Научная статья на тему 'STUDY OF STATES EURASIAN ECONOMIC INTEGRATION THROUGH THE PRISM OF PRODUCTION VALUE CHAINS'

STUDY OF STATES EURASIAN ECONOMIC INTEGRATION THROUGH THE PRISM OF PRODUCTION VALUE CHAINS Текст научной статьи по специальности «Социальная и экономическая география»

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GLOBAL VALUE CHAINS / FACTORS OF PRODUCTION / CAPITAL / LABOUR / INNOVATIVE PRODUCT / FINAL AND INTERMEDIATE GOODS

Аннотация научной статьи по социальной и экономической географии, автор научной работы — Hasanov Ilgizar S.

This article examines the genesis of global value chains as a result of action of the law of international division of labour on the modern world economy. During the globalisation, we prefer to assess the integration of national economies in terms of the main value added indicators developed by international institutions. Value-added indicators make it possible to identify advantages and disadvantages of the economic development of different types of countries. The study found: national institutions in the extractive industries of developing countries receiving foreign exchange earnings from raw material exports, then spend more foreign exchange for imports of manufactured goods from developed countries that process raw materials from developing countries; foreign corporations in developed countries, receiving raw materials from developing countries, develop the processing sectors of the national economy and create new jobs by increasing the wages of employees; foreign corporations are expanding the scale of production, the rate of capital accumulation, and recouping the costs of technological upgrading of production and modernising machinery through an increase in depreciation fund and profits; corporations in developing countries need to process raw materials (oil, gas, iron ore, non-ferrous metals, etc.) deeply, produce final goods and export them to world markets on their own; based on new technologies, produce innovative final goods and create high-tech jobs, increase the wages of workers and expand the domestic market.

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Текст научной работы на тему «STUDY OF STATES EURASIAN ECONOMIC INTEGRATION THROUGH THE PRISM OF PRODUCTION VALUE CHAINS»

Study of states eurasian economic integration through the prism of production value chains

Ilgizar S. Hasanov

Doctor of Economic Sciences, Professor Kazan Federal University, Kazan, Russia E-mail: ilgizarkhasan@mail.ru

Abstract. This article examines the genesis of global value chains as a result of action of the law of international division of labour on the modern world economy. During the globalisation, we prefer to assess the integration of national economies in terms of the main value added indicators developed by international institutions. Value-added indicators make it possible to identify advantages and disadvantages of the economic development of different types of countries. The study found: national institutions in the extractive industries of developing countries receiving foreign exchange earnings from raw material exports, then spend more foreign exchange for imports of manufactured goods from developed countries that process raw materials from developing countries; foreign corporations in developed countries, receiving raw materials from developing countries, develop the processing sectors of the national economy and create new jobs by increasing the wages of employees; foreign corporations are expanding the scale of production, the rate of capital accumulation, and recouping the costs of technological upgrading of production and modernising machinery through an increase in depreciation fund and profits; corporations in developing countries need to process raw materials (oil, gas, iron ore, non-ferrous metals, etc.) deeply, produce final goods and export them to world markets on their own; based on new technologies, produce innovative final goods and create high-tech jobs, increase the wages of workers and expand the domestic market.

Keywords: global value chains, factors of production, capital, labour, innovative product, final and intermediate goods. JEL codes: A10, F14, F17

For citation: Ilgizar S. Hasanov (2022). Study of states Eurasian economic integration through the prism of production value chains .Journal of regional and international competitiveness, 3(3), 60. https://doi.org/10.52957/27821927_2022_3_60

DOI: 10.52957/27821927_2022_3_60

Introduction

Recently, domestic scientific economic literature was interested in the problem of so-called global value chains (Kondratyev, 2019; Lukyanov & Drapkin, 2017; Sidorova, 2018; Chetverikova, 2018). The global value chain has as its origin a production feature, i.e. it is defined as the complete set of stages of the production process to produce a good (product and service) starting with a scientific and technical idea through to its creation and final consumption. If the individual stages of the technological process of producing a commodity are implemented by different organisations, this basis also forms the trade chain for the transfer (sale) of intermediate goods and services from one economic entity to another until the final good producing.

