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Theoretical and Applied Economics
Reference:
Ozarnov R.
The model of international trade by the type of mutual attraction of the EAEU, SCO and BRICS countries
// Theoretical and Applied Economics.
2020. ¹ 4.
P. 14-27.
DOI: 10.25136/2409-8647.2020.4.33954 URL: https://en.nbpublish.com/library_read_article.php?id=33954
The model of international trade by the type of mutual attraction of the EAEU, SCO and BRICS countries
DOI: 10.25136/2409-8647.2020.4.33954Received: 17-09-2020Published: 24-09-2020Abstract: The article is devoted to the study of factors affecting the financial and economic cooperation of countries with an emerging market within the framework of three blocs, namely the EAEU, BRICS and SCO, by building a model based on the type of mutual attraction. The countries belonging to the former USSR is considered separately. The time period of the study has been established, which begins in the crisis year 2014 for Russia and continues to the present. The subject of the analysis is the financial and economic relations arising in the process of cooperation of countries with an emerging market that are members of such associations as the EAEU, SCO and BRICS. The author examines the factors affecting the financial and economic cooperation of countries with an emerging market: the depth and scale of foreign trade turnover, gross domestic product per capita, the index of trade openness, the rate of growth of the currency of the importing and exporting countries, the distance between countries, the involvement of a country with an emerging market in such associations as the EAEU, BRICS, SCO. The research is based on general scientific methods of cognition (analysis, synthesis, comparison), presentation of tabular and graphical interpretation of statistical information, time series, econometric modeling using the EViews software product. The novelty of the article lies in determining, using econometric methods, the factors affecting the financial and economic cooperation of countries with an emerging market within the framework of three blocks, namely the EAEU, BRICS and SCO, by building a model based on the type of mutual attraction. The peculiarity of the presented model is the presence of lag exchange rates. The inclusion of the lag of the relative change in the exchange rate of the exporter led to the fact that the data for 2014 were excluded from the sample. It is advisable to take into account the results obtained in Russia's cooperation both on a bilateral basis and in a multilateral format within the framework of the EAEU, BRICS and SCO. Keywords: international finance, international trade, world economy, international economic relations, gravity model, Russian-Chinese cooperation, econometrics, The EAEU, BRICS, SCOINTRODUCTION The research of financial and economic cooperation among emerging countries being the members of such blocks as the EAEU, SCO, and BRICS, as well as determining the factors influencing the given cooperation, with the aim of further strengthening and expanding financial and economic relations among the countries in question is paramount in terms of increasing imbalances in the world economy and world finance, along with the protectionist policy of the largest world economies, the growth of geopolitical and economic contradictions, the use of sanctions policy, it is relevant to. The gravity model demonstrates the way the ties among countries influence the volume and quality of mutual trade. In the literature, this model is found quite frequently as the study of the character and the degree of influence allows to adjust international policy. The directions largely favouring the improvement of mutual trade relationships are distinguished. Thus, the efficiency of the international production system and world GDP growth. The gravity model allows setting the volume of trade in the lack of restrictions. Comparison of trade volumes predicted by the model with actual trade volumes makes it possible to determine the trade changes which are likely to take place if the restrictions are removed. Gravity models can be used both for analyzing the bilateral trade and the trade of the country in question with all countries at large, which essentially represents the sum of bilateral trade flows. [3] If it is politically necessary to exert a certain influence on trading partners, for example, a sanctions policy, this model allows one to calculate the distant financial and economic prospects of restrictive measures and find weak points. This makes it possible to increase the effectiveness of restrictive policies. The connections being included in gravity models can be divided into three main groups: 1) location, geography, boundaries; 2) economic production, raw materials and human potential, economic development rates; 3) features of the management system, political system, block membership.
METHODS The author has applied econometric data analysis using the EViews software as the main research method. The author uses statistical data of the World Bank Group [9], the International Trade Center [7], and the “FINAM” investment company. [8] Besides, the author makes use of general scientific methods of cognition such as analysis, synthesis, comparison, presentation of tabular and graphical interpretation of statistical information and time series.
MAIN PART The main purpose of the given research is to build up the gravity model for trade partners of the Russian Federation within three blocks, namely the EAEU, BRICS and SCO. The countries' belonging to the former USSR is considered separately. It should be noted that a strategic partnership has been established between Russia and China, and China's economic strategy presupposes a global foreign economic offensive with elements of trade expansion to foreign markets. [4] The research data starts with the crisis in Russia of 2014 and proceeds up to now. Table 1 provides a list of countries belonging to the EAEU, SCO and BRICS, as well as the ISO two-letter international classification codes for these countries. The countries of associations that were part of the former USSR are enumerated separately.
Table 1. List of countries united in blocks EAEU, SCO and BRICS and their belonging to the former USSR.
Table 2 presents a list of the countries participating in the sample, as well as their main economic indicators in 2018. Despite the eightfold excess of China's GDP over that of the Russian Federation, the trade surplus of the Russian Federation is more by 60 billion dollars than that of China.
Table 2. List of the countries participating in the sample, as well as their main economic indicators in 2018. Source: Authors' calculations based on the World Bank data [9]
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