Relationship between Complex Integration Indices and Inflation Indicators and Their Impact on the Development of Regional Cooperation between Countries to Reduce the Level of Inflationary Risks: Case of the SCO Member Countries

Abstract

In this study, we focused on the development of cooperation between partner countries, which may affect the reduction of inflationary risks for partnership participants in the context of global and urgent changes in the world. This article aims to identify the relationship between inflation indicators and various types of globalization (complex integration indices) of each of the member countries of the Shanghai Cooperation Organization (SCO) in order to develop measures to contain inflation risks in these countries. The authors used the methods of pairwise linear regression, correlation analysis, and multiple linear regression. As variables, the authors used complex indicators that characterize six types of globalization: Economic, financial, demographic, industrial, information, and political indices. The authors concluded that China and India more effectively curb inflation and are less prone to inflation risks. The inflation rate and the independent variables have a close negative correlation, which indicates a strong degree of mutual influence and has a downward effect on the consumer price index. The most significant variables that have a strong influence on the inflation rate are the factors of financial and information integration. The impact of other types of integration considered in this study is not significant. In order to reduce the level of inflationary risks, the SCO member countries most vulnerable to the price volatility of raw materials (Uzbekistan, Tajikistan, and Kyrgyzstan) are encouraged to develop trade cooperation more actively, for example, by reducing or eliminating import duties on raw materials from the SCO countries.