These economic interrelationships between different market economy actors are based on the law of division and specialisation of labour. Initially, production and trade chains expanded within the national economies of the industrialised countries, but as capital accumulated and large corporations emerged, they began to expand internationally. The major national monopolies of the leading countries are evolving into transnational corporations with the opening of their subsidiaries. In addition, multinational companies are increasing production and trade cooperation with each other along the entire technology chain. In this way, the value chains of multinational corporations are becoming global.

As we know, net value added is part of the value of any commodity. If the simplest cost formula for a good (without indirect taxes) includes material costs (c'), depreciation (c''), labour costs (v) and profit (m) respectively, then net value added consists of labour costs (wages and salaries) and profit (v + m). Many global value chains are based on inter-country factor price differences or in labour (v) and capital costs (c), which are continuously changing.

© Ilgizar S. Hasanov, 2022

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In terms of both the perspective of economic theory and the development of international trade practices, global value chains, or more precisely value added, have emerged from various international trade theories as a result of analysis of empirical and statistical evidence on the cost and value of products in world trade. For a long time the classical theory of the Swedish economists Elie Heckscher and Bertil Olin, based on the principles of the relation of factors of production (surplus and shortage of capital and labour), dominated economic theory and practice of capitalist economy and international trade. The essence of this theory is that countries export those goods for which there are surplus factors of production (labour and capital), while importing, on the contrary, those goods for the production of which there is a shortage, a shortage of factors of production (Ohlin, 1967; Heckscher, 2006).

However, Heckscher-Ohlin's theoretical approach was challenged by economist Vasily Leontief in his study of US foreign trade structure. V. Leontief calculated the ratio of the cost of capital (c) to labour (v) of the same quantity of exports and imports (of $1 mn, USD). The results showed that US imports were 30% more capital-intensive than exports, despite the fact that the economy has a surplus of capital. So, US exports were labour-intensive (v) and imports were capital-intensive (c). The reason is the national economic development, the proportion of labour costs in the cost of goods produced in the USA exceeded the proportion of material or capital costs, as the skilled labour used was highly remunerated. This effect is known as "Leontiev's paradox" (Leontiev, 2006a; Leontiev, 2006b). "Leontiev's paradox" was later explained scientifically and theoretically. Due to the fact that developed countries have entered the next stage of the scientific and technological revolution or innovation development. As we know, the cost structure and production price of an innovative good differs from ordinary goods by a high proportion of labour costs (v), entrepreneurial income (profit) (m), depreciation charges (c'') and, finally, net value added (v + m).

These innovative processes in the global economy, further deepening of the international division of labour, increased competition between transnational corporations and other reasons led to the widespread spread of global value chains (hereinafter GVCs) - a characteristic feature of the current stage of both national and global economic development. The participation of national economies in global value chains (v + m) of final goods reflects the degree of development of each country's economy, its role in the international division of labour and trade, and its competitiveness in world markets. In 2015 an official UN document, enshrined the concept of the "global value chain" as a form of international division of labour with the location of individual stages of end-use production in different countries, was issued.

GVCS (global value chains) are currently the focus of leading research centres and international organisations and integration alliances. The two main international databases used to assess the participation in GVCs: World Input - Output Data (hereafter WIOD) and Trade in Value - Added (hereafter TiVA). TiVA is a collective product of the Organisation for Economic Co-operation and Development (hereinafter OECD) and the World Trade Organisation (hereinafter WTO). The latest version of TiVA contains data on 66 economies, reflecting both traditional indicators of foreign economic activity and new indicators describing a country's participation in the GVC.

Main part

The subject of our study was a general analysis of the participation of different types of countries, in particular post-industrialised and industrialised countries (USA, China, Russia) and peripheral countries of the Organisation of Islamic Cooperation (hereafter OIC) in global value chains. The OIC currently involved 57 permanent members and 5 observer countries, including the Russian Federation. We do not claim perform the comprehensive analysis of this problem, but consider one of the many topical issues relating to trade value added analysis of the economies of Malaysia, Saudi Arabia (Islamic countries), Turkey, Indonesia (Muslim countries) Kazakhstan and Russia (former republics of the Soviet Union).

