Perception of the eurasian integration as a factor of improving the competitiveness of kazakhstan by the public and the experts

In August 2013 Institute of Eurasian Integration conducted a comprehensive sociological study on the perception by the public and the expert community of Kazakhstan of the Eurasian integration processes. Among other things, they touched upon the impact of the integration process on the development of the country, in particular, the growth of its competitiveness. Population survey was conducted on a nationwide sample in 14 regions of Kazakhstan, as well as in the cities of Almaty and Astana. In general, the study covered 17 urban and 27 rural settlements. The sample contained 1,200 respondents. Findings of the survey are representative, accounting the sampling errors at the level of ± 2,83% at the 95% of CI.

Questionnaire survey covered 80 experts from all regions of the country, the target group included political scientists, sociologists, philosophers, economists, educators, journalists, PR-managers, NGOs, community leaders, government officials,

analysts, employees of international integration organizations. During the study, series of indepth interviews with experts were conducted.

Eurasian integration project, the idea of which was first announced by the President Nursultan

Nazarbayev during a lecture at Moscow State University in 1994, now runs through the next stage of development - the Customs Union and the Common Economic Space.

In the context of participation in these integration associations in its domestic and foreign policy Kazakhstan now has to consider not only its own interests but also the interests of the partner countries, synchronize with them economic instruments, taking into account the possibility, and sometimes even the need for the establishment of joint projects. Paving the way for integration, Kazakhstan also expects participation of the partner countries in addressing a number of problems of its development.

In today’s world competitiveness of individual countries largely depends on their willingness to integrate into the global system. Active participation of the state in the integration processes

of different levels has a strategic nature, as it allows, firstly, expecting an increase of the po

litical weight of the country, which will allow participating in the development of global policy-making decisions, and secondly, effectively address the internal development in conjunction with other states.

Association of states, in addition, enables holistic and comprehensive approach to the solution of global challenges such as the food crisis, major environmental problems, international conflicts, terrorism and drug trafficking.

Integration is undeniably an important factor in the development of any state in the modern world, the experts, interviewed during the study, were unanimous in saying that for the further successful development Kazakhstan has to be involved in the integration processes.

What place do the integration processes occupy in the socio-political priorities of people in the country? Do the people of Kazakhstan consider integration to be perspective for the country’s development direction?

Results of the survey showed existing understanding of priority tasks by the Kazakhstan’s people, to address which Kazakhstan should first of all seek in its development.

The first place in the system of socio-political

objectives of the country’s development is taken by a task to reach the level of developed democratic states. It was named by almost half of the respondents (47.9%) (see Table 1). Among the priorities, the respondents voiced emergence of Kazakhstan as an industrialized country (35.6%).

For 18% of respondents, an achieving of regional leadership in Central Asia by Kazakhstan is a priority - this answer was the third most important direction of further development of Kazakhstan. 15.2% of the population believe that Kazakhstan should strive to become a strong power with military might.

The top five most expected trends of the development include integration expectations of the population. Thus, 14.9% of Kazakhstan people believe that the state should strive to join with other countries to form a strong alliance. People, who more often than others consider integration processes as important ones, are respondents of 45-54 years old (19.5%), with higher and incomplete higher education (20-24%), and civil servants (21.3%). A sense of importance of integration for the state is affected by financial level

of the respondents: the necessity to unite with other states into a strong union is often mentioned by respondents with reduced financial abilities

(those who consider themselves in the category of “income is only enough for food”) - 22%.

Objective

Share, in %

Become developed democratic state

47,9%

Become industrial developed country

35,6%

Become a leader in Central Asia

18,0%

Become a military super power

15,2%

Unite with other countries into powerful union

14,9%

Become a center of international business and trade

9,0%

Become a state, attractive to large investors

8,3%

Become a center of international tourism

5,9%

Become a center of international education and intellectual technologies

5,2%

Don’t know/No answer

1,5%

Table 1 - Distribution of answers to the question: “What should Kazakhstan strive to in its development first?” * (Population survey)

* Respondents were given the opportunity to choose two options

The need for integration of Kazakhstan with other countries is increasingly recognized by Kazakhstan’s society, it becomes a part of its ideology. This is confirmed by the fact that only

4.9% of respondents believe that Kazakhstan does not need to be integrated.

