ArmInfo. The world economy began to experience serious problems in the further implementation of the model of a post-industrial society, when the largest countries of the world are no longer able to move production beyond their borders and are forced to support the development of the real sector.
This opinion was expressed by famous Russian economist, specialist in the field of analysis and forecasting and cross-sectoral macroeconomic research, Professor Alexander Shirov, asking the question of how the EAEU countries should build their economic policy in the context of integration processes.
According to the economist, maintaining the real sector by the world's largest economies, and primarily the United States, is intended to provide them with the necessary level of economic and military security, which is necessary in the conditions of global regionalization and fragmentation. In this context, countries are faced with labor shortages, which require reforms in taxation and secondary redistribution of income, with a decrease in the efficiency of R&D expenditures (research-and-development activity, ed. note). Statistics from developed countries show that despite the high spending on R&D, which are growing exponentially, their returns are constantly decreasing. Moreover, after the 2008 financial crisis, the share of exports in the world GDP structure is decreasing. The conclusion of all this implies that the economic model that has existed over the past 30 years and has given large countries the opportunity to increase income levels has begun to falter.
Mr. Shirov believes that, in contrast to developed countries, the role of large developing countries has increased dramatically over the last 15-20 years. The complexity of their economies has increased and their ambitions to participate in global decision-making have increased accordingly. According to the expert's forecast, these fundamental changes will lead to the fact that only the United States will remain in the top five largest world economies, and the rest will be replaced by China, India, Indonesia and, possibly, Russia, which will lead to an increase in conflicts in global economic relations.
Therefore, speaking about the role and weight of the EAEU, the specialist considers the participation of the Union's member countries in this game obligatory. "This means that we must have our own technologies, which will be the "entrance ticket" to the new world," Mr. Shirov noted. However, in conditions of fragmentation, super-economic integration associations will play a crucial role. These are those associations whose population is about 300 million people, whose GDP is at least $5 trillion, total R&D expenditures are at least $200 billion, and defense spending is at least $200 billion. "Unfortunately, the EAEU has not yet reached the status of a super-economic association, but, nevertheless, we can participate in this new process of forming new economic dynamics. And here it is necessary to correctly build an economic policy and benefit integration processes in line with the development of industrial cooperation. This is where you can earn additional income," says the economist. According to Mr. Shirov, the EAEU's impact on member countries' economies has been very significant since 2015. "You can see the accumulated GDP growth in the EAEU countries; it exceeded 50% in Armenia. And these are not just numbers. In terms of per capita GDP, Armenia has come significantly closer to the leaders in the post-Soviet space. However, these high growth rates were mainly associated with trade and financial relations within the EAEU, and in order to maintain such growth rates in the future, decisions of the next echelon are required - the development and restoration of the country's industrial potential, its reindustrialization," he emphasized.
At the same time, according to Mr. Shirov, one must understand that the EAEU countries have enormous potential for development, and above all, the potential of markets in terms of consumer demand. "In this matter, unfortunately, we have a rather conservative consumption structure. Only 30% of the richest families in Armenia have access to a complete basket of consumer food, which conditions a person's quality food and comfortable life. In Russia, for example, it is available to a little less than half of the population. That is, there is room to grow and develop. In fact, the capacity of the EAEU market allows us to develop both production focused on consumer demand and production focused on investment demand," he believes.
According to the economist, if you look at what is happening in the EAEU with demography, then a lot will depend on the development of the real sector in this matter as well.
"It seems that the burden of non-working people to working citizens is increasing in all countries, but even with a 1% increase in labor productivity in 2050, the same burden will be maintained in EAEU countries. This suggests that even a small increase in production efficiency allows us to solve all these problems," he says. According to Mr. Shirov, the development of R&D should become the most important element of EAEU integration.
"Unfortunately, we do not yet have sufficiently acceptable volumes of exchange of results in the field of research and development, but access to global results is only possible if you have an "entry ticket", when you have your own technologies, be it in the IT sector, in the biotechnology sector and others like that sectors. This is where cooperation will allow us to both solve problems of industrial development and solve problems of increasing production efficiency," the specialist believes.
As the economist noted, now even considering the imported research and development costs, neither Russia, nor Belarus, nor Armenia, nor other EAEU countries can afford such a level that is comparable to world leaders. In general, EAEU shares 3% of the world's total R&D costs, of which 1% are domestic costs and another 2% are imported costs. For example, Germany has a 3% share, and these are direct own costs. It is clear that without a serious increase in these costs, and primarily on by the business, including through cooperation, solving the problem of increasing production efficiency is impossible.
For now, the level of cooperation in the production sector in the EAEU countries is quite low. For example, intermediate products from Armenia to Russia is $220 million alone, which is very little. Things are somewhat better in industrial cooperation between Russia, Belarus and Kazakhstan. Therefore, if this cooperation is created and production chains begin to form, there is a serious source of income growth.
According to the expert, already today, the growth potential of the Armenian economy by inertia is about 4% per year, without connecting other factors to the existing model. If we add technological and integration changes that increase efficiency, then the average y-o-y economic growth rate will reach 6% by 2035. In Russia, this figure may be 3.5%. Half of the growth will be related to production efficiency and will provide countries with a satisfactory level of global competition.
Therefore, according to Mr. Shirov, the implementation of the "technology - cooperation - efficiency - growth" chain within the EAEU is more than relevant and vital as of today.
