Economic Integration Stages Clarification of the Countries in Electricity Trade

Abstract

The article analyzes regional energy cooperation in sub-regions of Asia with a detailed study of South Asia and the CIS. The aim is to develop the theory of energy markets integration by adding an element of mutual trade to it. The study is based on statistics data of electricity exports by sub-regions of Eurasia based on the information of bilateral exports. The level of regional economic integration was estimated by the “export share” indicator, as well as by graph theory methods. Four out of nine countries in the South Asian region are not yet included in energy trade. This fact does not allow to speak about the success of the efforts undertaken by international organizations in the subregion as a whole. The results of the network analysis show that the relations between the countries of the region are fragmented, the problem of South Asian countries integration in the field of electricity trade is far from a solution. In the CIS, only 10% of electricity is traded within the region. There are two clusters of countries in the subregion. The countries of the larger cluster are connected through trade with the rest of the world. The countries of the second cluster — Kazakhstan, Tajikistan, Kyrgyzstan and Uzbekistan — are interconnected, but not with Russia, being the beneficiaries of the Central Asian Regional Economic Cooperation Program. Thus, the prevailing architecture of regional ties may indicate small integration created by the efforts of an international organization in the region. The CIS region meets the description of the energy markets' integration level as being between “interconnection” and “shallow”. To characterize the integration level, we recommend examining the graph connectivity, centrality indicators, and the number and size of clusters. Russia's efforts in the area of electricity trade in Asia are examined in four aspects. Development assistance is inadequate, and membership in the Asian Development Bank is likely to become a pressing issue. Cooperation with the CIS countries leaves aside two countries of the post-Soviet space, it is not able to attract four more countries of Central Asia to cooperate. Cooperation within the EAEU is insufficient for Belarus and Armenia, therefore, the creation of a single electric energy market by 2025 is an urgent task.