Empirical Frontiers of International Integration for Kazakhstan and Beyond

Faculty Development Competitive Research Grant Program (General) 2024-2026

Economic diversification and green economic transition, long-time strategic goals for Kazakhstan and many other countries, could be hindered by accelerating deglobalization. The US-China trade war and Russia’s invasion of Ukraine have created pressures for friend-shoring, a term recently promoted by U.S. Treasury Secretary Janet Yellen for increasing trade barriers outside of a trade bloc of geopolitical allies. Friend-shoring works against fundamentals of economic efficiency such as specialization, division of labor, scale economies, and migration. These fundamentals remain important even in a world with substantial environmental externalities and security concerns. As friend-shoring gains stature in policy circles, society must understand well the consequences of heightened trade bloc restrictions and the principles guiding past achievement in trade cooperation. The project purpose is to advance frontier empirical knowledge on international integration, first by using Kazakhstan’s firm-level micro-level data to assess consequences of Eurasian integration, and second by using global country-industry data to test theories of the principles underlying past multilateral trade cooperation. Each of these complementary aims is reflected in a distinct project work package. Since Kazakhstan increased tariffs to form a trade bloc in pursuing Eurasian integration, the first work package provides insights into the unintended consequences of a recent episode of external trade barrier increases that is similar to those proposed by friend-shoring advocates today. And as friend-shoring threatens global integration, a scientific imperative is to understand which principles facilitated the global trade cooperation that culminated with the World Trade Organization (WTO), so the second work package proposes the first empirical tests of prominent theories concerning the principles that underlie WTO cooperation.