International Economic Integration in the Context of Sustainable

Development

Fatima Dakhaeva

Chechen State University Named After A.A. Kadyrova, Grozny, Russian Federation

Keywords: World Economic Processes, Changing Labor Market, Globalization and Internationalization, Scientific

Activity.

Abstract: The concept of “internationalization” must be considered “in the broad sense of the word” and “in the narrow

sense of the word”. The internationalization of the economy is the process of economic convergence of the

countries of the modern world. National economies are drawn into world economic processes, thus increasing

the interdependence of the economies of countries, primarily developed ones. A special place in the literature

is given to the internationalization of scientific activity. Modern scientific research requires huge financial

and human investments; for this, companies from different countries unite to conduct scientific and design

research. In addition, there is an objective process of specialization of individual countries in certain types of

scientific research. One of the forms of exchange of scientific and technical knowledge and information, the

results of research conducted in different countries is the international trade in patents and licenses, which is

developing extremely rapidly at the present time.

1 INTRODUCTION

To date, the European Union is the most developed

integration association in the world, providing a

successful example of close economic cooperation

and a high level of national, international and

cooperation. However, in 2019, amid increased

tensions in important relationships, as well as

uncertainty in the field of public control and

geopolitics, the EU economy slowed down in 2019.

Real GDP increased by 1.5%, which is 0.6% less than

in 2018. The decline in the economic dynamics of the

EU states led to an increase in the state budget deficit

by 0.9% of GDP and an increase in industrial

production by 1%. Particularly acute in 2019,

political problems arose within the bloc, which

emerged in the desire of states for sovereignty. So,

after the double transfer of Brexit statistics last year,

the UK formally left the European Union on January

31, 2020 after 47 years of membership in it. Until that

time, partnerships in trade, politics and the economy

as a whole throughout the country will continue.

According to the agreements with the application. An

important point of Brexit is the fact that Northern

Ireland partly belongs to the EU customs area. Also

https://orcid.org/0000-0002-7089-7154

in October 2019, after a two-year lull, the Catalan

crisis broke out in Spain with a margin of safety. In

connection with the indictment of 12 separatists in

Barcelona, again and several other cities in Catalonia,

a protest movement broke out. However, after the

election of Pablo Sanchez as Prime Minister, the

dialogue with the source of great power was resumed,

and it can be predicted with some certainty that the

Catalan crisis will be put, probably not an everyday

end, but by the disappearance of the episode a

temporary solution. The change of the best EU

institutions also came last year. The European

Commission was headed by the German

representative Ursula von der Leyen, the European

Council by the former Prime Minister of Estonia

Charles Michel, the European Parliament by the

Italian politician Maria Sassoli, the European Bank

by the French center Christine Lagarde. Decisive

tasks will be outlined in the context of the weakening

of the geo-economic and geopolitical positions of the

EU, as well as the UK, as well as the reduction of its

share in world trade and uncertainty regarding trade

relations with the UK (which will largely affect the

development of integration processes in the EU)

against the backdrop of the global economic crisis

Dakhaeva, F.

International Economic Integration in the Context of Sustainable Development.

DOI: 10.5220/0011602300003577

In Proceedings of the 1st International Conference on Actual Issues of Linguistics, Linguodidactics and Intercultural Communication (TLLIC 2022), pages 59-64

ISBN: 978-989-758-655-2

 2023 by SCITEPRESS – Science and Technology Publications, Lda. Under CC license (CC BY-NC-ND 4.0)

associated with the pandemic (Molchanova, 2019).

However, if we look at the problem of measurement,

then the assessment of globalization includes

political, economic, cultural, environmental and other

components, while internationalization includes only

economic ones. Globalization is comprehensive and

affects all aspects of life, not just the economic. We

share the view of scholars that internationalization is

the economic dimension of globalization. The two

leading global integration groups - the EAEU and the

EU - are striving to strengthen trade and economic

relations between the two unions (Reynard, 2018).

