clearly demonstrate that the process of globalization and open markets have stalled, the output of which requires new approaches to economic integration. In these circumstances, on the background of damping of the integration of pulses in developed countries, the initiative in shaping the new contours of the world economy intercept the largest developing country. One of the leaders in this field is China, whose head earlier this year in Davos spoke in defense of open markets in the global economy. China illustrates the construction of development institutions and the creation of a major transcontinental mega-projects, such as “One belt, one road”.

The recent proposal in this series of Chinese initiatives — the idea of creating a Union of the BRICS+, which, according to Chinese foreign Minister Wang Yi, will prepare a new platform for cooperation among developing countries through an effective dialogue between the BRICS countries to other economies or groups of countries. “We will expand the circle of partners of the BRICS, and transform our Union into the most influential platform for the cooperation in the format of “South — South” in the world” — said Wang Yi

The initiative to establish a BRICS+ can give new impetus to the process of openness in the world economy. And will allow BRICS to become the first organization of developing countries, is really defining a new, more sustainable and equitable world economic order. In the current BRICS rests on the limitation of interaction between major countries, sometimes separated by a considerable distance. Under these conditions, the greatest potential of BRICS development is to enhance economic cooperation in a broader format that includes not only countries, but regions and even continents.

Indeed, the uniqueness of BRICS lies in the fact that each member of this Association, the country’s economy at the same time is leading to their continent or sub-region in the framework of the agreement on regional integration: Russia in the Eurasian economic Union, Brazil in MERCOSUR, the South Africa development Community Southern Africa (SADC), India in the South Asian Association for regional cooperation (SAARC) and China in the Shanghai cooperation organization (SCO) and created a Regional comprehensive economic partnership (RCEP). All countries in these regional integration mechanisms, which are the partners of the BRICS, can form so-called “BRICS+” − unions that are open to establish flexible and diversified modes of cooperation (not only through trade liberalization) on a bilateral or regional basis.

Due to the implementation of such a strategy, the BRICS can take a leading role in shaping global economic integration by creating a network of unions on all continents. While trade liberalization is not the only or even the main tool of integration within the BRICS+, given that one of the key trends in the practice of the economic integration of recent years is the development of investment cooperation between the two countries.

Thus, when forming an extended integration of a network of alliances, BRICS countries+ you will need to pay special attention to the conclusion of investment agreements, reducing non-tariff barriers, building a regional and global value chains.

It is obvious that to overcome the “new normal” of low growth of the world economy it is time to start thinking about integration and globalization in the new and in some cases even non-standard key. It is necessary to abandon the outdated formula of globalization in the form of “core — periphery” in favor of sustainable development, which is based on greater equality of opportunity and consideration of mutual interests of the countries in the process of economic integration. The group of BRICS countries can become a suitable platform for the restarting of globalization in the new format.

The author is chief economist at the Eurasian development Bank (EDB), program Director of the international discussion club “Valdai”

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