The object of the study (countries mentioned above) was chosen as the target because they are the only ones among the 66 countries for which the main value added trade indicators for 2018 were calculated. For assessing the participation of the above countries in GVCs based on the TiVA international database we considered: gross output, value added, gross exports, gross imports, trade balance, share of value added in

gross output, gross export of final goods, gross export of intermediate goods, gross import of final goods, gross import of intermediate goods, domestic value added content in gross exports, domestic value added content in gross imports, backward participation in GVCs (share of foreign value added in gross exports) and prospective participation in GSC (share of domestic foreign export value added in gross exports).

An analysis of OECD and WTO statistics for the eight countries and the 15 main value added indicators listed above for 2018 shows the following. The average ranking of the above countries in the first 13 indicators among the 66 countries surveyed is: China - 6th place, USA - 8th place, Russia - 9th place, Saudi Arabia - 21st place, Indonesia - 22nd place, Turkey - 27th place, Malaysia - 30th place and Kazakhstan - 36th place. However, for the fourteenth integrated indicator on Backward Participation, the rankings are as follows: Turkey - 4th place, Malaysia - 16th, China - 50th, Indonesia - 55th, Kazakhstan - 62nd, USA - 63rd, Russia - 64th and Saudi Arabia - 65th. In contrast, in terms of 'forward-looking participation' in global value chains, the most optimistic countries are: Kazakhstan - 2nd, Saudi Arabia - 3rd, Russia - 5th, the US - 10th, Indonesia - 12th, Malaysia - 30th, China - 34th and Turkey - 37th (OECD, 2022; TiVA, 2021).

Table 1 - Rankings of Islamic and non-Islamic countries in output, exports, imports, value added and its share in goods output among 66 countries in 2018

share

country gross output added value gross exports gross imports trade balance of value added in gross output

The USA 1 1 2 1 66 10 (56,2)

China 2 2 1 2 4 63 (38,5)

The Russian Federation 12 12 12 15 2 22 (53,4)

Indonesia 15 16 28 26 56 23 (53,4)

Saudi Arabia 20 18 22 29 5 1 (67,4)

Turkey 17 19 30 27 53 40 (49,8)

Malaysia 25 31 29 31 15 61 (40,2)

Kazakhstan 45 46 47 51 14 3 (58,9)

Source: composed by author

Table 2 - Rankings of Islamic and non-Islamic countries in gross exports and imports of final and intermediate goods among 66 countries in 2018

country gross exports of final goods gross exports of intermediate goods gross imports of final goods gross imports of intermediate goods domestic value added content of gross exports

The USA 2 1 1 2 1

China 1 2 2 1 2

The Russian Federation 20 8 12 21 9

Indonesia 28 26 25 24 25

Saudi Arabia 43 13 16 37 15

Turkey 21 31 27 25 26

Malaysia 26 28 32 26 29

Kazakhstan 58 41 50 52 44

Source: composed by author

However, for the fourteenth integrated indicator on Backward Participation, the rankings are as follows:

Turkey in 4th place, Malaysia in 16th, China in 50th, Indonesia in 55th, Kazakhstan in 62nd, USA in 63rd, Russia in 64th and Saudi Arabia in 65th. In contrast, in terms of 'forward-looking participation' in global value chains, the most optimistic countries are: Kazakhstan - 2nd, Saudi Arabia - 3rd, Russia - 5th, the US -10th, Indonesia - 12th, Malaysia - 30th, China - 34th and Turkey - 37th (Table 3).

Table 3 - Rankings of Islamic and non-Islamic countries in backward and forward participation among 66 countries in 2018

country domestic direct value added content of gross exports domestic value added content of gross import backward participation in GVCs: share of foreign value added in gross exports prospective participation in GSC: share of domestic value added in gross exports

