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EEC proposed to develop human capital to ensure economic growth in EAEU countries

EEC proposed to develop human capital to ensure economic growth in EAEU countries

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2/5/2021

The Eurasian Intergovernmental Council considered a Report on macroeconomic situation in the Eurasian Economic Union States and proposals for ensuring sustainable economic development at its meeting held on February 5. The Eurasian Economic Commission invited countries to drive innovation, develop financial systems and invest in human capital to restore their economies.

According to the report, the pandemic’s impact on the global economy was more significant than expected due to the prolonged use of restrictive measures and lost productivity. 

According to the results of 2020, the GDP growth rate of the EAEU will decrease by 3.9%, and in 2021-2023 it is expected to grow by 3.2%, 3.1% and 2.5%, respectively, because of recovery of internal and external demand.

 

According to the Commission, it is required to drive innovation and introduce scientific research results into production processes to restore the economy and enter the path of sustainable economic development. In particular, the countries are invited to support organizations that invest in manufacturing innovation and encourage private investment in research.

 

The Commission considers modern information technologies, biotechnologies (molecular biology, genetic engineering and cell technologies), nanotechnologies, digital and laser technologies, rocket and space industry, satellite and fiber-optic communication systems and modern environmental technologies as key priority areas of scientific and technological development.

 

As the document reads, further development of the Union States’ financial systems will make a positive contribution to the GDP dynamics. In particular, facilitating mutual access to financial markets will be of great importance.

 

The report's authors state that human capital becomes the key factor of competitiveness. 

 

"The State faces a number of tasks: reorienting the education system to new needs of the future labor market, developing technologies for mass education of talents, developing a system of supplementary education and changing qualifications for adults, developing a health care system involving the public in preventive medicine, providing social elevators and establishing a targeted social assistance system".

 

Nowadays, the level of government spending on human capital development in the EAEU States is kept below the level of developed countries. Spending on education, health care and culture amounts to about 15% of the GDP in most developed countries, while in the EAEU it is only 8%.

 

"The increase in inequality and poverty due to the pandemic will hinder economic growth," the report notes. "The solution of problematic issues in the social sphere (unemployment, low labor productivity and high poverty) as well as the improvement of the education system and social infrastructure in the Member States can significantly speed up economic development".

 

Special emphasis is placed on forming a full-fledged system of financing investments in production cooperation and creating value-added generation chains in the Union. The document proposes specific steps and measures to set up the EAEU States’ development institutions and credit and financial structures for these purposes.

 

The Report on the macroeconomic situation is elaborated by the Commission on an annual basis. The issues of boosting employment, providing social guarantees and developing human potential have been included in the Report for the first time in accordance with Paragraph 6.5.1 of the Strategic Directions for Developing the Eurasian Economic Integration until 2025, approved at the meeting of the Supreme Eurasian Economic Council on December 11, 2020.