Integration processes in the world economy

4.1. Modern forms of the international economic integration

Integration processes of global economic activity are considered to be an objective peculiarity of the modern economic development. Integration is a natural historical process of increasing interdependency between the world economy subjects.

Because of the complexity and diversity of such category as integration, there are many definitions proposed by different specialists [8, 20]:

-economic interaction between countries, which leads to the convergence of economic mechanisms, which is considered as a quite high and prospective step of the internationalization process;

-controlled process of convergence and merging of national economies into a single economic complex, based on the economic interest of business entities and the international division of labour;

-the process of states unification to establish an extended economic space, where goods, services, finance, investment and labour can easily circulate;

-process, developing on the basis of the internationalization of social life, accelerated by technological change, increasing interdependence of nations and states;

- counterbalance to coming unipolar world, the ability to maintain one’s own identity in the context of globalization based on Western philosophical standards.

The most significant contribution in the theory of international economic integration was done by B. Ballas, who identified forms and stages of regional integration [Refer to 25, p. 211]:

1. Free trade area implies the elimination of customs duties and quota restrictions on trade between the member countries of association, but retaining of national import tariffs and quotas in relation to third countries.

2. Customs Union is a free trade zone with the single external customs tariff in relation to third countries for all member countries and common foreign trade policy towards third countries.

3. Common market is the Customs Union, where free movement of goods supplemented with free movement of capital, labor and other factors of production.

4. Economic Union is a common market, completed with harmonized economic and social policies of member countries.

5. Economic and Monetary Union is the full integration of economic systems of the member countries, which implies the unification of monetary and fiscal policies, and the introduction of the single currency and the creation of supranational authorities, whose decisions are bound. In practice, this means replacing of the nation state by federal or confederate central government.

It is important to mention prerequisites for the formation and successful functioning of integration groups: almost the same level of economic development of the member countries; sustained economic growth of the member countries; geographical proximity; political will of the integrating countries; the presence of the initiating center of the state or group of states, which should join partner-countries.

4.2. Main integration units and participants’ role in them

Modern international unions in a greater or lesser degree possess the most important attributes of integration groups, and regardless of the different degree of integration maturity and their own peculiarities, unions functioning on the base of the common to everybody law. All of them are committed to liberal values ​​and declare open economy that determines the essential unity of the forms of cooperation that they have already achieved.

International economic integration reached the greatest success on the European continent. Nowadays European Union (EU) represents 493 million people, about 22% of GDP, about 18% of world trade and 26% of trade in services, the European Union is also the source of 45 % of foreign direct investment in the world, and attracts almost 30 % of FDI [20, p. 84]. European economic integration is developing in two directions: more complete integration of national economies into a single regional economy and the territorial expansion of the zone of integration.

The Shanghai Cooperation Organization (SCO) is the permanent regional international organization, founded by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan in June 2001.

Originally the main goals of the SCO foundation were strengthening the stability and security on the territory of Central Asia; struggle against terrorism, separatism and extremism. Gradually, the sphere of objectives has been broadened and obtained struggling against drug traffic and then economic cooperation, energy partnership, scientific and cultural interaction.

In June 2002 at St. Petersburg’s summit of the Organization’s Heads «The Charter of Shanghai Organization of Cooperation» (the basic document) was signed. In September 2003, the Heads of the Government of the SCO signed the program of the multilateral trade and economic cooperation, designed for 20 years. As a long term goal the creation of a free trade area in the SCO is considered, and as a short term goal, the activization of the process of creating favorable environment conditions for trade and investment.

Nowadays, the cooperation within the SCO embraces the areas of energy, transport, agriculture, telecommunications and many other industries. Its member countries widely interact in scientific and technological, cultural, educational, touristic and humanitarian spheres widely[2] [43].

The complicated multi-level integration system originated in the former Soviet Union, i.e. the Commonwealth of Independent States (CIS), which is 20 years old now; and the Eurasian Economic Community was established in 2000. Some of the main Integration Units are in table 9. Main international integration groups in the world are presented in the Appendix 12.

Table 9

Comparable characteristics of BRIC, SCO and IBSA

Criteria	BRICS	SCO	IBSA
Countries	Brazil, Russia India, China + South Africa (2011)	Russia, China, Kazakhstan, Kirgizia Tajikistan Uzbekistan India (observer)	India Brazil South Africa
Year of appearance
Priority that unites given strictures	Assistance to building up a new international order
Distinctive features	Lack of institutional relations	Military and political aspect	Promotion of the South-South dialogue

However, not all countries have the status of «integrative» For example, the oldest paraorganization is «G7 – Group of Seventy Seven»; the other most striking examples of modern international organizations are «G8 – Group of Eight» and
«G20 – Group of Twenty».

The new event shaking the world community was the emergence of the BRIC phenomenon in 2001. That is the union of four (4) fast growing economies: Brazil, Russia, India and China. The BRIC’s format in total is the enormous centre of economic growth and political influence. The dialogue between these countries is developing quite fast while the development prospects of these countries are becoming crucial to the future of worldwide processes and relations. That’s why the BRIC’s union and its role in the world is a pressing and controversial issue.

The working assumption of the research is thatBRIC is an informal international institute requiring the development of the so-called system-forming relations in order to become a real driving force in economic international relations.

Having examined the modern forms of countries’ integration as well as the origin of the very idea of the BRIC, we have come to the conclusion, that currently the BRIC is neither a form of economic integration, nor an international club. There have been analyzed several approaches to understand the nature of the BRIC. They can be classified into 3 categories: economic integration, political and alternative union.

The developing format of BRIC is supposed to be a new modern form of countries association that can be called a dialogue-based mechanism. However, claiming to be a new driving force this mechanism has to set up a certain system between these countries.

Upward trends of economic growth in all the 4 countries can be fully admitted, but the rate of this growth considerably differs from country to country (table 10).

Table 10

BRIC’s share in world GDP, %

Country
BRIC	–	–	–	–	22.1	23.3	24.5
USA	27.3	24.2	21.5	21.9	20.6	24.4	19.8
Euro zone	26.3	26.8	22.5	15.8	15.7	21.4	20.0

Sources: World Bank World Development Indicators

The other characteristic features are in Appendix 13-19

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