Today, the European Union is the main foreign trade

partner of the EAEU. Unfortunately, the sanctions

policy of developed Western countries, including

European ones, against the Russian Federation has

complicated the interaction of the two associations in

recent years, although the EAEU does not give up its

desire to sign an agreement that was actively

discussed earlier. In 2019, a number of constructive

discussions took place between representatives of the

EU and the EAEU, which discussed such initiatives

as the work on the Lisbon-Vladivostok project, which

is already supported by more than 60 companies and

associations from eight countries, the German-

Russian Chamber of Commerce, as well as German-

Eastern Business Association. During the working

meetings, issues of technical regulation, customs

procedures and improvement of the taxation

regulation system, including problems with VAT,

were discussed (Murtazova, 2021; Gakaev, 2020).

The issues of normalizing relations between the two

associations became key in the discussion at the First

Dialogue: Connecting Eurasia - from the Atlantic to

the Pacific forum, held in March 2019 in Brussels.

Given the tense relations between the EU and Russia,

the EU is much more actively involved in concluding

bilateral cooperation agreements with individual

EAEU countries than with the Union as a whole.

Thus, in 2015, an expanded partnership and

cooperation agreement was signed with Kazakhstan.

In 2017, the EU and Armenia signed an agreement on

a comprehensive and enhanced partnership. And in

2019, a similar agreement was reached between the

EU and Kyrgyzstan. Ultimately, the strengthening of

trade and economic relations between the EU and the

EAEU opens up new prospects and mutual benefits

for both unions in terms of trade, tourism, industrial

development and geopolitics.A similar situation (the

presence of many definitions) is typical for the

concept of ‘internationalization”. This set is caused

not only by the fact that each author reveals a separate

side of the essence of the concept, but also by the fact

that they reflect the features of the process in the

current period of time (point in time). Therefore, it is

advisable to talk about approaches. For example, the

essence of the spatial approach is the search for the

most favorable territories for placing a division of an

enterprise, improving the territorial structures of

enterprises. Marketing is aimed at forming a strategy

for the development of foreign economic relations in

the context of globalization, the choice of alternative

options for a development strategy. With the

development of the company in the foreign market,

management receives some independence. The global

development of the corporation is in the area of

responsibility of the headquarters, and the local

manager concentrates on the development of the

company within a certain region. The goal of the

management approach to internationalization is to

improve the management of a company in a foreign

market.

2 RESEARCH METHODS

According to the most general definition, transaction

costs are the equivalent of friction in mechanical

systems. Getting rid of the analogy with physics, any

costs associated with the coordination and interaction

of economic entities should be classified as

transactional. In other words, these are all costs

associated with the exchange and protection of

entitlements. Savings in transaction costs are both

external and internal factors affecting profits. Its

content is determined by a variety of personal

relationships that regulate entrepreneurial activity.

Some authors, emphasizing the importance of the

considered source of profit formation, are talking

about "calculation of personality" and "transactional

exchanges" (Murtazova, 2021). In psychological

science, a transaction is defined as the interaction of

the ego states of two individuals entering into

communication (Gakaev, 2018). And in this regard,

we can talk about the “market of personalities” in the

economy. D. Hartwick writes the following about

this: “The predominant behavior in the psychology of

an individual who is aware of his connection with

other individuals and dependence on them,

apparently, should be considered behavior that is

fundamentally different from the “purchase and sale”

of the basis of market relations.” This is explained,

according to the author, by the fact that people

intuitively prefer cooperation to rivalry

(Bekmurzaeva, 2009). But cooperation, according to

other authors, does not negate the relationship of

“purchase and sale” (Braverman, 2019). The thing is

that the equivalence occurring in this case of

TLLIC 2022 - I INTERNATIONAL CONFERENCE "ACTUAL ISSUES OF LINGUISTICS, LINGUODIDACTICS AND

INTERCULTURAL COMMUNICATION"

exchange is determined not only on the basis of cost

calculation, but also on human dignity. And the

substance that is obtained as a result of the synthesis

of these two values is still unknown to modern

science, which does not prevent people from actively

working in the “market of personalities”. In a market

economy, the company's costs are divided into 1)

transformational; 2) transactional.

