ERI FEB RAS

UDC 339.92(5-012) Economic Cooperation between the Russian Far East and Asia-Pacific Countries / edited by PA. Minakir ; Rus. Acad. Sci., Far-Eastern Branch, Economic Research Institute; the Sasakawa Peace Foundation. - Khabarovsk : RIOTIP, 2007. - 208 p. ISBN 5-88570-073-7

The monograph presents a summarizing result of the three-year research conducted within the framework of an international project initiated by the Sasakawa Peace Founda­tion in 2004, on the problems of cooperation between the Russian Far East and countries of the Asia-Pacific region (APR). The project is focused on determining challenges and op­portunities, political and economic mechanisms promoting integration of the Russian Far East into the rapidly developing processes of economic cooperation in Northeast Asia.

Key words: the Russian Far East, APR, NEA, cooperation potential, integration, institutional background.

Edited by P.A. Minakir, academician

Authorized for printing by the Academic council, ER1 FEB RAS

 Iissued with the support of the Sasakawa Peace Foundation

Preface

In-depth studies of international economic cooperation capacities of Northeast Asia were launched in a big way in the early 1990s. The concept of sub-regional economic integration within the region of Northeast Asia (originally termed the Japan Sea Rim, or the Japan Sea Ring), put forward by H. Kanamori, R. Scalapino, K. Ogawa and other researchers, already in 1991 was substantiated in economic and political terms into an international project of economic development of the Tumen-river area at the common boundary of China, DPRK and Russia. Not only researchers, but also politicians pinned great hopes on that «Golden Delta». The idea of sub-regional cooperation within that region received a powerful backing from the international communities. The UNO Development Program organized a special office in Beijing intended for consolidating the international forces advocating this project.

The issues of economic cooperation in the Tumen-river area and in Northeast Asia in general have attracted and are attracting a great number of scholars and experts from research, public and political organizations of many countries: Japan, the Republic of Korea, China, Russia, the USA, Finland, Mongolia and the DPRK. Bustling activity in this direction was and still is performed by Northeast Asia Economic Forum (with the head-office in Honolulu), Economic Research Institute for Northeast Asia (Niigata), Institute for Russian and NIS Economic Studies (Tokyo), Yonsei University (Seoul), Mongolian Development Research Center (Ulaanbaatar), Economic Research Institute FEB RAS (Khabarovsk), East-West Center (Honolulu), Shanghai Institute for International Studies (Shanghai), Korea Institute for International Economic Policy (Seoul) and other research centers.

From the very beginning (1991), these studies have been most actively promoted and supported by the Sasakawa Peace Foundation (Tokyo). Under its aegis, important interdisciplinary and multinational projects concerning the development of guidelines and strategies for economic cooperation in Northeast Asia have been accomplished.

In 1991-1993 the Sasakawa Peace Foundation backed the first of those projects that was aimed at the information compliance of the Russian Far East involvement in the economic cooperation processes in Northeast Asia. Within the framework of this project carried out by the Economic Research Institute FEB RAS, a monograph called The Russian Far East: an Economic Survey was prepared for publication in Russian, English and Japanese. Later this work was revised and published twice. That project was the initial stage of the building of today's information infrastructure for international cooperation in the Russian Far East area.

In 2004 under the support provided by the Sasakawa Peace Foundation, the Economic Research Institute began to work on a new project aimed at identification of challenges, potentialities, as well as political and economic tools for the involvement of the Russian Far East in economic cooperation moving along in Northeast Asia. The compiled monograph is a summarized result of a three year research carried out in the bounds of that project.

In that project an emphasis was intentionally laid on the external and internal conditions promoting and/or detrimental to the involvement of Russia and the Russian Far East in sub-global integration processes in Northeast Asia as well as on institutional mechanisms coordinating that involvement. The authors will be grateful for any constructive comments and suggestions for a more detailed elaboration of the mechanisms facilitating economic integration in the sub-region of Northeast Asia.

The project was accompanied by two editions reflecting preliminary results of the research, they were «The Russian Far East in the Asia-Pacific Region. Proceedings of the International Workshop held 25-26 January, 2005. Khabarovsk» and "The Russian Far East in the Asia-Pacific Region. Materials of Field Studies 24 October - 5 November 2005".

A large international group of authors and experts took part in the development of the project and in the preparation of the monograph which is the summarizing result of the tree-year project research. The project manager, compiler and scientific editor of the monograph is Academician P.A. Minakir.

Contributors of separate sections of the book are: E.I. Devaeva, Doctor (Economics) (5), V.D. Kalashnikov, Professor (Economics) (4), V.V. Kuchuk, Doctor (Economics) (6), S.N. Leonov, Professor (Economics) (7), P.A. Minakir, Academician (2, 7, Introduction), О.М. Prokapalo, Doctor (Economics) (1), A.S. Sheingauz, Professor (Agriculture) (3).