The USA 1 1 63 10

China 2 2 50 34

The Russian Federation 7 12 64 5

Indonesia 25 20 55 12

Saudi Arabia 10 29 65 3

Turkey 27 33 4 37

Malaysia 32 31 16 30

Kazakhstan 38 49 62 2

Source: composed by author

There is an issue of Russia, Indonesia, Saudi Arabia, Turkey, Malaysia and Kazakhstan rank lower in terms of value added. In our opinion, the answer to this question is the extent to which the peripheral economies of the Eurasian continent make use of the factor of mutually beneficial economic cooperation. We firstly consider Russia's trade relations with Eurasian countries. So, we examined statistical data from the Russian Federal Customs Service on 24 countries belonging to the Organisation of Islamic Cooperation and to the Eurasian region. The countries with which Russia has close trade and economic ties has been divided into the Islamic far-abroad countries (Bahrain, Brunei, Jordan, Malaysia, Oman, Qatar, the United Arab Emirates, Pakistan, Saudi Arabia), the former Soviet republics - the Turkish-speaking countries (Azerbaijan, Turkmenistan, Tajikistan, Kyrgyzstan, Uzbekistan and Kazakhstan) and Muslim countries (Turkey, Egypt, Iran and Indonesia).

According to the Russian Federal Customs Service, the above 24 countries accounted for Russia's foreign trade turnover with the countries of the Organisation of Islamic Cooperation, which has steadily increased in recent years (with the exception of the two pandemic years 2020 and 2021) (Federal Customs Service of the Russian Federation, 2022). The Islamic non-CIS countries (Malaysia, UAE and Saudi Arabia) accounted for the largest volume and share of Russia's foreign trade turnover in 2017 - 6.58%, in 2018 - 7.3%, in 2019 - 8.3%, in 2020 - 10.58% and in 2021 - 10.3% (Table 4).

Table 4 - Foreign trade turnover and balance of the Russian Federation with 10 Islamic countries (USD, thousands) The USA

Years 2017 2018 2019 2020 2021

Name of country Goods turnover Balance of trade Goods turnover Balance of trade Goods turnover оборот Balance of trade trade balance Goods turnover Balance of trade Goods turnover Jan-Nov Balance of trade Jan-Nov

Bahrain 10390 - 44 100753 86595 46346 24306 21129 -2801 4721 -1037

Brunei 0 0 0 0 0 0 0 0 0 0

Years 2017 2018 2019 2020 2021

Name of country Goods turnover Balance of trade Goods turnover Balance of trade Goods turnover o6opoT Balance of trade trade balance Goods turnover Balance of trade Goods turnover Jan-Nov Balance of trade Jan-Nov

Jordan 156941 110993 602518 573876 390126 340086 300841 134819 93288 71210

Qatar 73318 26252 78774 5884 82447 9415 100622 27292 14999 -4309

Kuwait 708221 707617 644661 644469 554372 550750 748284 746420 173831 173821

Malaysia 2147407 -944387 2713191 -539997 2904921 -605231 2627261 -531657 609782 -134760

Oman 115367 108799 156828 151450 239929 231939 211038 207202 69288 68622

United Arab Emirates 1630242 1287646 1689081 1277425 1834549 1364117 3256509 2564751 1149928 1046240

Pakistan 541064 -19026 732541 105123 541569 -203649 789830 203974 272943 19843

Saudi Arabia 915202 626164 1054863 470598 1667174 1138710 1677985 1240637 297687 186541

Total lines 6298152 1904014 7773207 2775423 8261433 2850443 9733499 4590637 2686467 1426171

Source: composed by author

According to above list of countries, the share of Russia's foreign trade turnover of former Soviet republics - the Turkish-speaking countries (Azerbaijan, Turkmenistan, Tajikistan, Kyrgyzstan, Uzbekistan and Kazakhstan) was 37.1% in 2017, 38.1% in 2018, 41.36% in 2019, 43.92% in 2020 and 39.28% in 2021, respectively. While Islamic countries (Turkey, Egypt, Iran and Indonesia) reached 47.3% in 2017, 50.3% in 2018, 47.3% in 2019, 41.3% in 2020 and 46.67% in 202, respectively (Table 5).