Since integration with other countries, as per the majority of respondents, meets the interests of Kazakhstan, therefore, a matter of choice of integration partners is directly related to the successful implementation of joint projects.

Multi-vector foreign policy of Kazakhstan is also reflected in the integration orientations

of its citizens. The Kazakhstan people consider multiple destinations of integration promising, but show the greatest interest to already being implemented Eurasian project. 30.4% of respondents chose this area as the most coinciding with the interests of the country (Table 2). Competition for this direction is the integration with the European Union, which is also an interest for a considerable part of the Kazakhstan people.

These areas can be called competent due to the fact that the support is made by almost the same social groups: quite financially independent,

university-educated, between 25 to 34 years old (in the case of the Eurasian project - from 25 to 44 years old). The difference is that the Eurasian project is often supported by civil servants, the integration with the European Union by state employees and self-employed. A factor of ethnicity also has an impact: logically Russians are more likely to believe that Eurasian direction with participation of the Russian Federation is more sensible one among the interests of Kazakhstan, while in favor of European destinations, they speak more rarely than others.

Table 2 - Distribution of answers to the question: “Which of the integration areas, in your opinion, are to a greater extent in the interests of Kazakhstan?” *

Answers

Share, in %

Integration within the Customs Union (CU) and the Common Economic Space (CES) (Kazakhstan, Russia, Belarus)

30,4%

Integration with the EU countries

30,1%

Integration with the countries of the former USSR

18,4%

Integration with China

15,3%

Integration with Central Asia’s countries (Uzbekistan, Kyrgyzstan, Tajikistan, Turkmenistan)

8,1%

Integration with the countries of the Turkic world (Turkey, Kyrgyzstan, Uzbekistan, Turkmenistan, Azerbaijan)

6,8%

Integration with the countries of the Islamic world

3%

Kazakhstan does not need to integrate

4,9%

None of these

3,2%

Other

1%

No answer

10,8%

* Respondents were given the opportunity to choose two options

At the same time the idea of integration with the countries - the former Soviet republics has a strong support. 18,4% of the respondents believe this direction to be corresponding to the interests of Kazakhstan. It should be noted that this trend is unpopular among the younger age groups - 18 to 34 years old people and students. Most often this option of integration is supported by respondents with low levels of income, with secondary education, the Russian.

The idea of integration with China, ranked fourth in the list of preferred destinations, is supported by 15.3% of the respondents. It should be noted that the same number of respondents believe that China is a country with which the Republic of Kazakhstan has to have same approach to strengthen its position in the world arena. Financially independent people employed in the private sector show greater interest, as well as respondents with incomplete higher education and students.

During in-depth interviews, the interviewed experts pointed out that China is gradually becoming one of the priority areas of cooperation, which requires more attention. In their view, the bilateral cooperation between Kazakhstan and China is already out now on the level of competition with the Russian one. According to experts, the trade turnover of Kazakhstan with these two countries has in fact caught up in volume, reaching nearly twenty-five billion, both with Russia and China. Experts do not exclude that it will be another area of attraction for Kazakhstan, supported under the Chinese program to include Kazakhstan in the sphere of their economic interests. At the same time, among the experts there are different opinions according to which Kazakhstan has “natural allies”, which include the former Soviet Union and, above all, Russia. Eurasian direction of Kazakhstan’s foreign policy, according to them, has a natural base, while other destinations (India, China, and the European Union) are unviable, primarily because Kazakhstan does not represent a significant inter est for them.

Other areas of integration: the Central Asian countries or states of the Turkic world (Turkey, Azerbaijan, Kyrgyzstan, Uzbekistan, and Turkmenistan) are not accepted by the population as ones, meeting the interests of Kazakhstan, they were noted by 6-8% of the respondents.

Returning to the assessment of the Eurasian integration project, it should be noted that at the moment it already has broad public support. About three years have passed since the establishment of the Customs Union and the year since the launch of the Common Economic Space (CAP), and today’s society has formed acertain picture about an impact of integration on the development of the country. The findings suggest that the positive-optimistic view of the present and future integration begins to dominate in Kazakhstan society.