Group of experts: Prof. Susumu Yoshida (Japan), Prof. Kiichi Mochizuki (Japan), Mr. Hiroshi Takahashi (Japan), Dr. Takashi Yajima (japan), Prof. Satoshi Mizobata (Japan), Prof. Qu Wei (China), Prof. Yin Jiangping (China), Dr. Jin Park (Republic of Korea), Dr. Mohamed Ariff (Malaysia), Prof. Mya Than (Thailand), Dr. Sung Kyu Lee (Republic of Korea), Dr. Nyamtseren Lkhamsuren (Mongolia), and Prof. Li Chuan-Xun (China).

Logistic provision group: V.G. Buldakova, M.Y. Bausheva, Chen Woo Lee, Kaori Kobayashi, Lolahon Saiidova.

Editorial and technical group: L.A. Samokhina.

The monograph is issued in the Russian and English languages. Translated from the Russian by Y.V. Kucheryavenko.

Introduction

A concept of export-oriented development of the Russian Far East under a planned system of economy was first defined by Academician V.S. Nemchinov early in the 1960s. Export was supposed to be restricted by involvement only the contiguous countries of the Pacific region[1]. It was only at first sight that this idea had a purely practical relevance. At its basis lay an attempt of seeking a way the resources «closing on themselves» could be involved in a commercial turnover. There was a time in the Soviet history when that very same approach was already used. But then, in the 1920s, there did not exist the centralized planning, while the region's economy development was organized in compliance with market economy principles, although under the State's control. Anyway, that idea, in essence, had anticipated the market oriented economy that came as a revolutionized the life after 40 years. Already since 1964 that idea began to be implemented through compensation agreements.[2]Later, in 1986, the idea was appreciated from a political angle, and since then it has turned into just a commonplace formula. It ran through the conceptual declarations of all the three state programs devoted to development of the Far East and Trans-Baikal areas (issued in 1987, 1996 and 2002) [3].

In the late 1980s, R. Scalapino[4] put forward a concept of a natural economic territory in which he noted Northeast Asia's predisposition to economic cooperation among the countries constituting the area, the predisposition that is based on the naturally presupposed distribution of production capacities and economic resources that part of the Asia-Pacific Region has at its disposal (Tab. I-1). The author of the concept put into its basis the idea of existence of two groupings of countries with mutually complementing economic resources. That idea was further developed by many other researchers studying the countries of that sub-region, and is known now under the names Japan Sea Rim Concept, Japan Sea Rim Economic Ring, and Northeast Asian Economics Integration Concept [5].

Table I-1

Distribution of industrial capacities and natural resources in Northeast Asia

Note: *** vast resources, ** adequate resources, * scarce resources, - lack of factor or resource.

The idea of economic cooperation in the bounds of Northeast Asia was received in Russia with enthusiasm. It was assumed as a basis for analytical and official concepts of economic integration of Russia's eastern areas into the APR. One of the reasons why that idea was unanimously welcomed in Russia and her eastern parts was, obviously, its recognizability. After all, the theories of economic zonation and capacities distribution had been also based on the territorial division of labor preconditioned by mutual resource complementarity[6]. In addition, the concept offered an extremely simple interpretation of Russia's economic gains from that integration. Indeed, Russia was supposed to play its natural and habitual role of a never exhausted supplier of the natural resources the other Northeast Asian countries lack.

The economic mechanism of such integration appears to be both simple and effective. Russia trades her law valued natural resources for capital-, high-tech- and labor-intensive production highly valued by Russia and offered by the countries of the sub-region, and vice versa.

In essence, Russia was offered a role of a resource trap. In the mid-1980s playing such a role appeared to be a natural way for Pacific Russia to integrate into the markets of the NEA countries, which would promote a consequent involvement of the rest of the Russian economy into the integration process.

When in 1986, in Vladivostok, M.S. Gorbachov declared a turnabout of the USSR's economic policy towards the Asia-Pacific region, cooperation with this part of the globe began to display obvious signs of dynamism. It also became evident that this cooperation was inevitably localized within certain areas of the APR and certain sectoral markets. The most dynamic and important appeared the economic ties with the countries of Northeast Asia, and with certain countries of Southeast and South Asia. Among the sectoral markets, prospective as Russian companies' partners, stand out, first of all, an armaments, hydrocarbonaceous raw material, fish, coal, forest resources markets and markets of certain types of electronics and domestic electric appliances.

A further integration of Russia into the world-wide economy on the basis of international labor division has become a principle of the foreign economic policy of Russia. The foreign economy strategy of Russia in the 21st century will be defined by such key factors of the world economy development as globalization and advance in informational technologies.

Russia whose two thirds of the territory lie in Asia, is an inalienable part of the Asia-Pacific region, so the developments occurring here, can't help involving Russia's interests. The participation of Russia in the development of the APR countries, and her involvement in the ongoing integration processes facilitate the creation of favorable conditions for the economic development of the RFE's areas and for enhancing a geopolitical role of Russia.

The development of economic interrelations with the APR countries is one of the main goals of the state foreign policy of Russia today.

