Table Of ContentRUSSIAN ACADEMY OF SCIENCES
FAR EASTERN BRANCH
ECONOMIC RESEARCH INSTITUTE
SASAKAWA PEACE FOUNDATION
Economic coopEration
bEtwEEn thE russian
Far East and asia-paciFic
countriEs
Khabarovsk
RIOTIP
2007
UDC 339.92 (5-02)
BBC 65.9 (2R55) 8
Economic Cooperation between the Russian Far East and Asia-Pacific
Countries / edited by P.A. 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 Founda-
tion in 2004, on the problems of cooperation between the Russian Far East and countries
of the Asia-Pacific region (��PPPRRR)))... TTThhheee ppprrrooojjjeeecccttt iiisss fffooocccuuussseeeddd ooonnn dddeeettteeerrrmmmiiinnniiinnnggg ccchhhaaalllllleeennngggeeesss aaannnddd oooppp---
portunities, 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, ERI FEB RAS
Iissued with the support of the Sasakawa Peace Foundation
ISBN 5-88570-073-7
Economic Research Institute FEB RAS, 2007
The Sasakawa Peace Foundation, 2007
2
Contents
Preface ......................................................................................................5
Introduction ..............................................................................................7
Part I. CooPERAtIon PotEntIAl ....................................................3
1. The Russian Far East’s economy: potential for economic
cooperation .........................................................................................5
2. Russia and the Russian Far East in economies of the APR
and NEA .............................................................................................49
Part II. FoRms And stRuCtuRE oF thE RussIAn FAR EAst
And thE APR IntEgRAtIon ............................................................55
3. Natural resources sector of the Far East economy:
integration potential .............................................................................57
3.. The role of natural resources industries ...................................57
3.2. Features of natural resources use .............................................59
3.3. Economic problems of the Russian Far East natural
resources sector .............................................................................69
3.4. Social and environmental problems of nature use
in the RFE ....................................................................................7
3.5. Potentiality for cooperation of the Russian Far East
natural resources sectors with the APR economies .........................72
3.6. Tools and mechanisms of integration of the Russian
Far East natural resources sectors into the APR .............................76
4. Fuel and power complex of the Russian Far East ................................8
4.. Current trends of the power development ................................8
4.2. Strategic problems and challenges ...........................................86
4.3. Assessment of the future development .....................................90
4.4. Initiatives of the Russian Federation in the development
of the energy sector of East Siberia and the Far East with
participation of international companies ........................................94
4.5. Major principles of the energy cooperation between
the Russian Far East and Northeast Asian countries .....................03
3
5. Foreign trade of the Russian Far East ..............................................05
5.. Commodity composition of foreign trade ..............................07
5.2. Geographical structure of foreign trade .................................0
5.3. Problems and prospects for foreign trade development ..........20
Part III. InstItutIonAl BAsIs FoR
thE IntERnAtIonAl IntEgRAtIon ...........................................3
6. The external integration environment: problems
and prospects of economic integration in Northeast Asia .......................33
7. Stages and mechanisms of integration into the APR ..........................62
7.. The goal of the integration. Challenges and opportunities
of the integration .........................................................................62
7.2. Possible scenarios for establishing the integration
mechanisms ................................................................................65
7.3. Integration mechanisms. Major political and economic
integration formats ......................................................................66
7.4. Organizational issues of integration .......................................77
List of references ...................................................................................79
4
Preface
In-depth studies of international economic cooperation capacities of
Northeast Asia were launched in a big way in the early 990s. 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
99 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 (99), 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 99–993 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
5
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), O. M. Prokapalo, Doctor
(Economics) (), 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.
6
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 960s. Export was supposed to be restricted by involvement only
the contiguous countries of the Pacific region. 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 920s, 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
964 that idea began to be implemented through compensation agreements.2
Later, in 986, 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 987, 996 and 2002)3.
In the late 980s, R. Scalapino4 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-). The author of the concept put into
its basis the idea of existence of two groupings of countries with mutually
““���� tthhee BBaaiikkaall aanndd FFaarr EEaasstt ddeeppoossiittss ooff iirroonn oorree....,, tthhee ccookkiinngg ccooaallss ooff CChhuullmmaann aanndd NNeerryy--
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 produc-
tive capacities // Problems of Economics). 96. No 6].
2 CCoommppeennssaattiioonn aaggrreeeemmeennttss wwiitthh JJaappaann oonn ddeevveellooppiinngg ffoorreesstt aanndd ccooaall rreessoouurrcceess,, aanndd oonn
prospecting of natural gas deposits.
3 Dalni Vostok I Zabaikalie – 200 (Far East and Trans Baikal Areas, 200) / Ed. by P.A.
Minakir. M.: Ekonomika, 2002.
4 PPrrooffeessssoorr,, UUnniivveerrssiittyy ooff CCaalliiffoorrnniiaa,, BBeerrkkeelleeyy,, UUSSAA
7
Introduction
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.
Table I-
distribution of industrial capacities and natural resources in northeast Asia
Natural
Country Capital Technology Labor
resources
Japan *** *** – –
Republic of Korea ** ** – –
PRC ** – *** ***
Russia’s Pacific area – – – ***
Mongolia – – ** *
DPRK – – – –
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 complementarity2. 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-980s
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 986, in Vladivostok, M.S. Gorbachov declared a turnabout of
TThhee bbeesstt kknnoowwnn aauutthhoorrss ooff tthheessee ccoonncceeppttss aarree KK.. KKaannaammoorrii,, KK..OOggaawwaa ((JJaappaann)),, RR.. SSccaallaa--
pino, Li Tsei Cho (USA) and Shi Min (China).
2 SSeeee,, ffoorr eexxaammppllee:: EEkkoonnoommiicchheesskkaayyaa iinntteeggrraattssiiaa:: pprroossttrraannssttvveennnnyy aassppeecctt ((EEccoonnoommiicc iinnttee--
gration: spatial aspect) / Ed. by P.A. Minakir. M.: Ekonomika, 2004.
8
Introduction
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 2st 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 5-0 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
9
Introduction
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.
0
