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13
Borisik Olga Viktorovna, PhD, associate professor of World economy department Belarusian State Economic University, Minsk, Belarus
E-mail: olga_star79@mail.ru
MULTI-FACETED DEVELOPMENT OF EURASIAN ECONOMIC INTEGRATION IN THE CONTEXT OF THE ECONOMY OF TRUST
Abstract: The article reveals the theoretical aspects of the economy of trust as an economic category. Special attention is paid to the factors influencing the formation and development of the economy of trust in Eurasian Economic Integration. On the basis of the analysis performed, there have been identified the results of formation of the economy of trust in the Eurasian Economic Integration and also there have been proposed the measures for their improvement.
Keywords: economy of trust, integration of trust, inclusive growth, digitalization of the economy, Eurasian Economic Union.
There are various definitions of the "trust" term (Lorenz E. H. (1988), for example, defines trust as follows: "I would like to suggest that the transaction cost literature...can tell us something about the role of trust in the economy. Trust enters into the argument because the presence of these [transaction] costs is directly linked to the possibility that economic actors will behave opportunistically. If transactions are thought of as friction in the economy, then trust can be seen as an extremely effective lubricant" [2, 195]. At the same time, the lack of a clear definition of the "economy of trust" term causes certain analytical difficulties. The economy of trust is defined as the area of economic relations that organically combines private and public interests; its core is the market for social goods (the so-called social capital), which is being formed at the border of the market for private goods and the public goods production field that provides favorable conditions for the realization of the creative potential of a person, team, and society [1, 68]. In the author s opinion, the economy of trust is an economic activity based on the development of social capital carried out by economic actors under conditions ensuring the trust at all levels which results in a rational distribution of all
available resources, inclusive growth and achievement of economic, political, social and other significant goals.
In this case, the economy of trust in the processes of economic integration (integration of trust) may be viewed as the creation of conditions for the development of integration potential, ensuring the trust of subjects of international integration at all levels, with an eye toward achieving the goals to be sought.
The economy of trust shall be distinguished from the sharing economy. The sharing economy is an interaction between two parties, one of which has resources and does not use them, and the other one is willing to rent these resources for a while to meet their needs. As a result of this exchange, transaction costs are reduced and the problem of inefficient use of resources is solved.
The main characteristics of the economy of trust are as follows:
- the union of private and public interests;
- ensuring the confidence of economic actors at all levels (interpersonal, institutional).
Creating conditions that ensure the trust of economic entities at all levels is manifested in:
- facilitation of the coordination of interests of participants in economic interactions;
- reduction of investment risks (the uncertainty of actions and the threat of opportunism is reduced);
- reduction of transaction costs (costs of monitoring, control, protection of property rights, etc.);
- high quality of social capital as a condition for the functioning of the economy of trust;
- sustainable inclusive economic development in order to improve the welfare of society.
Trust is the basis for the sustainable development of the Eurasian Economic Integration participants. What is more, it is the basis for the sustainable development of both the member countries separately, and the integration association as a whole. Building trust is necessary at all levels of economic integration: between people (interpersonal trust), between society, business and government, integration institutions (institutional trust), between economies. Integration of trust shall be based on the principles of openness of economies, transparency of state regulation, fair social policy, which correspond to the main goals of the Eurasian Economic Integration, i.e. the growth in population wellbeing and improving the competitiveness of the country. The digitalization of all forms of business, government administration and social interaction shall be the most important tools for building such economy.
The conditions for the economy of trust in Eurasian Economic Integration are as follows:
- the functioning of domestic markets without barriers, derogations and restrictions. Economic and legal derogations in the EAEU are the main deterrent elements that impede deeper integration and give rise to complex custom outcomes, violate the mechanism for the implementation of fair competition between the subjects of the Eurasian Economic Union, including equal access to the common market. In addition, recently the number of derogations has increased significantly due to the fact that the invasion processes of supranational principles into the system of interstate interaction of national markets under
conditions of an aggressive external environment and the emergence of new extreme factors are becoming much more complex today than it was a few years ago [3, 37-38]. Countries spend enormous resources (time, finances) on investigations, overcoming the barriers, derogations, restrictions that undermine not only trust within the integration, but also the image of the EAEU on the global stage.
- strengthening of the international cooperation. Trust is the basis of international cooperation and lasting peace. The economy of trust is impossible without the strengthening of international cooperation on the terms of mutually beneficial openness of economies, and countering unilateral protectionism. Building closer cooperation with the CIS countries, the SCO, expanding the network of free trade agreements with third countries and integration associations, strengthening the cooperation with international organizations (WTO, UNECE, UNCTAD and other organizations) will allow the union to enhance its economic position in the Eurasian space and become the center of the interregional project -the "Comprehensive Continental Partnership".
