Institutional ensuring of the industrial and innovative development of member states of the Eurasian economic union

In article are considered the current state and problems of industrial and innovative development of member countries of the Eurasian economic union, and also a possibility of his activization through development of institutional ensuring of the industrial cooperation in the scientific and technical and innovative and production sphere. In article is noted that one of the main reasons for lag of the industry of member states of EEU in labor productivity on gross value added from the level of economically developed countries, is the imperfect technological structure of an industrial complex that leads to decrease in his competitiveness. It demands combination of efforts of member countries of the Eurasian economic union on reduction of technological lag and to development of export of in common made production on the markets of the third countries. In article  is emphasized that activization of industrial cooperation in the scientific and technical, innovative and production sphere of member states of EEU has to be promoted by creation and functioning of the following supranational institutes of development: Euroasian network of industrial cooperation and subcontracting, Euroasian technological platforms, Euroasian engineering center, Euroasian network of a transfer of technologies, uniform digital space of the industry of EEU.

In modern conditions there is an intensive strengthening of international economic correlations and interdependencies of different countries and regions of the world. This leads to an increase in the role of the international component of all factors, links and elements of the national reproductive system. In the course of this objective process there is growing of economic strength and efficiency of the market mechanism on the one hand and on the other hand there is an increase of growing discrete and unpredictable factors; and the risk of global transformation of the world economy. With the growth of exogenous risks the degree of market uncertainty for the business sector increases, as well as a functional role of the state becomes complicated. The limited opportunities of national states for self-leveling of effects of the external threats and factors initiate their desire for regionalism and integration in the regional integration blocs. World economic cataclysms actualize the need for institutional convergence of countries, especially at the regional level.

As Bjorn Hettne, Professor of the University of Gothenburg (Sweden) fairly pointed out, «regionalism  is one of the ways to cope with the global transformation, since most countries lack the manpower and resources to overcome such problems at the national level» [1].

By now the world’s number of regional free trade agreements, customs unions and preferential trade agreements has exceeded three hundred and almost every country has participated into one or another trading bloc, and even several blocks. Thus regionalism and regionalization are objective tendencies of the modern globalizing world market space determined with tendency of national states to use the international exchange of goods and factors of production to boost the economic growth, rise incomes of the a business sector and social welfare of the country as a whole.

It is important to note that globalization and regionization have dualistic functional nature. On the one hand they perform the consolidating function (in terms of the liberalization of various goods and resource flows; and the interdependence of different countries resulting from it). On the other hand they also are characterized by separating basis: globalization leads inevitably to a polycentric world stratification and regionizm leads to isolation from third countries. In fact this means that the intensification of relations between the participating countries of regional integration alliances, merging of their economic and political system is not the goal of the regional integration, but rather, its side effect or instrument. Also the dominant purpose of the regional integration as a model of a consolidated active participation of the group of the region’s states in the globalization process of the world stratification is the desire of the participating countries to take a higher position (stratum) in the world hierarchy and eliminate the possibility of drift toward the periphery.

It is necessary to analyze the opportunities and consequences of formation and functioning of the Eurasian economic union between Kazakhstan, Belarus and Russia exactly from these methodological positions. 

It should be noted that in March 1994 the President of Kazakhstan, N.A. Nazarbayev was the first to suggest an idea to create the CIS qualitatively new integration association the Eurasian union of states.

Creation of the Eurasian union offered initially the realization of 5 stages:

• stage of establishing a free trade area (FTA) suggesting duty-free trade between the participating countries but their independent trade policy towards the third countries;
• stage of the Customs Union (CU) suggesting the formation of a single customs territory with unobstructed movement of goods within it and development of the general policy of customs and trade;
• stage of establishing a single market (economic space) (CES) suggesting freedom of movement not only of goods but also services, capital and labor force within the CES;
• stage of establishing an economic union within which the participating countries shall coordinate the economic policy of each other;
• absolute economic integration within which a supranational body shall determine the monetary, fiscal, trade and social policy for all the participating

The Eurasian economic union assumes creation of an economic union of countries within which restrictions on the movement of goods, services, capital and labor force shall be abolished. In addition, within the Union there shall be conducted harmonized and unified economic policy related to the key areas of the economy.

