The Baltics and Belarus: Development of foreign economic cooperation and improvement of the institutional structure

Galina Gavrilko,
Ph.D. (Economics), Associate Professor,
Department of International Economic Relations,
Belarus State University,
Belarus

Politicians and experts from the Baltic states analyze the past and build a strategy of sustainable development and cooperation with the partner countries from the EU and the CIS, taking into account the experience of a 25-year transformation and 100-year independence of the Baltic states. The estimated results and prospects for the development made by foreign researchers are diametrically opposed.

Some experts say, “… the Baltics keep proposing  initiatives for the European Union which complicate their foreign policy, in particular relations with Russia, the former Soviet Republics (Belarus), with the countries that prefer a non-aligned path of development.” [Olenchenko, V.А. The Baltic States: The Eve of the 25th Anniversary of Independence / V.A. Olenchenko // World Economy and International Relations. – 2017.- No. 4.- p.107].

Other researchers analyze the particular features of the Belarusian and Baltic economic models and come to the conclusions about the necessity and possibility of extension of trading and investment cooperation, with due account of external and internal factors for sustainable social and economic development. [A. Budrauskaite, A., Trade Policy and Economic Growth: Cases of Belarus and Lithuania / A.Budrauskaite, J.Mamytova, K.Mlinarevic, A.Savina [Electronic resource]. – Access mode: https://hrcak.srce.hr/file/29039 – Access date: 09/30/2018].

In our opinion, publications of Belarusian experts and representatives of official authorities of the Baltic republics and Belarus on the prospects for mutually beneficial cooperation in the field of foreign trade and foreign investments (T. Zharina, A. Korol, M. Kokaev, M. Virsis) also have practical significance for foreign economic cooperation.

The neighboring Baltic states are among top ten trade partners of Belarus, with whom Belarus has a common history and actively develop foreign trade and cultural ties.

In 2015 Lithuania, Latvia and Estonia imported goods from 174 countries. The main suppliers of products to the regional market in 2015 were the Russian Federation, Germany, Poland, Finland, the Netherlands, China, Sweden, Italy, the United Kingdom, and Belarus.

Lithuania is also one of the most important European economic partners of Belarus.

In 2015 the commodity turnover of Belarus and Estonia amounted to 195.7 million euros. Belarusian exports to Estonia reached 131.3 million euros, and goods from Estonia totaled 64.4 million euros. The balance was positive for Belarus in the amount of 66.9 million euros.

Lithuania is also one of the most important European economic partners of Belarus. At the end of 2015 this country ranked 8th in the total volume of Belarusian commodity turnover and 6th in the volume of Belarusian exports.

In 2015 the volume of merchandise trade between the countries amounted to 1,934.1 million euros. Belarusian exports to Lithuania reached 879 million euros, imports from Lithuania – 1,055.1 million euros. The balance of foreign trade for Belarus was negative in the amount of 176 million euros.

In 2015 the commodity turnover between Belarus and Latvia amounted to 451.4 million euros. Exports from the Republic of Belarus to Latvia in value terms amounted to 300 million euros. Belarus imported goods from Latvia in the amount of 151.4 million euros. The balance was positive for Belarus in the amount of 148.6 million euros. [Commodity flows. Market Overview // Market Survey. – 2017. – Тщю2. – S. 10.17, 19-20].

The structure of Belarusian exports to Latvia consists of 400 commodity items.

The structure of Belarusian exports to Latvia consists of 400 commodity items. Belarus exports petrochemical products, timber and wood products, food products, metal products, tractors and other advanced technology products, textile goods and footwear.

The brands of Belarusian manufacturers such as the Belarus tractors (M.T.Z.-Serviss, LLC, joint venture), farm machinery (BaltTehnika) and MAZ vehicles (AlkomTrans) are well known to Latvian consumers. The Amkodor machinery (Kombainserviss) has been on the Latvian market since 2014.

Institutions and macroeconomic environment provide the basis for the economic activity and competitiveness of the export basket. For this reason, it is important to conduct a comparative analysis of the ranking of Belarus and the Baltics in the Doing Business and good governance studies of the World Bank (see Table 1).

Table 1. The Doing Business and good governance studies ratings of the World Bank in the Baltics, Belarus, Russia (points)

Country Doing Business Rating, 2018 Good Governance Rating, 2017.*
Belarus 38 – 0,35
Latvia 19 0,90
Lithuania 16 0,98
Estonia 12 1,12
Russia 35 -0,08

* The average in 6 indicators: voting rights and accountability, political stability and the absence of violence, government effectiveness, quality of government regulation, rule of law, control of corruption.
Source: World Bank data (www.doingbusiness.org/content/dam/doingBusiness/media/…/DB2018-Full-Report.pdf; http://info.worldbank.org/governance/wgi/index.aspx#home)

Summarizing the results of the 25-year transformation of the Baltic states, with due account of the priorities of the foreign trade policy with neighboring countries pursued by these states, the following conclusions can be made:

  • the reproach to the Baltic states that they conduct only an anti-Russian policy and depend on external managers, who are far from the national interests of these countries, needs a serious adjustment;
  • the institutional environment of the Baltics is estimated by the World Bank experts higher than that in Belarus and Russia, therefore, reforms in this area should be coordinated at the national and interstate levels within the Union State and the EAEU;
  • to improve the competitiveness of Belarus’ national economy, economic growth, export development and to attract foreign investments, it is necessary to keep on working on the improvement of governance, taking into account foreign experience, including the experience of the Baltic states: at the 73rd UN General Assembly Estonia and UNDP launched a cooperation project to support e-governance development.

Email: galina_gavrilko@list.ru

Expert article 2540

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