Exporting machine

Assembly workshop of Europe or IT Hab: what will be the economy of Belarus after Lukashenko

The main rival of Alexander Lukashenko, at the presidential election in Belarus, Svetlana Tikhanovskaya turned to the European Union for help and received assurances that help would be provided if a new window of opportunities will be opened in this country. The support of the European Union, of course, will be required by Belarus. But it is important today to make some assessments of the content of this help in order to plan reforms.

Today's model of economic development of Belarus can be considered exhausted in terms of economic growth. Despite the fact that the Belarusian economy exports many complex goods, for example, agricultural machinery, engines and engines, buses and refrigerators, she hardly manages to move beyond the economies of her poor eastern neighbors. Belarusian manufacturers send mainly simple goods, such as chemical fertilizers to more developed countries.

The regime of Alexander Lukashenko reserves the role of the owner and manager of the industry, and not her partner.

In such an institutional environment, it is not easy to attract investments and technologies that would help increase the attractiveness of Belarusian complex goods.

So far, the high standard of quality and the demand for services in developed countries is distinguished by just that sector of the Belarusian economy, in the history of the development of which the state played the role of a partner, not a leader. We are talking about it. However, this sector is unlikely to play the same role for Belarus that Nokia played for the Finnish economy in the second half of the 1990s.

Finland of the second half of the XX century. Excessively concentrated its export in one geographical direction. The largest buyer of many Finnish goods, which did not differ in high competitiveness in the world market, became the USSR. Its collapse caused the deepest crisis of the Finnish economy, from which the country in many ways in many ways brought out the heyday of the Nokia telecommunication unit, which until then has been non -core and unprofitable.

Repetition of such a scenario in modern Belarus is possible only if a local IT sector creates a new and a service in the whole world. But this is unlikely not only because breakthrough innovations are rare, but also because the regime of Alexander Lukashenko subjected part of it to repressions.

The inertial scenario of the development of the Belarusian economy is to continue the slow industry structural transformation. This scenario implies that the structure of the release will develop at the expense of goods similar to those that are already produced by Belarusian companies. And they will be sold at the markets familiar to Belarusian manufacturers.

The development of Belarusian exports only on the basis of production factors existing today in this economy is reflected in the figure below. Multi -colored points in this figure are marked with goods that the Belarusian economy so far either does not export at all, or exports not intensively enough.

Horizontal is postponed by the PCI food complexity index, reflecting how technologically this or that product is technologically complicated. For example, a engine or refrigerator is technologically more complicated than T -shirts or rapeseed, so such products are assigned a higher PCI value. On the vertical axis, the measure of the technological proximity of each of the goods reflected in the figure is postponed to the export basket existing today in Belarus. For example, various types of agricultural machinery are technologically connected.

You can pay attention to the fact that the simplest goods related to agriculture and textile industry are technologically closest to the current export basket of Belarus. Among the more complex exports, it is possible to primarily note the goods of the chemical industry and metallurgy, as well as individual engineering goods. It is these goods that the Belarusian economy is ready to produce primarily, because production ingredients - infrastructure, knowledge, production equipment, etc., suitable for the production of similar goods, can be used to a certain extent for the manufacture of technologically close goods.

This is not to say that from the point of view of the possibilities of commodity diversification, the future of Belarusian exports looks fail. However, this drawing reflects mainly the side of the sentence: what additional export can the Economy of Belarus count if it is to build up production factors that exist today.

But it makes no sense to engage in commodity diversification if there is no sufficient demand for new goods.

And just here, the deeds of Belarusian manufacturers are quite bad. If we assume that this country will export new goods to the same thing where technologically close goods are already exporting, then there is no expectation of a large increase in income from such diversification. Buyers of Belarusian complex exports are mainly the former republics of the USSR, including those included in the Eurasian Economic Union (EAEU). The problem of the EAEU is that it consists of poor and slowly growing states. Due to trade only within this union, it is difficult to develop its export.

By choosing the most technologically affordable and assessing their potential geographical markets from potential new products, we got the result reflected in the next figure. Technologically more complex Belarusian goods characterized by a higher value of the product complexity (PCI), for example, dishwashers or agricultural equipment, will be exported to countries with a low level of economic complexity (ECI) - Kazakhstan, Russia, Ukraine, etc. Conversely, simple goods, for example, fertilizers, an unprocessed tree or T -shirts will go to rich economies, for example, to Spain and Germany.

The investments of the European Union, which Svetlana Tikhanovskaya, probably spoke in her conversation, would help to get out of such a development model leading to the economic stagnation of Belarus. It is important for Belarusian manufacturers of more complex goods to learn how to produce goods of standardized quality and functionality that can satisfy the needs of rich European buyers. Such a goal previously reached the countries of central European Europe, where many Western European manufacturers have moved their assembly production, including from electronics and automotive sectors.

The problem is that the countries of central European Europe predominantly retained the role of the assembly workshop of the European Union, not advantageing enough in the development of more complex links in the added value chains. Success in complication of their economies would inevitably lead to changes in the structure of their labor. The latter would focus on the performance of more complex tasks. And would delegate the implementation of simple production functions, including the assembly, to other countries. But this did not happen to the necessary extent.

In addition, the world today is at the stage of partial deglobalization. This means that

The society does not make decisions too friendly to attach the production of its companies.

It is possible that the investment of production partners, a place in global technological chains and know-how, Belarusian manufacturers will have to be sought in different countries and regions of the world. However, today it is a quite common scenario of economic development.