According to the leadership of Kazakhstan, the Eurasian union is a mega-project commensurate with complex challenges of the present and future. It has the potential to become an integral part of the new global architecture, formation of which began under the influence of the global financial and economic crisis.

To this end, all the participants of the Eurasian integration must have a clear and precise strategy. The strategy should be based on the following principles:

• The Eurasian Union was originally established as a competitive global economic
• The Eurasian Union must develop as a strong link connecting Euro-Atlantic and Asian areas of development. In economic terms, the Eurasian union may become a bridge between the dynamic economies of the European Union, East, Southeast and South Asia. We are primarily talking about implementation of the project of the international transport road corridor «Western Europe Western China». Seemingly with time a modern transport and logistics system will be formed along this route and this system will reduce delivery periods of goods to the European and Chinese markets more than 3.5 times. Of course, it is seen perspective to establish a Trans-Eurasian high-speed railway in the future. It is assumed to expanse cooperation between the Eurasian economic union with the European union, the People's Republic of China, Japan, and
• The Eurasian union must develop as a self-sufficient regional financial union which shall be a part of a new global financial system. According to Kazakhstan, the creation of a monetary union within the Common Economic Space is a line, breaking which we shall come very close to a new level of integration, close to the current state of the European
• A geo-economic and then geo-political strengthening of the Eurasian integration must go exclusively in an evolutionary and voluntary

As experts think, the Eurasian economic union is a powerful integration union with a huge economic potential due to the following objective factors:

• combined GDP of the three countries is nearly 2 trillion dollars;
• industrial potential is estimated at 600 billion dollars;
• volume of agricultural production is about 112 billion dollars;
• general consumer market is 170 million persons;
• gas production is at the 1st place in the world, 22 % of the world share;
• oil production is at the 1st place in the world, 14.6 % of the global share;
• coal production is at the 4th place in the world, 5.9 % of the world share;
• electricity production is at the 3rd place in the world;
• metallurgical industry: the production of the pig iron is at the 3rd place, steel is at the 4th place in the world;
• production of mineral fertilizers is at the 2nd place in the world;
• mechanical engineering is at the 6th place in the world;
• agriculture: wheat is at the 4th place, meat the 5th place, potatoes the 3rd place in the world;
• road infrastructure is at the 5th place in the world;
• railway infrastructure is at the 2nd place in the world [2]. 

Development of integration processes between the EEU participating countries, creation of innovative systems, one of characteristics of which is the leading role of science and high-tech industries, are possible on condition of development of integration processes on the basis of creation of new institutional forms of cooperation by the countries. It is connected with the fact that the increasing relevance is acquired by management not of separate innovations, but the processes directed to creation of innovative systems and system use of innovations. As a consequence of these changes acts requirement of formation of new approaches to the state and interstate regulation, and management of innovative activity, to contents, coherence and interactions scientific and technical, innovative, industrial and investment the policies.

Analysis of significant publications. Questions of the theory and practice of the Euroasian integration rose in works of such domestic researchers as S. A. Afontsev, S.Yu. Glazyev, R. S. Greenberg, A. N. Luzgin, I. Ushkalov. At the same time, despite the existing considerable number of publications on the considered subject, many aspects of development of integration processes still cause heated debates. Overwhelming part of the publications devoted to the analysis of functioning of the Eurasian economic union considers process of formation of the uniform market from a position of his standard legal support and economic effects, without paying due attention to questions of institutional ensuring of the industrial cooperation in the scientific and technical and innovative and production sphere. The question of supranational regulation of process of integration in the sphere of industrial and innovative cooperation of the countries of EEU and its direct influence on effectiveness of the carried-out economic transformations of the integrated countries is insufficiently studied.