- forming-up a coherent industrial policy. The guidelines of industrial cooperation within the EAEU include industrial cooperation, collective import substitution, aligning in value-added interstate chains. Moreover, the return on industrial capital increases in a favorable social environment which in addition to production development includes trust and confidence in the mutual benefits of social partnership. The results of the import substitution in the EAEU have shown that the share of imports in the Eurasian industrial market in 2017 decreased compared to 2013 by 2.8 percentage points from 25.6% to 22.8%. The largest decline in the share of imports was achieved in the wood processing industry (by 3 pp), chemical production (3.4 pp) and metallurgy (5.9 pp), as well as in the production ofvehicles and equipment (5 pp) [4]. These results indicate that the employment of moderate protectionism on the territory of the Eurasian space at current stage of its
economic development is more than justified. Collective import substitution in the Eurasian Economic Union, firstly, contributes to the endogenous modernization of its member countries, and, secondly, to some extent contributes to overcoming "unilateralism" in terms of raw materials in the economy of the Russian Federation and the Republic of Kazakhstan, and also contributes to preserving the accumulated production potential in manufacturing industry of the Republic of Belarus and the development of the industrial sector and agriculture in the Republic of Armenia and the Kyrgyz Republic. This is due to the growth of domestic demand for goods and services of national manufacturing and other industries. At the same time, it is important to choose export-oriented innovative import substitution, which will facilitate entry into stable and solvent markets and be a necessary step for further qualitative growth of the national producers.
The alignment of national producers into the technological chains of partners in the EAEU and foreign manufacturers in developed countries has a great potential in manufacturing sector. Within the context of mutual trade, it concerns the supply of both intermediate goods for further assembly and final products. The alignment of national enterprises (including import-substituting) in the production chains of international companies is beneficial for several reasons: attracting investment and advanced technologies, no costs for brand promotion, promotion in the technological chain from the supply of relatively simple products and components to wider participation in the final product, job creation, tax revenue to the budget. The union has already implemented the first integration projects (the HORSCH (Germany) plant for the production of sowing and soil-cultivating equipment has been established in the town of Chaplygin (Lipetsk region). An interstate program list of activities for the development of the Earth's remote sensing system (ERS) has been prepared based on national operators of Belarus, Kazakhstan and Russia, which will include the ground-
based satellite control facilities engaged in Earth sensing.
- ensuring the inclusive growth. The issue of ensuring the inclusive growth of the EAEU member states is quite relevant in connection with the declared purpose of the Union - creation of conditions for the sustainable development of the economies of the member states in order to advance the living standards of population. In the interpretation of the ECE, inclusive growth is defined as the convergence of the quality of life of all groups of a country's population, achieved not only by the state's redistribution of economic results, but also to a large extent by creation of favorable non-discriminatory conditions in the economy that allow each group of the population to independently provide itself with the quality of life comparable with the one of other groups while advancing the country's quality of life in whole [4]. Trust is the basis of these non-discriminatory favorable conditions, which include: advancement of the quality of life, creation of favorable conditions for living, renewal of education and the increase in funding of science, greater investments in human capital, educational and health care reforms, pave the way for creative self-expression.
The assessment of growth inclusiveness in the EAEU countries has shown that in three countries -the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation - there is a sufficiently high degree of inclusive growth. At the same time, according to some indicators, the EAEU member states do not correspond to the level of the overwhelming majority of OECD countries (including: difficulties in ensuring access of the entire population to high-quality logistics infrastructure, low values of important indicators of the Healthcare and Longevity Group) [5].
- the formation and development of the digital transformation of the economy (digitalization of the economy), covering all spheres of economic and social activity are the most important conditions for inclusive sustainable economic development of the
integration association. Digitalization is a tool of the economy of trust. Within the context of digitalization, electronic public services are being intensively developed in the Eurasian integration, which inevitably raises questions of trust in identifying and authenticating participants of electronic interaction, trust in electronic signatures, time, and authorities. In this regard, it has been decided to create a cross-border space of trust of the EAEU member states (A cross-border space of trust is a combination of legal, organizational and technical conditions agreed by member states to ensure confidence in the interstate exchange of data and electronic documents between authorized bodies) [7]. The development of the cross-border trust space opens up new horizons for improving business climate in the countries of the Union, makes it possible to more fully utilize the economy of scale and create a unified environment of trust.
Thus, it can be argued that the further development of Eurasian integration and effective use of the integration potential is possible only in terms of trust at all levels (interpersonal and institutional; trust between people (labor migration, refugees, etc.), public and business trust in the state (trust in integration institutions).
The important conditions for the economy of trust in Eurasian Economic Integration are as follows: the functioning of domestic markets without barriers, derogations and restrictions; strengthening of the international cooperation with third countries, integration associations, international organizations; development of a coherent industrial policy in such areas as industrial cooperation, collective import substitution, aligning in value-added interstate chains; ensuring the inclusive growth of the EAEU member countries and the digitalization of economies.
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