Table 5 - Foreign trade turnover and balance of the Russian Federation and the former Soviet republics and Islamic countries (USD, thousands) The USA

Years 2017 2018 2019 2020 2021

Name of country Goods turnover Balance of trade Goods turnover Balance of trade Goods turnover o6opoT Balance of trade trade balance Goods turnover Balance of trade Goods turnover Jan-Nov Balance of trade Jan-Nov

Turkey 22085783 15309831 25544680 17081918 26127756 16171262 20410746 10187498 6588559 3798279

Egypt 6723034 5621798 7668863 6615379 6250010 6287064 4534844 3503414 1127970 713648

Sudan 330564 328990 509141 -508865 278300 276680 379489 377631 118963 118783

Libya 135183 135183 227107 227075 157323 157311 121248 121248 91735 91 735

Iran 1707116 922688 1745043 666423 1588858 806212 2220320 626730 904359 324145

Indonesia 3271610 -1696518 2583396 -847220 2452300 -912504 2352499 -1223829 702343 -380333

Afghanistan 208172 202364 122653 114669 126134 115792 310260 -3548 24805 22815

Palestine 3045 2295 5056 4844 4783 3513 4769 4183 1546 1428

Azerbaijan 2627328 1242266 2486852 939854 3169937 1455077 2888483 1260789 649939 399417

Turkmenistan 428245 259309 411649 166013 694848 391772 970176 328776 117821 48323

Tajikistan 717580 667088 893908 805270 989999 916139 838070 752952 233233 207315

Kyrgyzstan 1606847 1185675 1889456 1386514 1881587 1237723 1697024 1216722 486722 345170

Uzbekistan 3651714 1598438 4381324 2254366 5087331 2728665 5881407 3437865 1225359 617347

Kazakhstan 17441156 7438068 18390093 7692245 19997073 8576815 19106285 8996649 5132887 2294901

Total: lines 65038460 37408558 66859221 36598485 68670239 37347521 61715620 29587080 17289006 8710208

Source: composed by author

The participation of corporations (natural monopolies) in global value chains is very important for national peripheral economies. With a predominantly commodity orientation, domestic corporations

in developing countries are heavily involved in the initial stages of value creation. Developing country corporations tend to locate low value-added production (e.g.: 5v + 75m) in the domestic economy, whereas high value-added production (e.g: 70v + 35m) are usually located in developed countries.

This decentralization of the stages of commodity value chains differs from the practices of developed innovation countries, where high value-added production is most often concentrated within their own economies, while the upstream parts of the value chain are transferred to developing countries. Therefore, the EAEU and CIS states need to create an independent international research system for Eurasian integration based on the application of value chains for the benefit of friendly states. The study of trade and production chains can serve as a starting point for a return to basic interstate planning for a joint economy.

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We consider the conventional example of a peripheral economy participating in a value-added chain with post-industrialised countries in a production-trade relationship.

The commodity value chain - crude oil to petroleum products - between upstream and downstream countries would be as follows. The producing country produces and supplies crude oil with the following value (USD):

15c' + 5c" + 5v + 75m = 100w,

where: 15c' is the material cost (USD $15) to produce one barrel;

5c'' is the depreciation charge (USD $5) per barrel produced;

5v is the payroll (USD $5) per barrel produced;

75m - profit (USD $75) per barrel produced;

100w is the price of one barrel of crude oil (USD $100).

A country with a manufacturing industry carries out deep processing of one barrel of oil (gas and other raw materials) to produce final goods of value:

100c'+ 20c" + 70v + 35m = 225w,

where: 100c' is the material cost (USD $100) of refining one barrel of oil;

20c'' is the depreciation charge (USD $10) for processing one barrel of oil;

70v is the payroll (USD $70) for processing one barrel of oil;

35m is the profit (USD $35) to process one barrel of oil;

225w is the price of goods produced from one barrel of crude oil (USD $225).

The economic outcome of the interaction of countries with the extractive and manufacturing industries in the value chain of final goods would be as follows.

The foreign exchange earnings of a country's upstream exports of crude oil (gas and other raw materials) to a downstream country: 100 w or $100 USD.

The foreign exchange earnings of a country producing final goods based on crude oil: 225w or USD

$225.

Produced net value added of corporations extracting raw materials (5v + 75m) or USD $80.

The produced net value added of corporations producing finished goods (70v + 35 m) or USD $105.

Extractive industries payroll (jobs, employment) by (5v) or USD $5.

Manufacturing payroll (jobs, employment) by (70 v) or USD $70.

Conclusions

1. National institutions in the extractive industries of developing countries receiving foreign exchange earnings from raw material exports (100w), then spend more foreign exchange for imports of manufactured goods from developed countries that process raw materials from developing countries (215w).