Main results of a research. Now cumulative economic opportunities of member states of the Union create great opportunities for strengthening of influence on development of world economy. At the total amount of gross domestic product of the Union about 2,2 trillion US dollar or 3,2 % in structure of world GDP, industrial production of member states makes about 1,3 trillion US dollar or 3,7 % of world industrial production, and the number of economically active population 92,9 million people or 2,8 % of world number [3].

Availability of considerable resource base, industrial and scientific and technical potential creates opportunities for the extensive integration agenda that allows to expand in the long term the list of spheres of economy and market niches in which the EEU is a significant player on the world scene.

Development of economies of member states of EEU in 2016 happened in the conditions of preservation of low growth rates of world economy and trade, strengthening of regional geopolitical tension, strengthening of influence of sectoral sanctions both on external, and on domestic trade and investments, growth of sensitivity of cross-border streams of the capital to change of economic conditions.

In 2016 in comparison with 2015 such main socio-economic indexes of EEU as volume of GDP and investment into fixed capital show decrease – for 0,7 % and 3,4 % respectively (Table). At the same time positive dynamics was observed on industrial outputs (for 0,9 %), productions of agricultural production (for    4,5 %), retail trade (for 4,8 %).

T a b l e

Macroeconomic indicators of EEU countries in 2016 (as a percentage of gain by 2015) 

Note. It is made by the author according to the data of the Euroasian economic commission [4, 5]. 

In a country section is noted decrease: GDP – in Belarus (for 2,9 %), in Russia – for 0,9 %; industrial production in Belarus (for 0,4 %), Kazakhstan (on 1,1).

In general, an optimum situation with macroeconomic indicators at the Republic of Kazakhstan and the Kyrgyz Republic among the states of EEU. In Kazakhstan at the positive level there is GDP gain, production of agriculture, volume of the performed construction works and retail trade turnover (table 3). As result, positive rates of a gain in most branches of manufacturing industry. In Kyrgyzstan positive dynamics is shown by all considered macroeconomic indicators.

In 2012-2015 the countries of the Union have considerably improved the positions on a number of the international ratings (given below data display changes of positions of member states in the international ratings for the specified period):

1. Republic of Armenia has raised positions in the following ratings: «Doing Business» — on 26 points (I place among the EEU countries), Global index of innovations — 8, Index of efficiency of logistics of the WB — 13, Index of an involvement of the countries into international trade of the WEF —
2. Republic of Belarus: «Doing Business» — 31, Global index of innovations — 25, Index of human development of PROON —
3. Republic of Kazakhstan: «Doing Business» — 12, Index of global competitiveness of the WEF — 5, Index of efficiency of logistics of the WB — 3, Index of an involvement of the countries into international trade of the WEF —
4. Kyrgyz Republic: «Doing Business» — 9, Index of global competitiveness of the WEF — 21, Index of an involvement of the countries into international trade of the WEF —
5. Russian Federation: «Doing Business» — 75, Index of global competitiveness of the WEF — 18, Global index of innovations — 3, Index of efficiency of logistics of the WB — 10, Index of human development of PROON — 9, Index of an involvement of the countries into international trade of the WEF — 13 [6].

At the same time, negative dynamics of macroeconomic indicators demands from member states of acceptance of the complex measures directed to overcoming the crisis phenomena in economy.

In general, problems of diversification of manufacturing industry, including questions of import substitution and development of new hi-tech types of production are urgent for all states members.

Now one of world calls to development of industrial production is the increasing complexity of productions, complication of the production, processes of her designing, design, production management.

One of the main reasons for lag of the industry of member states of EEU in labor productivity on gross value added from the level of economically developed countries, is the imperfect technological structure of  an industrial complex.

The industry of the countries of OECD, unlike the industry of member states of EEU has other technological structure: highly technological sector makes from 7 % to 14 % of industrial production. High-tech industrial types of activity are a competitiveness source for less technological, and low-technology – a source of raw materials and materials for the others [7].

In EEU member states the specific weight of highly technological sector in industrial production makes 2-4 % that nearly three times below than the level of the countries of OECD and leads to decrease in competitiveness of their industry [7].