Evaluating the effectiveness of being a part of the CU for the country, the majority of the Kazakh (46.3%) agree that membership in the Customs Union is good for Kazakhstan and opens up new possibilities for its development. Every fifth of the respondents does not agree with

this statement (19.5%). About one third of the respondents do not have answer. The main positive effect, which was noted by the respondents, was a lightweight format of moving between borders of the CU and the expansion of the range of goods and foodstuffs. In addition, two thirds of the respondents (74.9%) believe that integration with Russia and Belarus is beneficial for Kazakhstan.

The opposite view is held by only 10.5%.

Public opinion is characterized by an optimistic view regarding the future of the Eurasian integration. An idea of the establishment of the Eurasian Economic Union has a high level of public support. The majority of the respondents (76.4%) consider the creation of the Eurasian Economic Union necessary. In the expert sample, 83.7% of the respondents agree with the necessity of development of the integration process towards the creation of the Eurasian Union. Opinions on realism and vitality of the Eurasian integration project in the future are widespread in society. So all in all, 80% of respondents consider it possible that the integration will continue to delve into the framework of the EAC. Confidence in the viability of the Eurasian project is higher in the expert community: 90.2% of the experts surveyed consider further deepening of integration and the establishment of the EAC possible.

During a survey, experts and the public were invited to speak out what interests, in their view, pursue Kazakhstan participating in the Eurasian integration associations.

Key strategic interest of Kazakhstan in the process of Eurasian integration, according to Kazakhstan’s people, is the access to the markets of partner countries. This option was in first place in the rankings, it was mentioned by about 35.8% of the population and 54.5% of the experts.

According to 29.6% of the population, for Kazakhstan the integration is a tool for entry into the world economic system. 38.6% of the experts express solidarity.

29.5% of the population and 45.5% of the experts believe that Kazakhstan is involved in the integration processes, as it hopes for a joint technological breakthrough with partner countries that will provide it an appropriate economic growth.

The fifth part of Kazakhstan’s people (22.9%) and 40.9% of the experts believe that the Eurasian integration enhances the external security of the state.

Despite widespread fears among Kazakhstan’s people concerning non-competitiveness of local producers, and, consequently, the potential of flooding the market with goods produced by

partners of the Customs Union, a fifth and a third of those surveyed Kazakhstan’s experts see Kazakhstan’s interest in enhancing the competitiveness of domestic goods.

In the frameworks of the study, a group of experts were asked to assess the effect for Kazakhstan on certain actions and measures undertaken in the framework of the Customs Union and the Common Economic Space.

Ranking in the analysis of the responses with the estimate of the significance of the measures, actions, acts that can positively or negatively affect the Eurasian process, helped to reveal, firstly, the level of the importance for a normal functioning of the already working integration mechanisms. Secondly, find a higher level of inconsistency, some shortcomings and omissions in the removal of which it is necessary to pay more attention as to the most difficult problems.

For example, according to experts the most positive effects for Kazakhstan and for Kazakhstan’s producers must be provided by ensuring maximum freedom of movement of goods. The largest number of experts surveyed who responded to this question in the questionnaire - 93% (see Table 3) agree with it. At the same time, clearly believe that it will only have “positive” effect - 48% of the experts, and find that the effect will be “more positive” - 44.2%. The negative effect for Kazakhstan was mentioned by only 7% of the experts surveyed.

The opinion among Kazakhstan’s respondents is likewise, most of them (82%) believe that the free movement of goods and services on the territory of the CU would be beneficial for the development of the country.

In addition, 86.4% of the experts surveyed see a positive effect in the free movement of services in the territory of the Customs Union as well.

During the interview, the experts emphasized the importance of creating a precedent of “open borders” for domestic producers, who will have to compete in the same economic niches with Russian and Belarusian business. Not denying the fact that the first time the competition will

be a very difficult challenge for Kazakhstan’sbusiness, however, experts emphasize the need to pass through this stage, the effect of which will be manifested in the long run. Otherwise, existing only in one country, local businesses do not make necessary breakthrough in the development of their own competitiveness, finding its specific economic niches.

At the same time, ensuring the free movement of goods and services is the most urgent task of legal and economic integration of the current phase of the movement to creation of a common economic space, the basis of the successful implementation of all the parameters of the interaction within the framework of the Customs Union.