For a long time, transaction costs were simply

“not noticed”. This term was first used in the

construction of economic models by R. Coase

(Bekmurzaeva, 2009). In addition, O. Williamson

(Reynard, 2018), D. North (Braverman, 2019) wrote

about the importance of transaction costs in the life of

society. Their papers dealt, respectively, with the

"costs of operating an economic system", "the

equivalent of friction in mechanical systems", "the

costs of evaluating the useful properties of the object

of exchange, and the costs of enforcing and enforcing

rights". Modern authors are talking about the

classification of transaction costs (Gakaev, 2018;

Vladimirov, 2019). They are divided into:

1) real and effective transaction costs. The former

are determined by the network of transactions

actually taking place, and the latter by the most

efficient one. The magnitude of the deviation of

these types of costs shows how effectively the

community uses the established institutions.

The more this deviation, the worse. Individuals

(entrepreneurs) use the opportunities they have

to optimize their activities. The existence of

such a deviation is due, on the one hand, to the

refusal to comply with the norms and rules

established by society, and on the other hand,

to the diverse availability of information

necessary for doing business;

2) explicit and implicit transaction costs. In other

words, the former are also called "explicit",

taking the form of cash payments to suppliers

of transactional resources. Explicit transaction

costs are deliberately hidden (for example, the

cost of maintaining a criminal “roof”). Implicit

costs, by analogy, are called “implicit”. But

they are associated with risk and nerve costs for

the entrepreneur;

3) total and average transaction costs. They are

related to each other in a certain way: the

average transaction costs are determined by

dividing the total by the number of

transactions. But the growth of their number is

not always a positive thing (although it reduces

the average cost). This is explained by the

lengthening of the technological chain for the

production of the same product.

Achieving a number of effective trade agreements

with EAEU partners based on mutual benefit and

predictability, focused on the implementation of the

existing regulatory potential, is objectively a

necessary condition for the development of the

economy as a whole. In the context of the instability

of the current WTO multilateral system, the legal

environment formed within the framework of

bilateral trade agreements acquires additional value.

Until recently, the ability of exporters from the EAEU

countries to supply under the free trade regime was

limited to the CIS space, apart from the free trade

regime with Serbia (for Belarus, Kazakhstan and the

Russian Federation) and Montenegro (for Russia). At

the same time, the CIS countries that are not members

of the EAEU account for only about 5% of the foreign

trade of the Union states. After the completion of the

current negotiations, the share of partners of the

EAEU countries on trade and preferential agreements

(Vietnam, Egypt, Israel, India, Iran, Serbia and

Singapore), according to experts, will account for at

least a third of the Union's foreign trade. In 2019, the

possibility of creating a separate dialogue partnership

between the EAEU and ASEAN was considered,

taking into account the established practice of

interaction between the Asian association and foreign

partners, including integration associations. The

strategic line of the EAEU and its supranational body,

the Eurasian Economic Commission, is to further

expand the network of partners, including through

ASEAN members. Thus, the EEC is trying to develop

the practice of organizing joint events with the

participation of the business community, in

particular, by analogy with the EAEU-ASEAN

business dialogue within the SPIEF in 2018–2019.

Another format of work to expand international

cooperation is meetings at the level of heads of

integration associations of the EAEU - ASEAN -

SCO (and also the EU under certain conditions). One

of the largest economies in Southeast Asia - the

Republic of Indonesia (2.5% of global GDP,

population 267.7 million people) - in 2019 became

the fifth ASEAN state (along with Vietnam,

Singapore, Cambodia and Thailand), with which the

EEC formalized relations by signing a memorandum

of cooperation. In 2019, regular consultations were

held between representatives of the EAEU member

states and the Republic of India, as a result of which

the format of the future trade agreement was agreed

and the transition to the active phase of negotiations

with Indian partners began. Last year, a memorandum

of cooperation was signed between the EEC and the

government of the People's Republic of Bangladesh.