Overcoming the increasing complexity of industrial production happens due to development of sector of the engineering companies which undertake processes of a research of the market, search of perspective commodity niches, development of 6D-model of investment projects, a transfer of technologies.

Speed of design of new production has increased in modern industrial production, and time of development of new model in production has to decrease up to several weeks that is connected with risk of copying of production. Transition to modular designs of products when a component of a product becomes attached to function became one of the main trends in world design and via the standard interface all components gather in one product. Use of modular designs saves labor costs and reduces time for testing and certification of the final product.

Lag in introduction of electronic control systems of production processes, use of the modular principle of design, use of quickly readjusted technological lines leads to loss of competitive advantages in the industry. The organization of increase in competences and education in the sphere of digital technologies, first of all is extremely important for the persons making decisions in the sphere of transition to digital economy. In this regard, member states of EEU will prepare the Euroasian digital platform of development of the countries of EEU. Besides, member states of EEU need to create actively, including in common, conditions for formation of the innovative industry and development of objects of industrial and innovative infrastructure, such as technological platforms, network of a transfer of technologies.

Industrially developed countries have announced policy of new industrialization: return of productions to the own territory, activization of innovative development in highly technological types of activity, ensuring competitiveness due to increase in extraction of energy resources and power generation in the nonconventional ways (renewables).

The called tendencies mean considerable strengthening of the high-quality competition in foreign markets, difficulty in strengthening of non-oil export to the third countries for EEU member states.

Overcoming this call demands combination of efforts of the Parties  on reduction of technological lag and to development of export of in common made production on the markets of the third countries and interaction in these markets.

The cooperation purpose in the sphere of industrial and innovative development within EEU is realization of potential of effective and mutually advantageous interaction of member states for ensuring acceleration and stability of industrial development, increase in competitiveness and innovative activity of the industry of member states.

Activization of industrial cooperation in the scientific and technical, innovative and production sphere  of member states of EEU has to be promoted by creation and functioning of the following supranational institutes of development:

• Euroasian network of industrial cooperation and subcontracting;
• Euroasian technological platforms;
• Euroasian engineering center
• Euroasian network of a transfer of technologies;
• uniform digital space of the industry of

The Euroasian network of industrial cooperation and subcontracting has to become the mechanism of creation of cooperation communications between the enterprises of the industry of member states of EEU, involvement of small and medium-sized enterprises in production chains. A basis of the Euroasian network  of industrial cooperation and subcontracting is creation and functioning of national segments (national networks) of industrial cooperation and subcontracting of member states of EEU.

Formation and functioning of the Euroasian network of industrial cooperation and subcontracting demands from member states of EEU of realization of the following events:

• creation of the general information system of search and the organization of orders in the industry (databases about the enterprises of the industry and products, production capacities and the available resources);
• creations and the organizations of functioning of the exchanges of subcontracting (as platforms for search of partners, negotiation and the conclusion of preliminary contracts);
• organizations of advisory support of the enterprises of the industry for search of partners in cooperation.

For development in the innovative sphere EEU member states, business community have to realize the joint projects aimed at the development and commercialization of technologies, creation of the innovative enterprises, start of production of innovative industrial goods (works, services). Sources of financing of the joint projects which are at a stage of generation, development and commercializations of technologies can also be joint venture and investment companies (funds).

At the same time the leading role in financing of projects with cooperation effect of member states of EEU has to be assigned to Eurasian Development Bank (further – EDB). At the same time the share of such projects according to the strategy of Bank has to increase constantly. Cooperation effect can carry:

• short-term character at which delivery of processing equipment for implementation of investment projects, including, with use of leasing schemes is carried out;
• long-term character at which the investment project forming stable relations between the enterprises of member states of EEU is

For creation of the centers of competences of member states, for formation of economy of future, continuous technological updating, increases in global competitiveness of the industry are formed the Euroasian technological platforms (further – ETP).

ETP are the mechanism of cooperation of interested parties in scientific and technical, innovative and production spheres and sciences (research institutes, universities, other educational institutions), the states (institutes of development, profile public authorities), public organizations (branch associations and  associations) of EEU member states are formed by creation of conditions for cooperation between the leading organizations of business (the branch industrial enterprises, the state companies).

