12 September 2018

Economic Integration in East-Central Europe: How to Create a Common Economic Area in Such Fragmented Region?

Analytical Research

Why is it so interesting and important? East-Central Europe is among the most sensitive and diversified regions of Europe. It is situated on the border of continents, civilizations and powerful regional organizations. The region is divided by physical, political, customs, cultural and language borders. Little wonder that East-Central Europe is the most conflict region of Europe. Political and war conflicts have regularly outburst here during the past half-century.

So, is it possible to create a common economic area for development of business and making investments on such basis? Is it realistic, with all the political differences, to create a common platform for cooperation between the eastern European Union members, western Eurasian Economic Union’s members, and the states not participating in that projects?

There is no simple answer to these questions, but unquestionably such base should be created to prevent destructive developments and to ensure prosperity of the region and whole Europe. The economic integration of the region’s states will help unlock a great economic potential of East-Central Europe. This will increase the wealth of the people and diffuse the political tension through whole region.

Goals and tasks. The main goal of the Project is to perform a comprehensive study aimed at finding mechanisms to encourage economic integration in East-Central Europe. To achieve this ambitious goal, one will need to complete a number of tasks requiring in-depth study and research. Using an interdisciplinary approach I’m planning to find the required mechanisms on the following three levels:

  • International Level. The most important task of this part is to find out effective model of international cooperation between countries of East-Central Europe, which will allow to establish common economic area.
  • Level of the National Economic Policies. At this level we are going to search for economic policy solutions. Such policies may be implemented by every state and organization to facilitate the integration of own economy in the whole region’s economy and strengthen the economic cooperation with the partners;
  • Micro-level. This level of study is focused at corporations and their strategies in the region. One of important tasks at this level is the exploration of the potential for creation of international economic chains in East-Central Europe.

Each of these tasks is a relatively autonomous research project, but they have been designed in a way allowing using the obtained results to achieve the main goal of the Project, to develop mechanisms to boost economic integration of the East-Central Europe states.

Novelty. Taking the historical perspective, we can find a lot of research works related to the various aspects of the economic integration of East-Central Europe. However, the situation in this region has been changed dramatically in 2014-2018. First of all, three states of the region have exited the sphere of influence of Russia. By signing the Association Agreement and establishing Free Trade Zone with the European Union, Ukraine, Moldova and Georgia have declared their intention for economic and political integration with Europe. As the political integration is a long-term prospect, the economy shows a large-scale transformation of relations in the region.

Second, East-Central Europe has experienced a war conflict between Russia and Ukraine. This caused not only the deterioration of economic and political cooperation between the two largest states of East-Central Europe. This also results in new problems for the whole region by impairing the established transit routes and severance of economic ties.

Third, the EU and the USA have imposed economic sanctions on Russia. This has created some additional obstacles for economic integration in the region. Sanctions impact establishing the economic relations. Now, we are witnessing the forming of the two closed economic areas: the European Union and Eurasian Economic Union.

Nowadays East-Central Europe is a region dramatically different from what it was several years ago. The new reality requires new deep researches which will allow us to have an up-to date understanding of the situation and forecast new trends for contemporary East-Central Europe. Understanding these new circumstances is crucial as this may help international organizations, independent states and corporations of the region to address new challenges successfully

Project Leader:                                                                 dr Aleksy Mołdowan

Duration of research project:                                  1.06.2019 — 30.11.2020

Publication of the briefing paper:                         November 2020

Public presentation:                                                       December 2020

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