2. Foreign corporations in developed countries, receiving raw materials from developing countries, develop the processing sectors of the national economy and create new jobs by increasing the wages of employees (70v > 5v).

3.Foreign corporations are expanding the scale of production, the rate of capital accumulation, and recouping the costs of technological upgrading of production and modernising machinery through an increase in depreciation fund and profits (20c'' + 35m < 5c'' + 75m).

4. Corporations in developing countries need to process raw materials (oil, gas, iron ore, non-ferrous metals, etc.) deeply, produce final goods and export them to world markets on their own.

5. Based on new technologies, produce innovative final goods and create high-tech jobs, increase the wages of workers and expand the domestic market.

Consider the trade relations of the Republic of Tatarstan with Eurasian countries as an example. So, we examined statistical data from the Russian Federal Customs Service on 24 countries belonging to the Organisation of Islamic Cooperation and to the Eurasian region. The countries with which Russia has close trade and economic ties has been divided into the Islamic far-abroad countries (Bahrain, Brunei, Jordan, Malaysia, Oman, Qatar, the United Arab Emirates, Pakistan, Saudi Arabia), the former Soviet republics - the Turkish-speaking countries (Azerbaijan, Turkmenistan, Tajikistan, Kyrgyzstan, Uzbekistan and Kazakhstan) and Muslim countries (Turkey, Egypt, Iran and Indonesia),

Tatarstan's foreign trade turnover and balances in 2017-2021 were as follows: in 2017 - 2.9% and 7.0%; in 2018 - 2.8% and 5.45%; in 2019 - 2.36% and 5.21%; in 2020 - 2.17% and 4.84%; in 2021 - 2.56% and 3.99%, respectively. The years before the COVID-19 pandemic (2019 and 2020), foreign trade turnover and balance of the Republic of Tatarstan increased by USD $2361004.5 thousand and USD $2394367.7 thousand, respectively in 2018 in compare with 2017, i.e. by 13.97% and 26.15%, respectively. In 2021, the foreign trade turnover and balance of the Republic of Tatarstan tended to recover compared to 2019 and 2020.

Table 6 shows statistics provided by the Federal Customs Service of Russia on the foreign trade turnover and balance of the Republic of Tatarstan with the twenty-four Organisation of Islamic Cooperation member states (comprising 57 states) with which there are close and substantial trade and economic relations.

Table 6 - Foreign trade turnover and balance of the Republic of Tatarstan with the 10 Islamic OIC countries for 2017-2021 (USD $, thousands)

Years 2017 2018 2019 2020 2021

Name of country Goods turnover Trade balance Goods turnover Trade balance Goods turnover Trade balance Goods turnover Trade balance Goods turnover Jan-Nov Balance of trade Jan-Nov

1. Bahrain - - 13.7 6.3 83.8 83.8 0 0 0 0

2. Brunei - - 0 0 0.5 - 0,5 3.9 - 2,3 3.6 - 3,6

3. Jordan - - 11.1 7.1 76.1 49.7 37.8 - 13,8 59.2 2.4

4. Qatar 5176.3 - 5166,5 3898.5 - 2928,3 7547.1 - 5868,1 7281.6 - 7110 3541.7 - 3396,9

5. Kuwait 532.6 532.6 164.5 164.5 786.7 297.9 142.1 135.7 0 0

6. Malaysia 9824.6 - 6900,4 12066.5 - 5923,7 9250.1 - 4209,7 11155.2 - 6608,8 13875.4 - 13059

7. Oman 56.9 - 11,9 119.7 60.1 138.0 90.0 106.2 49.2 327.1 254.1

8. United Arab Emirates 21409.7 7422.9 34103.2 11133 20151.6 - 635,0 18002.0 13438.6 8031.5 5116.3

9. Pakistan 1039.6 290.0 713.5 - 171,1 989.6 - 323,8 564.3 - 135,9 791.7 - 227,3

10. Saudi Arabia 42844.8 30050.6 18651.8 3056.2 49409.3 43970.9 18597.7 14547.9 36130.0 27519.4

Total lines 1-10 80884.5 26217.3 69742.5 5404.1 88432.8 33455.2 55890.8 14300.6 62760.2 16206.4

