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Yaroslav Lissovolik

Programme Director of the Valdai Discussion Club, RIAC Member

In view of the idiosyncratic features of Eurasia with respect to the gravity of distance, a common Eurasian platform for digital economic agreements may allow the region to attenuate the effects of distance and severe economic fragmentation — most notably in the regulatory sphere — emanating from the sheer size of Eurasia and the multiplicity of regional integration arrangements. By consolidating regional, bilateral, as well as corporate alliances, a common Eurasian digital platform would allow its members to introduce greater consistency and compatibility into the existing set of digital economic agreements, thus providing the conditions for multilateralising existing digital arrangements and for creating new digital economic accords.

One of the ways to create a digital “platform of platforms” for Eurasia that is to include platforms for regional integration arrangements, regional development banks and regional financing arrangements (RFAs) of the countries of Eurasia.

The current economic framework in Eurasia is fragmented and lacks the digital connectivity that would be predicated on cross-country and cross-regional digital agreements. This in turn limits the capability of countries to coordinate policies in areas such as trade, migration, digital economy development. A common platform would address the issue of the “digital gap” across the countries of Eurasia via promoting greater “digital inclusivity”, most notably with respect to the low-income developing economies, writes Valdai Club Programme Director Yaroslav Lissovolik.

In view of the idiosyncratic features of Eurasia with respect to the gravity of distance, a common Eurasian platform for digital economic agreements may allow the region to attenuate the effects of distance and severe economic fragmentation — most notably in the regulatory sphere — emanating from the sheer size of Eurasia and the multiplicity of regional integration arrangements. By consolidating regional, bilateral, as well as corporate alliances, a common Eurasian digital platform would allow its members to introduce greater consistency and compatibility into the existing set of digital economic agreements, thus providing the conditions for multilateralising existing digital arrangements and for creating new digital economic accords.

One of the ways to create a digital “platform of platforms” for Eurasia that is to include platforms for regional integration arrangements, regional development banks and regional financing arrangements (RFAs) of the countries of Eurasia.

  • The platform for regional integration arrangements would work towards advancing greater inter-operability into the digital platforms of Eurasia’s regional groupings such as the EU, the EAEU, ASEAN, RCEP, EFTA, BIMSTEC, SAFTA, GCC.

  • The platform for regional development banks and funds such as EDB, EIB, ADB, EBRD, SDF, CAF would focus on building project portfolios in the area of digital cooperation/digital connectivity/digital inclusiveness and work to advance digital economic agreements (DEAs) on the basis of the existing digital arrangements concluded by countries such as Singapore.

  • The platform for regional financing arrangements (ESM, EFSD, Chiang Mai Initiative Multilateralization, Arab Monetary Fund) would focus on the coordination of anti-crisis measures, the creation of ex-ante anti-crisis response mechanisms based on the use of “big data” and forward looking indicators obtained through digital cooperation and data exchange.

These three platforms can reinforce one another and can be further complemented by country-level and corporate-level platforms to form a Eurasian ecosystem of digital cooperation and inter-operability.

Such a Eurasian “platform of platforms” is:

  • Digital: it advances digital cooperation, including digital trade at the level of countries and regions

  • Regional: it places particular emphasis on building cooperation in areas that have hitherto lacked coordination, namely among regional integration arrangements and their development institutions

  • Scalable: it can be replicated in other parts of the world as well as at the global level via creating a regional layer of global governance

The current economic framework in Eurasia is fragmented and lacks the digital connectivity that would be predicated on cross-country and cross-regional digital agreements. This in turn limits the capability of countries to coordinate policies in areas such as trade, migration, digital economy development. A common platform would address the issue of the “digital gap” across the countries of Eurasia via promoting greater “digital inclusivity”, most notably with respect to the low-income developing economies. Such a common digital platform for Eurasia may prove to be particularly important for land-locked developing countries that face notable geographical/logistic barriers to trade.

Indeed, of all of the different parts of the global economy Eurasia stands to benefit the most from greater digital connectivity and inclusivity, given the prominence of the “distance factor” that constrains the intensity of economic cooperation within the region. The gravity of distance is particularly costly for Eurasia’s land-locked economies — in fact Eurasia harbours 26 out of 44 (59%) of all of the world’s landlocked countries. Moreover, the scale of “inwardness” of some of the regions of Eurasia in terms of geographical location is truly unique, whereby Kazakhstan is the largest landlocked country in the world, while Bishkek is the farthest capital city from the coast in the world (all top-5 of the most distant capitals from the sea coast in the world are in Asia).

Existing research suggests that digital platforms may exert a sizeable effect in reducing the gravity of distance: as noted by Pierre-Louis Vézina, “distance between countries impedes international trade, but it matters 65% less for trade on the eBay platform than for traditional offline trade... The online world is flatter”. Yet another study focusing on the EU evaluated the importance of distance for e-commerce. This study of 721 regions in five countries of the European Union shows that while distance is not “dead” in e-commerce, there is evidence that express delivery in e-commerce reduces distance for cross-border demand.

Ways of measuring the effectiveness of a common platform would include the scale of liberalization and trade facilitation in digital trade across the Eurasian platform; increases in the size of the portfolio of joint investment projects related to the digital economy on the part of the region’s development institutions, increases in cross-border and cross-regional trade and investment associated with the digital economy. The number of multilateral digital economic agreements (DEAs) facilitated by the platform would be a measure of the contribution of the initiative to multilateralism. Another important metric is increases in connectivity arising from the creation of the platform — this would concern increases in digital connectivity/inclusivity, most notably in developing economies.

A common digital platform in Eurasia will serve to improve coordination across countries as well as regional integration arrangements and their development institutions. It will also serve to transform the landscape of trade agreements by facilitating the conclusion of digital economic agreements and multilateralising existing digital accords. The common platform will also advance international cooperation in the digital sphere and other areas pertaining to the Fourth Industrial Revolution to strengthen the response to the Covid pandemic and improve the region’s capabilities in the health care sphere as well as other areas pertaining to the development of human capital. A more cooperative framework for Eurasia that aims to emulate best practices and standards across the platform will also be conducive to longer-term cooperation, a more active use of ESG standards and greater emphasis placed on economic sustainability.

The creation of the Eurasian digital platform may be a step towards building a global network of cooperation on the basis of a “bottom-up” plurilateral cooperation among regional blocs rather than a “top-down” framework devised at the global level. Such an approach conforms with the principles contained in the WEF’s White paper on Globalization 4.0 that advocates the use of flexible plurilateral trade agreements as a way of further advancing trade openness in key areas, including in digital trade and e-commerce: “open plurilateral agreements of this nature are the most promising way available to update the trade rulebook without further fragmenting the world economy and weakening its crucial multilateral foundation”.

The formation of an open digital platform for Eurasia renders it amenable to replication at the level of not only regional arrangements, but also at the level of country-to-country cooperation as well as multilateral corporate platforms. An important aspect of the operation of such a platform is the principle of openness and inclusivity — whereby developing countries benefit from greater “digital inclusion” and the possibility to join digital alliances with advanced economies across Eurasia. In this way, the operation of such a platform contributes to a more sustainable and balanced economic paradigm across Eurasia.


Source: Valdai. Discussion club

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