Eurasian Integration Yearbook 2012

Customs Unionand the Single Economic SpaceThe formation of the Single Economic Space means not only the expansionof intercountry trade, but also deeper industrial cooperation between theenterprises of the countries involved. In addition, the lifting of customs barriersis expected to encourage competition among post-Soviet enterprises thatare roughly equivalent in terms of their capacity and potential. All this willstimulate technological convergence between the economies, which will lead,inter alia, to an equalisation of the indicators of energy and material intensityand to the attainment of closer productivity in terms of the utilisation of primaryresources. This scenario assumes that the energy and material intensity of theUkrainian economy will decline at faster rates, levelling off at the standard ofthe currently more advanced Russian economy. This will cause a reductionin energy consumption and, therefore, lower dependency on energy imports.In addition, lower production costs are expected to enhance opportunities forreducing prices for the purposes of stimulating demand and higher production.The same factor conditions the additional growth in exports.Russia 2015 2020 2025 2030Export 0.03 0.1 0.1 0.1Import 0 0 0 0.01GDP 0 0.01 0.01 0.01Kazakhstan 2015 2020 2025 2030Table 1.8.Change in keymacroeconomicindicators comparedto the baselineoption(scenario envisioningUkraine’s joiningthe SES andtechnologicalconvergence;% of baselinevolumetric indicators)Source: Calculationsby IEF RASExport 0.03 0.05 0.07 0.08Import 0.03 0.02 0.04 0.03GDP 0 0.01 0.01 0.01Belarus 2015 2020 2025 2030Export 0.15 0.34 0.39 0.41Import 0 0.06 0.06 0.06GDP 0.06 0.15 0.18 0.2Ukraine 2015 2020 2025 2030Export 4.35 4.35 3.73 3.09Import -2.19 -5.7 -5.41 -5.28GDP 2.81 5.94 6.65 6.57In this scenario, the Ukrainian economy is expected to see the greatest effects,as the impact of technological convergence within the SES was already factoredin the baseline scenario envisioning the unification of Russia, Belarus andKazakhstan.The formation of a unified currency system – or maintaining constant exchangerates for the SES national currencies – could become another element of theSingle Economic Space. On the one hand, this would minimise currency32 EDB Eurasian Integration Yearbook 2012