Of course, integration comes not only through inter-state union, but through the liaisons of national economies and enterprises. International Monetary Fund research indicates that, over the past 150 years, the role of the state has risen 4.5 fold on average among the world’s top 30 most developed countries. From 1870-1996, the share of state expenditure within GDP in the USA grew from 7.3 to 33.3 percent — despite apparent market self-regulation. The figure rose from 8.8 to 36.2 percent in Japan, from 10 to 49 percent in Germany, from 12.6 to 54.5 percent in France, and from 5.7 to 64.7 percent in Sweden.
Of course, anti-crisis injections into Western states’ economies have strengthened the trend, which should help us understand many issues. It may explain why the former Soviet republics faced a sharp decline in production and standards of living after market reforms led to withdrawal of much state participation. Moreover, it’s now clear why Belarus has taken the lead within the post-Soviet space since 1994 — strengthening the state’s economic role and following the spirit of the times (though lacking its own natural resources). As regards the UN Human Development Index, our country continues to lead among CIS states.
In fact, the withdrawal of state support for the economy, following governmental orientation towards market liberalisation, hastened the arrival of the 2011 global crisis in Belarus, painfully affecting our citizens’ wellbeing. With this in mind, Alexander Lukashenko announced to the Government and the National Bank in November 2011, “I’m seriously worried by the Government’s excessive passion for market reform. Having stopped regulating prices and other economic processes, we’ve seen negative results and serious problems. To solve them, we need to take additional efforts and set aside more funds. Despite the Government’s vigorous measures to efficiently mobilise resources and overcome negative factors, I have simply observed discussion and speculation on the advantages of the liberal development model and of radical reform. Even the West is searching for ways to curb the power of the market, looking at nationalisation to strengthen state control and manage socio-economic processes.”
A return to active state economic management helped ensure stabilisation in 2012.
Integration between enterprises is also active, with fast capital concentration and profits (under the control of huge corporations); this leads to market monopolies and lack of competitiveness. While transitional states have seen small and medium-sized businesses develop rapidly, companies with funds exceeding $1bn in cumulative capital rose from a 49 to 83 percent share of those operational in the USA. Meanwhile, their joint profit rose from 52 to 86 percent of the total from 1970-2006.
Similar trends are being seen in other technologically developed countries, including in Belarus. We have managed to prevent market powers from destroying our major enterprises — as has happened in many neighbouring states — ensuring that we continue to earn foreign currency through the sale of tractors, buses, trucks, trolley buses and oil products.
Classical competitive-market ideology is now in the past, giving way to progressive integration, pushing us to nurture large industrial, food and energy companies and work towards integration within the post-Soviet space.
By Valery Bainev —
Doctor of Economic Sciences and Professor at the Belarusian State University’s Economic Department