The document provides for the creation of a joint

International Economic Integration in the Context of Sustainable Development

working group to discuss trade and economic

cooperation. Also in 2019, cooperation with the

Kingdom of Thailand was further developed within

the framework of the memorandum dated November

19, 2018. In June last year, the first meeting of the

joint working group was held, at which the parties

discussed the development of trade and economic

cooperation, customs and technical regulation, SPS

measures , digital agenda and contacts in the industry

and agro-industrial complex. As a result of the

discussion, an agreement was reached to establish

cooperation in matters related to the application of

trade protection measures and to work out the

possibilities of interaction, including through the

direct exchange of notifications between authorized

bodies.

3 RESULTS AND DISCUSSIONS

In the modern world, internationalization is an actual

trend in world economic development, by the middle

of the 90s of the twentieth century. reached an

unprecedented level. As an illustration of this

phenomenon, the educational literature presents a

huge number of diagrams demonstrating how the

parts of one of the most ordinary cars are assembled

in several dozen countries. The Japanese school was

close to the main conclusions of R. Vernon's theory.

Among the founders, we single out K. Kojima and T.

Ozawa, who outlined the advantages of companies in

the conditions of international capital mobility (the

theory of “flying geese of development”)

(Vladimirov, 2019; Molchanova, 2019). Scientists

have proven that companies can contribute to the

economic development of the host country, while

pursuing their corporate goals. When choosing a

location for locating production facilities, company

management relies on two factors: location of

production near end users (i.e. outside customs

barriers) and access to resources to reduce production

costs. J. Dunning in a series of his works (1980, 1981,

1988, 1992) published an eclectic theory of OLI-

advantages, called the “eclectic paradigm of

international production”, or Dunning's eclectic

paradigm (Eclectic paradigm, or OLI paradigm).

Dunning's theory is based on a set of OLI-advantages,

that is, an investor makes a decision on foreign direct

investment based on an assessment of three

components (advantages): - Ownership / property (O

advantages, or specific advantages of ownership).

The volume of foreign FDI is explained by the nature

and set of competitive advantages of foreign investors

in comparison with domestic investors (possession of

a unique technology or patent, a wide range of goods

and services, a good reputation, a recognizable

brand); - Location / location (L advantages, or

specific location advantages) (Molchanova, 2019).

The advantage is determined by the peculiarities of

the markets offered to foreign investors by individual

countries in comparison with other countries

(significant market capacity, low transport and labor

costs, cheap raw materials); - Internationalization /

Internationalization (I advantages, or advantages of

internationalization). Benefits from the

implementation of intra-company transactions

(between branches of TNCs, companies of the same

holding, etc.) in comparison with the execution of

such transactions between independent entities in the

market. Advantages are also determined by the

degree to which a company can internationalize, i.e.

control its own competitive advantages, and not

transfer or offer them to foreign companies, for

example, through export or licensing (i.e., benefits

from own use of assets, and not from transferring

third party). The term “internationalization” is

multifaceted (Vladimirov, 2019). However, if we

look at the problem of measurement, then the

assessment of globalization includes political,

economic, cultural, environmental and other

components, while internationalization includes only

economic ones. Globalization is comprehensive and

affects all aspects of life, not just the economic. We

share the view of scholars that internationalization is

the economic dimension of globalization. At the

EAEU level, regionalization has actualized the idea

of the Greater Eurasian Partnership. The

commonality of the task of promoting it for the Union

countries was recorded in the Declaration on the

Further Development of Integration Processes within

the EAEU dated December 6, 2020, which forms the

basis for the development by the Eurasian Economic

Commission (EEC) of a relevant conceptual

document, as well as a specific plan of joint actions.

