A. Kazakov. Digital Economy: the real back

DIGITAL

ECONOMY:

THE REAL

BACKBONE OF INTEGRATION IN CIS AND EAEU Anatoly Kazakov, Chairman of the Business Council of the Association “Business Center of CIS Economic Development”, Chairman of the Coordination Council of CIS Financial and Banking Council TODAY THE WORLD IS STANDING ON THE CUSP OF THE FOURTH INDUSTRIAL REVOLUTION WHICH IS ANTICIPATED TO BRING UP A RADICAL TRANSFORMATION OF THE EXISTING PRODUCTION CAPACITIES (TECHNO-ECONOMIC PARADIGM) INTO THE PRODUCTION BRAINPOWER (ARTIFICIAL INTELLIGENCE). AND THIS WILL INEVITABLY LEAD TO DRASTIC CHANGES IN THE PRODUCTION RELATIONS. AS A RULE SUCH CHANGES ARE FOLLOWED BY CRISES WHICH CAN ALREADY BE OBSERVED. AND WE SHOULD GET READY FOR IT WITHOUT DELAY.

According to scientists the fourth industrial revolution will drive technological breakthrough in such sectors as AI, robotics, internet of things, Nano- and bio-technologies, quantum calculation etc. Whereby not only new and more effective technologies will ramp up but all the existing systems will go through external and internal transformation in countries, companies, sectors and society in general. The frameworks of the new techno-economic paradigm are only setting about (first of all in the USA, Japan and China) and are aimed at the development of science-driven “high” technologies.

Everyone is aware of such notions as digitalization, robotics, AI, quantum and membrane technologies, fusion energy, gene engineering etc. Synthesis of achievements in these areas has led to the creation of a quantum computer, artificial intelligence and in the end will provide for a totally new level in the systems of management of state, society and economy. Experts believe that the new techno-economic paradigm of the fourth industrial revolution will start its formation in 2020–2030-s and will mature in 2040-s.

In CIS countries with the most developed economy (Russia, Belarus, Kazakhstan etc.) the share of the new technoeconomic paradigm is not large yet and is mostly applied in the most developed sectors: military and aerospace industry. And the CIS countries are facing a challenge today: in the next 10 years to join the range of the countries with the new techno-economic paradigm (the sixth techno-economic paradigm in accordance with the sixth N. Kondratiev cycle).

One of the essential stages of the fourth industrial revolution is the transition from the analogue formats to the digital ones. In March, 2019 the Business Center of CIS Economic Development supported by the Executive Committee of CIS organized in Moscow the International Forum of CIS countries on the digital economy. The participants – leaders of integration structures like CIS, EAEU, the Union State of Russia and Belarus shared their vision of the ways for coordination and networking among states on the digitalization of economy.

The Forum participants stated that in CIS countries digitalization is gaining momentum. Today the digital economy has become one of the key topics to be discussed by all CIS countries together in the nearest future.

In order to harmonize the digitalization processes in CIS the Council of the CIS Heads of Government has worked out a Concept on states’ cooperation in the digital development and the plan to implement it. The CIS countries have also taken up programs for the digitalization of economy.

Russia has approved and is carrying out the national program “Digital economy of the Russian Federation”. Its key aims are to increase internal expenses for the economic digitalization development, to create a sustainable and safe information and telecommunication infrastructure for the high-speed transfer, to process and store large data volumes available for all companies and households, to allow the governmental bodies, local authorities and organizations to apply preferably national software. The President of the Russian Federation V. Putin has set the goal in the next six years to triple domestic investments into the digital economy, to create a safe IT infrastructure, to ensure the relevant technical capacities.

Today every sector needs to revise effectiveness and to transform with the help of digitalization. Industry, agriculture and construction are expecting massive introduction of the key developments defining the future economy, as well as the management system based on the concept of internet-technologies and high-speed data processing. Anticipated are smart networks with industrial robots interacting there, the technology of 3-D printing, precision agriculture, system of production and energy administration, digital models of construction objects.