Tasks of ETP is ensuring system work on accumulation of the advanced national and world achievements of scientific and technical development, mobilization of scientific capacity of member states for the solution of applied tasks of development of innovative products and technologies, and also to their introduction in industrial production.

Member states for formation of technical and technological base for ensuring transition to new technological way of the industry of member states and service-oriented model of industrial production in EEU  have to work the mechanism of generation and introduction of the advanced technology solutions regarding automation, robotization, including with consideration of creation of the Euroasian engineering center (further EEC) and his elements (the centers of competence).

Main objective of activity of EEC is development and assistance to introduction of innovative technology solutions in productions of machine-building complexes of member states of EEU. EEC together with institutes of development has to predict requirements of mechanical engineering and perspective niches for development of means of production and objects of the labor, to form the updated list of the perspective technology solutions demanded in priority branches of economy.

EEC has to assist development and start in mass production of the perspective equipment in close cooperation with the interested producers and objects of innovative infrastructure (including through joint scientific and technical researches with world technological leaders, including multinational corporations).

The Euroasian network of a transfer of technologies is has to become one of effective forms of advance of innovations in EEU member states, the tool for transfer of results of intellectual activity, and also the rights for their use, between persons or the organizations for the purpose of their subsequent introduction and/or commercialization.

The main forms of transfer of results of intellectual activity are:

• transfer or alienation of the exclusive right to results of intellectual activity (as a rule, objects of industrial property);
• granting the right to use intellectual property items within licenses;
• transfer of a know-how, technological experience, covering notes to transferred to the machinery and equipment of documents, and also training of experts, advisory maintenance, ;
• transfer of the technological data accompanying acquisition or rent (leasing) of the equipment and сars;
• information exchange in personal contacts at seminars, symposiums, exhibitions, ;
• carrying out by various firms and scientists of joint developments and researches;
• employment of the new qualified employees having certain knowledge;
• other forms of information

For formation and the subsequent use of the Euroasian network of a transfer of technologies EEU member states on the basis of national systems have to realize the following events:

• to create the general network system for search of developers of technologies and the enterprises interested in them;
• to create the general network system for search of partners for performance of joint research and development;
• to integrate the Euroasian network system into

Research conclusions. One of the main reasons for lag of the industry of member states of EEU in labor productivity on gross value added from the level of economically developed countries, is the imperfect technological structure of an industrial complex that leads to decrease in his competitiveness. It demands combination of efforts of member countries of the Eurasian economic union on reduction of technological lag and to development of export of in common made production on the markets of the third countries. Therefore the priority directions and problems of cooperation in the sphere of industrial and innovative development within EEU in modern conditions have to become:

• increase in growth rates and industrial outputs in EEU member states;
• development of cooperation;
• increase in a share of production of member states in the common market of EEU and aspiration to stage-by-stage increase in its localization;
• development of productions of the new competitive production focused on export, modernization of the operating productions with creation of new innovative sectors of the industry of member states of EEU;
• elimination of barriers on the way of the movement of industrial goods in the common market of EEU as on federal (republican) and regional (local) levels;
• attraction of investments and increase in availability of financial resources to the enterprises of the industry.

Activization of industrial cooperation in the scientific and technical, innovative and production sphere  of member states of EEU has to be promoted by creation and functioning of the following supranational institutes of development: Euroasian network of industrial cooperation and subcontracting, Euroasian technological platforms, Euroasian engineering center, Euroasian network of a transfer of technologies, uniform digital space of the industry of EEU. Realization of these institutional mechanisms of interaction of member countries of EEU will give a powerful impulse to deepening of cooperation between them in the field of industrial and innovative development, and also will promote association of innovative infrastructure and system of a transfer of technologies, fuller use of potential of the common market, increase in a share of production of member countries of EEU in the world market (including in common made production). Besides, it will allow to gain synergetic effect of joint development of industrial production of member countries of  EEU and to increase the specific weight of hi-tech kinds of activity in industrial production.

References

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