The President of Kazakhstan, N.A. Nazarbayev, participating in the meeting of the Supreme Eurasian Economic Council in Minsk, drew attention to the fact that along with the increase in the share of imports into Kazakhstan from EEA countries, at the same time, there remain serious difficulties for access of

Kazakhstan’s products to the markets of Russia and Belarus. For example, the Kazakhstan’s meat products are in a prior non-favorable conditions, as in Russia they are subject to rules that do not exist in the sanitary certificates of RK. Similar examples are marked with deliveries of Belarusian food products to the Russian market, where there have been introduced new, not agreed upon in advance with partners, technical regulations, adopted increased sanitary and phytosanitary standards.

Statistics show that at this moment in trade with Russia, a major partner in the CIS, in spite of the increase in turnover, Kazakhstan has developed a rather stable deficit, identified more than

30 different access restrictions for Kazakhstan’s entrepreneurs to the markets of the CU countries [1].

Such situation causes negative comments from the experts, at the same time, there are some opinions that the situation in part contributes to “hardening” as Kazakhstan’s business so negotiators, brings up fighting qualities, gives

the experience of “trade wars” in the CU. In the future, when accessing to the WTO, Kazakhstan business will already have experience and certain stability in the competitive in a global level.

In their comments, experts, confirming the

presence at this stage of a mismatch in the actions of the participating countries, as well as the facts of non-tariff regulation methods towards Kazakhstan’s production from partner countries of the CU, offer their vision of measures to overcome the situation.

Experts talk about the need in the near future for the EAC countries to focus on narrowly focused integration projects based on specific

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areas, sectors, in which the mutual interests of the participants and the expected impact should be clearly calculated.

Speaking about the objective barriers to the free market development in the CU, experts point to the fact that the participating countries in many positions produce the same order of products: oil, oil products, natural gas, metals, grains, etc., which leads to competition for export to foreign markets between the countries. In this case, according to R.Alshanov, Dr. Sc. In Economics, Professor, to solve the problem it is necessary to create certain pools for individual types of goods. For example, the grain pool between Russia, Kazakhstan and Ukraine. Thus, according to Mogens Lund, an analyst at industry agricultural economics from the University of Copenhagen, in the case of the creation of such a grain pool, Russia, Kazakhstan and Ukraine in 5-8 years may become a major exporter of wheat, competing with the United States. Cooperation in the export policy will help countries to strengthen their position in the market, reduce price competition and stabilize export prices for grain. Despite the fact that efforts on creation of the pool do not work out, according to the news agency “Kazakh- Grain”, Russia, Kazakhstan and Ukraine at the moment managed to win 27% of the market (at the beginning of 2000’s it was 13%). [2]

The same principle could be effective for other types of products, from mineral resources to agricultural products.

Interviewed experts overwhelmingly also noted the importance of the introduction of a single customs territory. 90.9% believe that it will surely bring a high positive effect and only 9.1% doubt it.

The next by importance package of issues that can significantly affect the success of the integration project, are related to the need to harmonize the immigration and labor laws, the creation of conditions for free movement of human capital.

The effect of a successful solution of all problems in this sphere of relations and processes is recognize by the experts as a positive one: 86.1% - in ensuring the freedom of movement

of human capital, 88.6% - in the harmonization of labor laws and 90.9% - in the harmonization of migration legislation. The idea of free movement is supported by a significant group of the population surveyed.

The economic effect of the ratification of agreements on labor migration directly for countries - participants of the SES is associated with many factors. They are, above all, rational reallocation of labor, including the highly qualified, aimed at regulating migration flows, increase

the level of protection of foreign workers from the risks and threats associated with illegal employment, and cut the spending to curb illegal migration.

88.8% of Kazakhstan’s experts have stressed the significant effect for the success of the Eurasian integration process caused by the procedures on harmonization of macroeconomic policies with other countries participants. This should be promoted regardless of existed or anticipated level of self-sovereignty and other countries. Under the coordination of this kind of interaction it is necessary to enhance the role of supranational governance and organizational structures.

Positive effect on the whole process of integration in the provision of access to services of natural monopolies in the electricity sector, gas transportation is mentioned by 77.3% of the experts, but at the same time, 11.3% of them considered that the effect of this access may be negative. Introduction of common principles for the regulation of natural monopolies as a useful measure was supported by 75% of the experts, 13.6% stressed the negative effect of the introduction. Negative assessments of the experts likely to be associated with negative impressions of penetration by foreign monopoly companies into the energy sector of Kazakhstan.

More skeptical attitude of the experts is shown in relation to the creation of supra-national institutions in the field of economic regulation.