11. Turkey 303946.0 - 15338,6 313949.5 - 73999,3 481028.3 60522.3 361838.0 - 77545,2 520189.9 -118657.1

12. Egypt 22821.3 21459.7 20913.6 17193.8 24335.5 17319.9 11807.2 3917.4 17451.2 14518.4

13. Sudan 24.2 24.0 1058.9 - 617,3 105.4 105.4 1.5 1.5 5831.6 5831.2

14. Libya 14.1 14.1 339.4 339.4 14.8 14.8 1091.6 1091.6 170.7 170.7

15. Iran 25007.5 10915.1 22941.6 17039.0 21794.9 14176.1 50975.5 39255.1 178839.2 171610.4

16.Indonesia 39627.1 - 38266,7 46285.7 - 34991,7 32500.2 - 21764,4 33753.8 - 14089,0 49172.7 - 31962,3

17. Afghanistan 1137.2 1134.6 2305.3 2301.9 654.6 652.6 1806.3 1806.3 500.2 474.4

18. Palestine 252.7 252.7 313.8 313.8 117.1 117.1 34.1 34.1 15.9 15.9

19. Azerbaijan 44970.4 21615.0 57434.8 37477.4 67239.8 46756.8 55967.3 53856.5 62564.9 36512.7

20. Turkmenistan 24977.6 14518.8 23898.6 - 3459,0 120681.4 58189.2 106656.8 78113.8 72980.3 65520.3

Years 2017 2018 2019 2020 2021

Name of country Goods turnover Trade balance Goods turnover Trade balance Goods turnover Trade balance Goods turnover Trade balance Goods turnover Jan-Nov Balance of trade Jan-Nov

21.Tajikistan 34697.0 34624.0 12582.1 12479.7 22442.4 21664.2 20548.2 20430.4 18226.5 18211.7

22. Kyrgyzstan 50605.0 43539.0 61872.0 60720.4 61467.4 59748.0 41126.4 36537.6 48036.8 38502.6

23. Uzbekistan 92655.7 74880.3 145764.1 125392.5 194921.3 155988.5 156484.1 97471.7 171030.4 108638.6

24. Kazakhstan 702943.7 493701.7 700263.8 545047.2 551931.5 515759.5 630762.3 580808.7 560112.4 479156.2

Total lines 1-24 1343679 663073 1409923 705238 1579235 929250 1472853 821691 17051237 788544

Source: composed by author

The table includes Islamic countries of the far abroad (lines 1-10), former Soviet republics - the Turkish-speaking countries (Azerbaijan, Turkmenistan, Tajikistan, Kyrgyzstan, Uzbekistan and Kazakhstan) and Islamic countries (Turkey, Egypt, Iran and Indonesia), which characterise the specifics of export-import relations of the Republic of Tatarstan.

By the Table 6, these countries were 11.04% and 13.48% of total trade turnover and foreign trade balance in Tatarstan in 2021, 12.27% and 16.46% in 2020, 10.61% and 10.25% in 2019, 7.68% and 6.15% in 2018 and 8.43% and 7.53% in 2017, respectively. The largest volume and share of the Republic of Tatarstan's foreign trade turnover provided by:

- Islamic countries (Malaysia, UAE and Saudi Arabia) at 5.68% in 2017, 4.71% in 2018, 5.3% in 2019, 3.66% in 2020 and 3.55% in 2021;

- former Soviet republics (the Turkish-speaking countries of Azerbaijan, Turkmenistan, Tajikistan, Kyrgyzstan, Uzbekistan and Kazakhstan) at 67.75% in 2017, 67.71% in 2018, 61.08% in 2019, 62.87% in 2020, 52.77% in 2021;

- Islamic countries (Turkey, Egypt, Iran and Indonesia) 8.3% in 2017, 27.31% in 2018, 33.56% in 2019, 29.98% in 2020 and 43.31% in 2021.

The Republic of Tatarstan's foreign trade with Islamic countries, with former Soviet republics (with Turkic-speaking countries) and with Islamic countries has a positive balance in 2017-2021. At the same time, the positive balance in foreign trade turnover has been increasing over this period: in 2018 it increased by 3.09% compared to 2017 and in 2019 it increased by 35.47% compared to 2018. In 2020-2021, the foreign trade balance with these countries was also positive.

