Expert opinions

Russia’s development and regionalization of the global economy

Dmitry Evstafiev, Professor at the Communications, Media, and Design Department at the Higher School of Economics

The regionalization of the global economy is growing into an objective operating reality, influenced by internal development factors as well as trade and tariff wars and political tensions. This reality is developing at a faster pace than was conventionally expected, and causing a much higher political tension. It is yet premature to talk of any breakthrough development of an economic multi-vector approach; however, the Evolutionary Institutionalization concept in the development of economic multipolarity, where regional mechanisms are formed through globalist institutions, can already be recognized as irrelevant.

Nation states and their coalitions are obviously dominating the political and economic processes. They will also become the most active participants in the formation of a new global economy, at least at the initial stage of its institutionalization. This means that the Networked World concept, where trans-state economic and social systems and institutions would be key players, has become irrelevant, at least for a relatively long transition period.

So how well does Russia’s economic development policy (I would rather not seriously discuss the economic development strategy) – which the Government is implementing with varying degrees of success – fit with the potential image and future architecture of the global economy?

Given the objective slowdown of globalization and the lagging progress of the promised Fourth Industrial Revolution, the crisis of the Networked World becomes inevitable, along with a relative increase in nation states’ influence on the global stage. Economic growth is being nationalized, which is bound to trigger the nationalization of investment processes. But the continued dominance of global financial institutions is working to preserve the old system of rental relations that siphons off investment resources out of the national economies.

There is a growing conflict between the increasingly nationally controlled and regionally determined nature of economic growth and the globalist nature of the mechanism for rent expropriation and redistribution. This major controversy of the modern world can, under certain conditions, become the source of its forceful transformation. Importantly, this controversy is not only and not so much economic, as political and geopolitical.

Russia has been one of the countries that advocated the desirability of global political multipolarity. In fact, Russia never developed comprehensive political and economic awareness of a multipolar world and the country’s place in it; this was only about recognizing Russia’s ‘special’ interests in the post-Soviet space while acknowledging the United States’ dominating global status. Russia has never advocated economic multipolarity and partial or full erasure of the architecture that formed the United States’ dominance as a global economic power. Modern trends in the world economic development show that the global multipolarity will start forming in the economic rather than in the political space, and political transformations will be the result of changes in the global economic architecture.

For Russia, the main challenge in the process of regionalization of the global economy will be ‘symmetry of the development dynamics’. If the relatively stagnant Russian economy, which is facing the consequences of the unwise social reformatting of the society, comes in contact with dynamically developing centers of power, this will create not only economic challenges for Russia but political risks as well.

The regionalization of the world economy will remain a dominating global economic trend in each scenario of the world development, including the scenarios of non-catastrophic global and sub-global military and power projected force majeure circumstances. The regionalization of international trade reflects a deeper process of global economy’s reorganization, which is complex. The regionalization reflects, although in a ‘modified form’, a process of nationalization of economic development and, which is particularly important now, of economic growth.

The regionalization of global finances and systems of settlement should be considered a factor that restricts the potential of Russia’s involvement in the process of the world economy’s regionalization. The countries, coalitions or systems of sub-state players in international relations which can harness the process of developing mechanisms and formats for regional and sub-global systems of commercial settlements and investments, will simultaneously receive considerable economic and political dividends, especially in case they provide the settlements system with sufficient risk-hedging instruments. So far, Russia is falling considerably behind in this regard. The problem of competition among regional centers of economic growth is becoming a serious risk for the country. With asymmetries in the economic development and social models growing and becoming stable, this competition will form the urge for transforming the economic growth into a new level of economic and, as result, political influence on the national ‘core’ of economic macroregions. The regionalization will lead to creating the world not so much complementary as competitive, at a considerably lower level of economic and possibly technological interdependence. This process will at a certain stage result in disappearance of economic and then political ‘grey areas’, where Russia’s economic presence and influence is highly important for the country.

For Russia, this will be both a challenge and an opportunity. With its relatively low economic (but not geoeconomic, which is important) heft, the country will inevitably gain a greater attractiveness as an economic partner. This will most definitely be a short-term relevance, but Russia does have a cushion time of 3-6 years for reconfiguring the forms and tools of its involvement in regional centers of economic development. This implies a necessity for a substantial acceleration of developing alternative investment systems in the country, which have to be adapted to money circulation patterns, among others, and investment models in the most prospective regional centers of economic growth.

Previous ArticleNext Article