Although the attitude of the majority of experts in general is positive (65.2%), at the same time, more than a quarter (27.9%) of them believes that the establishment of such bodies will have a negative impact on the development of the country. The experts even more warily reacted to the creation of supranational political structures within the Eurasian integration - a little more than 50% in general approve of, but almost 42% consider the consequences of their creation to be negative.

The lowest preference as effective integration measure was expressed by experts towards the establishment of a single currency and a single banking system of the Customs Union. At the same time they emphasize its great importance, but not high demand at the current stage of development of integration processes. Positive effect for Kazakhstan is expected from creating a single currency by 51.2% of interviewed Kazakhstan’s experts, but 39.5% of them believe that the country will have negative consequences. Accordingly, almost the same attitude was expressed by experts towards creation of a unified banking system (48.9 and 39.6%).

Explanations, given by acting at that time Chairman of the National Bank of Kazakhstan Grigory Marchenko, are correlated with the comments of the experts made in the survey. The key point of view here is becoming one expressed by the President of Kazakhstan Nursultan Nazarbayev, who in early 2011 in an interview with RIA Novosti noted that based on the logic of running within the Customs Union integration processes, sooner or later, there should be a common currency.

This issue contains, as it turns out, two important and interrelated aspects: technological and political. Introduction of a single currency within the Customs Union should be preceded by a long preparatory work.

Firstly, it is about creating a single central bank of the union, which involves the pooling of financial systems of the countries participating in the integration. It is necessary to determine the conditions of separation of powers between the Central Bank of the CU and the central banks of the member countries. Principles of monetary policy of the participating countries in many respects are the same, but in the practice of monetary policy, there are differences. Only after their elimination, probably, full conditions for introduction of the concept of “common currency” and its title will be established.

Secondly, the political moment, where everything is not so simple. President of Kazakhstan clearly expressed position that the calculation unit of the CU should be a new currency, and not one of the existing ones. This moment is important in terms of confirmation of profitability and equivalence of the single economic space.

At the same time, all participants of the integration movement understand that the benefits of the single currency consist in the fact that all barriers not only of goods but also of capital between countries are finally removed.

As a result, it should be noted that the positive assessment of Kazakhstan’s participation in the Eurasian integration processes dominate among the population, and in the expert community. Integration is already beginning to be perceived by public opinion as a necessary component of the solution of problems as of a global scale, so of related internal development of the country and becomes part of the ideological system of Kazakhstan people. Kazakhstan’s participation in integration organizations has ceased to be something phenomenal in the perception of the population, gradually becoming one of the important foreign policy priorities.

Undoubtedly, the Kazakh society sees potential of participation in the Eurasian integration, not only in the fact that the border will be open for the movement of people, goods and services on the territory of the CU, but also in the significant role of the Eurasian project to

build competitive advantages of the country and Kazakhstan’s business. Despite some difficulties of the initial period of the Eurasian integration project, Kazakhstan people are confident that in the long term perspective a significant part of incorporated by the project measures: ensuring freedom of movement of goods, services, labor, harmonization of legislation in order to facilitate the functioning of these freedoms, coordination of efforts of the macro-economy, will contribute to development of Kazakhstan, increasing its economic strength.

Noting the presence of certain mismatch actions of the participating countries of the Eurasian integration at the present stage, the expert community believes that these temporary effects should give a new impetus for the state to understand and find other forms of interaction, reorientation of integration projects to the narrowly focused industry specialization and focus on results. The expert community sees the further hard work on the implementation of the agreements within the realities and mutual interests, avoiding politicization of the issues of integration development and strict enforcement of the principle of equality of pragmatism and equality of the Common Economic Space to be essential.

 

SOURCES:

  1. 1. Rastet tovarooborot, rastet i otritsatelnoe saldo// Business portal “Capital”. - 2013, 23 October: http://kapital.kz/details/21233/rastet-tovarooborot-rastet-i- otricatelnoe-saldo.html
  2. 2. ES ne nravitsya zhelanie Ukrainy sozdat’ zernovoi pul s Rossiei I Kazakhstanom// Website IA “Kazakh-Zerno” - 2013, 21 October: http://kazakh-zerno.kz/index. php?option=com_content&task=view&id=84781&Itemid=109
Year: 2014
City: Almaty