The above countries account for the following proportions of Tatarstan's total foreign trade balance with all countries: 8.43% in 2017, 7.68% in 2018, 10.61% in 2019, 12.37% in 2020 and 11.04% in 2021. The positive value of the foreign trade balance based on the inter-country structure.

The largest volume and share of goods imported into the Republic of Tatarstan provided by:

- Islamic countries (Malaysia, UAE and Saudi Arabia) at 5.92% in 2017, 7.35% in 2018, 5.63% in 2019, 3.81% in 2020 and 3.99% in 2021;

- the former Soviet republics (the Turkish-speaking countries of Azerbaijan, Turkmenistan, Tajikistan, Kyrgyzstan, Uzbekistan and Kazakhstan) at 16.44% in 2017, 29.15% in 2018, 22.4% in 2019, 20.83% in 2020, 19.35% in 2021;

- Islamic countries (Turkey, Egypt, Iran and Indonesia) at 56.12% in 2017, 62.27% in 2018, 69.42% in 2019, 73.16% in 2020 and 75.81% in 2021.

In our opinion, the countries of the Organisation of Islamic Cooperation have greater potential for socio-economic development. It is primarily depends on some economic advantages over developed and even post-industrialised countries. First, these countries have large concentrations of natural resources that are not profitably exploited: exports of intermediate goods and imports of final (manufactured) goods. These countries need to focus on processing raw materials together to produce final goods. The weak link in the OIC countries is the lack of new equipment and technology that needs to be produced by mobilising limited financial resources. There is a need to provide the economic analysis of the scientific and technical capabilities of certain states. For example, Russia, including Tatarstan, could specialise in the development

of new technologies and the training of scientific and technical personnel for future raw material processing industries within a joint division of labour. Also the economic function and role of the state in the planning of production, trade and logistics value chains should be enhanced.

The OIC countries have an undeniable competitive advantage - a social aspect, of an ethical, cultural, ideological and moral nature. Indeed, the main item for Islamic economic culture and ethics is the use of capital not for profit, speculation in the interests of individual actors, but for the purpose of collective investment in productive business projects and the concerted use of the capital earned. Therefore, Islamic moral norms need to be widely developed and popularised and transposed into economic life, the economy, such as Islamic financial institutions (Islamic banking, takaful insurance, etc). State organisations should propagate Islamic morality as a norm of economic life and translate its principles into the practice of mutually beneficial international economic relations.

There are some promising inter-state institutions for the further development of the OIC countries, such as the Eurasian Economic Cooperation, in which any OIC countries can participate, based on Islamic principles in economic activities. This requires increasing the economic function and role of the state in the OIC countries in guiding the planning and implementation of specific investment projects. In the context of global competition with Western and Eastern transnational corporations, OIC countries need to build their own production and trade chains for innovative goods at the inter-state level.

References

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2 Leontiev, V. V. (2006). Selected works: in 3 vols. V. 1: General economic problems of intersectoral analysis. M.: Ekonomika (in Russian).

3 Leontiev, V. V. (2006). Domestic Production and Foreign Trade: A New Study of the Position of American Capital. Milestones of economic thought. V. 6. International economy. A. P. Kireev (Ed.). M.: TEIS (in Russian).

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9 OECD.org. (2022). OECD Inter-Country Input-Output (ICIO) Tables. Retrieved from https://www. oecd.org/sti/ind/inter-country-input-output-tables.htm (accessed 10.09.2022).

10 Trade in Value Added (TiVA) 2021 ed: Principal Indicators. Retrieved from https://stats.oecd.org/ Index.aspx?DataSetCode=TIVA_2021_C1#] (accessed 11.09.2022).

11 Federal Customs Service of the Russian Federation. Customs statistics. Retrieved from https://cus-toms.gov.ru/statistic (accessed 11.09.2022) (in Russian).

12 Volga Customs Directorate of the Federal Customs Service of the Russian Federation. Foreign trade of the subjects of the RF PFD. Retrieved from https://ptu.customs.gov.ru/folder/146699 (accessed 11.08.2022) (in Russian).

Received 18.07.2022

Revised 14.08.2022

Accepted 02.09.2022

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