In essence, the idea of the Greater Eurasian

Partnership implies the establishment of close

mutually beneficial economic ties with all countries

of the continent, an increase in the contribution of the

EAEU to strengthening the interconnection between

Europe and Asia, the formation of "megablocks", that

is, the creation of alliances between large economies

and interstate associations. The formation of the

Greater Eurasian Partnership should become a well-

defined and dynamically implemented strategy for

the EAEU to create a wide zone of trade and

entrepreneurial activity for all those who work in this

space. The Union is faced with the task of formulating

specific proposals on how to build a system of

TLLIC 2022 - I INTERNATIONAL CONFERENCE "ACTUAL ISSUES OF LINGUISTICS, LINGUODIDACTICS AND

INTERCULTURAL COMMUNICATION"

mutually beneficial relations between the largest

players in Eurasia, in which interested states will be

involved on a mutually beneficial basis. All

integration initiatives of the EAEU, the formation of

a network of free trade zones, as well as the

conclusion of memorandums of cooperation should

be positioned as interrelated elements of the Greater

Eurasian Partnership. The EEC strives to minimize

the negative impact of external shocks on the

development of the EAEU members, including

through deepening international cooperation. The

expansion of the geography of trade and economic

partnership is considered as a factor that reduces the

risks associated with abrupt changes in the market

situation.

4 CONCLUSIONS

In 2020, the process of expanding relations between

the Eurasian Economic Union and non-CIS countries

continued, which was reflected in the signing of

cooperation agreements, the creation of free trade

zones and the substantive study of issues on the entry

of new members into the association. World

economic trends, indicating a high degree of

turbulence and uncertainty, have affected the

development trajectory of regional integration

associations, including the EAEU. The sphere of

international business relations is moving to a new

historical stage - geo-economic regionalization,

characterized by the coexistence of several local

economic centers (Hibbard, 2019). At the present

stage, regionalization is manifested in the evolution

of international integration processes, accompanied

by the formation of regional and multiregional

economic associations (for example, BRICS and

SCO), and expresses the desire for effective and

harmonious interaction between countries, regional

and subregional systems, ensuring their access to the

global level. Regional integration can contribute to

the development of competition on the basis of

existing and newly created advantages for members

of integration associations, taking into account the

protection of their internal national interests.As a

result, realizing the complexity of this phenomenon

and taking into account the variety of approaches to

understanding the essence of state economic policy,

in relation to economics and politics, there is a need

to improve the teaching and research process, the

optimal combination and choice of teaching methods.

Under these conditions, an extensive discussion is

unfolding on methodological issues, namely: which

direction of economic thought is capable of giving the

most adequate and complete answer to the question

posed. Therefore, within the framework of organizing

the educational process in economic disciplines, it is

advisable to use a systematic approach, that is, the

study of the economic phenomenon as an integral

complex of interrelated elements, views and

concepts. There is a need to use an adequate critical

synthesis of alternative approaches in order to make

the most reasonable and constructive decisions. Great

help in mastering the basics of economic policy in the

study of economic sciences is provided by interactive

teaching methods, which allow solving educational

problems on the basis of intellectual difficulty and

active interaction (Reynard, 2018). Thus, the full

realization of the scientific and educational potential

of economic science, the assimilation of a system of

views on state regulation of the economy and state

economic policy is impossible without the

development of various methodological areas and

their adequate refraction to economic reality through

the education system. Economic policy takes into

account economic interests, explores their

interaction, considers possible consequences, and

also has a direct impact on all areas of our lives.

Therefore, the organization of the educational and

scientific process should be aimed at a deep

assimilation of the patterns and relationships of any

economic phenomenon or process, including

economic policy. Only such an approach lays a

reliable foundation for a comprehensive

understanding of the phenomenon under

consideration and taking into account the existing

contradictions.

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