The analysis of economic and political transformation processes going on in the Far Eastern areas of Russia reveals the necessity for studying natural environment as a new and objectively existing factor with an increasingly growing impact on national economies in the present. Assessment of the developments going on in the Asia-Pacific region, one of the most difficult regions in the world politically, militarily and economically, becomes particularly important for Russia whose geo-strategic interests and chances of being involved in the regional economic integration may depend on it.

Regionalization of the Russian Far East will become apparent, at least, in two aspects. First, new growth poles and economic development centers will emerge in the region, enhanced by the progressing of science and engineering, and, on the other hand, by the necessity to satisfy the needs in certain products. In the upcoming years, certain dynamics will be witnessed by the the economies of such territories as Sakha Republic (Yakutia), Primorskiy Krai, Khabarovskiy Krai, and Sakhalinskaya Oblast. In 5-10 years, these processes will inevitably cause some changes in the proportion of economic potentials of separate areas of the Russian Far East.

Secondly, the processes of regionalization in frontier krais and oblasts (Primorskiy and Khabarovskiy Krais, Amurskaya and Sakhalinskaya Oblasts) may, with time, bring to formation of economically interdependent and mutually  complementary  territorial  units  (that  would  incorporate  the neighboring regions of the Russian Federation and the neighboring countries) willing to jointly produce goods and services.

In such conditions, it is only too natural to expect that the regions of the Russian Far East would become effectively instrumental in Russia's integration into the APR.

Successful economic cooperation of Russia with the APR countries depends very much on the creation of an international transportation infrastructure and a fuel-and-power system in NEA. Involvement of the Far East in the Asian market should be accompanied not only with the increase of raw materials resources exports, but also with exports of value added goods. Creation of a favorable investment climate in the Far East and elaboration of the adequate regional legislation will enhance the production and the exports of value added goods. The APR's community at whose disposal are the real finances and technologies, refers Russia to the zone of potential interests and intends to place investments into natural resources industries of the region.

Due to its outlying position, the Russian Far East is regarded to be a region that sustains the globalization effects more than any other areas. So far, these effects are sort of latent because of effective frontier, customs and other barriers. On the other hand, the Russian Far East is located in the zone of strong geopolitical conflicting influences. The states the Russian Federation borders on in this region, have different socio-political systems than Russia and, what is more important, a higher level of socio-economic development. Therefore in the future, provided that contacts with certain contiguous countries will become stronger, the areas of the Russian Far East will inevitably get drawn into the orbit of economic and political influence of those countries. In this context it is extremely important that the state and the region pursue such a policy, which, on the one hand, would make the countries gain as much benefit from such contacts as possible, and on the other, would be conducive to the integrity of Russia as a state.

At present, radical changes occur across the world and offer a new view of the world-wide process of social refinement. Objectively, mutual integration processes directed at the formation of a world market economy are going on under the influence of globalization and they serve as an economic basis of the rapprochement of the nations inhabiting the region. This primarily applies to the APR countries where tempestuous integration processes are being observed to happen, and a new world trade center is emerging with its unique culture, huge labor and raw material resources, and advanced technologies. Specific intra-territorial problems that arise in the APR have a considerable impact on the development of the international (or rather world-wide) economic system.

Working out the Russian strategy built on the assumption that the integration is a beneficial process, it is necessary to keep in mind that Russia is a Euro-Asian state, wedged in between the EU and NEA, so it would be unwise to neglect a dual orientation in her development.

The strategy of supporting Russia's and certain companies' attempts to offer their involvement in economic processes going on in the APR should be based on the general concept of forming an infrastructural framework for international economic integration. A system of alternative international transport corridors passing over the territory of the Russian Federation, or an energy infrastructural system connecting eastern parts of Russia and the power markets in the NEA countries can be such an infrastructural framework. The combined system of transport corridors and a power infrastructure would in perspective create a T-shaped framework on whose basis a scale and a structure of the diversified and integration-based cooperation will be identified.

[1] «... the Baikal and Far East deposits of iron ore.., the coking coals of Chulman and Nery-ungri, the forest resources of the Amur, Bureya and Zeya rivers, and the gas of the Vilyui river can be effectively used only if the development of the Trans-Baikal and Far Eastern areas economies are oriented to export». [Nemchinov, V.S. Teoreticheskiye voprosy ratsionalnogo razmeshcheniya proizvoditelnykh sil // Voprosy ekonomiki (Theoretical issues of rational distribution of productive capacities // Problems of Economics). 1961. No 6].

[2] Compensation agreements with Japan on developing forest and coal resources, and on prospecting of natural gas deposits.

[3] Dalni Vostok I Zabaikalie - 2010 (Far East and Trans Baikal Areas, 2010) / Ed. by P.A. Minakir. M.: Ekonomika, 2002.

[4] Professor, University of California, Berkeley, USA

[5] The best known authors of these concepts are K. Kanamori, K.Ogawa (Japan), R. Scala-
pino, Li Tsei Cho (USA) and Shi Min (China).

[6] See, for example: Ekonomicheskaya integratsia: prostranstvenny aspect (Economic inte­gration: spatial aspect) / Ed. by P.A. Minakir. M.: Ekonomika, 2004.

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