Digital transformation of economy is also a national priority in the Republic of Belarus. The President of the country has set a challenge to transform Belarus into an IT country. With this aim Decree #8 “On the development of digital economy” was adopted in December, 2017. The document reflects the deep awareness of the current processes in IT-business development, its need to work within the frames of international law and provides opportunity for a leap in this sector.

Huge opportunities are available for the residents of the Belarusian HighTech Park within the sectors of biology, medicine, aircraft and space. The number of residents registered in the Park by

the end of the last year grew up to 454. The number of start-ups and the record pace of export growth show that the legislative changes to create favorable conditions for investments in the area have been effective and have attracted a number of national and foreign companies. Therefore the country is facing a task to educate experts who can professionally and smoothly introduce these technologies. Besides IT-experts training system it is necessary to improve the approach to the education of lawyers, economists, managers and other specialists so they could work in the context of mass digitalization of the economy of the Republic.

It is worth mentioning – and it was mentioned by many participants of the Forum – that the development of information technologies directly influences the quality of interaction between CIS countries. The process of economic integration today has become impossible without the digitalization of economic platforms, new information flows, without relevant data bases and an organized cooperation between the countries.

The digital integration has no sensible alternative these days. Global players, regional and international, are rapidly forming on this space. It becomes obvious that within one country it is impossible to carry out digital transformation effectively. The CIS states are facing a challenge to take its place in the row of the world technical leaders of the largest digital economies. For a growth spur the CIS countries should cooperate and move closely together in the issues of digitalization as well. The Forum also supported this idea.

Within the coordination of the digital development of the economy in CIS and EAEU the focus areas of the implementation of digital agenda have been approved up to 2025. It is a program document to set the aspects of cooperation between states to form the digital economy and launch the up-to-date innovation projects.

The stage has already been set for the application of digital and general processes, the information system of the Commonwealth has been integrated to provide for the interstate data and documents exchange. The build-up of the cross-border space of confidence is also at the latter stages. The interaction of all participants of economic relations is being digitalized. And this digitalization gains legal format which is very important too.

As one of the promising elements of digitalization is the system of marking of goods – only within the EAEU for now. It is a necessary mechanism to ensure the goods turnover, equal conditions, consumer rights protection, fight against the “grey market”, infringing goods. This mechanism can “whitewash” the economy and create new principles of the goods turnover. According to experts today the “grey” turnover accounts for about 15% of GDP.

The introduction of the single mechanism and digital solutions is interesting both for the state bodies and private business which will be able to control the fairness of their counterparts, raise sale proceeds at the account of the control and reliability of the goods delivery and early recognition of counterfeit goods.

Digitalization will provide for the effective solution of the integration task to implement the “four freedoms” on the whole territory of CIS: free movement of goods, labour force, capital and services. With harmonized digital economies it will be much easier to introduce in CIS space the single standards, single registers, single approaches, data exchange etc.

Apparently today the trade is still limited by cross-border barriers including administrative, customs, tax, legal, logistic. The digital technologies are expected to reduce and remove them. Some IT companies are ready to offer advanced technologies to their partners in this sector which raise the effectiveness of economic processes considerably.

However with all the advantages of the digitalization there is an aspect calling for special attention – cyber-security. The legislation is the weak part here: digitalization is rapidly developing with the laws lagging behind.

It is also worth mentioning that the market is dominated by foreign solutions and products. For instance, the share of network traffic of the Russian segment on the Internet routed through foreign server systems in 2018 accounted for 50%; the value share of the purchased computer, service and telecommunication equipment of foreign manufacture in 2018 accounted for 94%, software – 50%.

More often we face corporate data theft, industrial spying, hacker attacks and personal data handling. Thus the security issues of digitalization require a lot of attention and serious funding.

The International Economic Forum of CIS member-states has become a considerable intellectual contribution to the formation of one of the backbones of integration – the digital economy. On March 13, 2020 the Business Center of CIS Economic Development supported by the Executive Committee of CIS is planning the International Economic Forum of CIS member-states “CIS + World” on the sidelines of the regular meeting of the Economic Council of the Commonwealth of Independent States. Digital integration remains on the agenda of the Forum.