Problemi Ekonomiki (Dec 2020)
Economic Primitivization as an Institutional Challenge Thrown by the European Integration Processes
Abstract
The article deals with the economic primitivization issue in the context of European integration. Economic primitivization is seen as a process of substituting high value-added economic activities for low value-added activities. The results of the study show that the economic primitivization issue has been widely covered in the works of the Norwegian scientist E. Reinert, who is in opposition to the neoclassical "mainstream" in economics. For example, the scientist recenses the theory of comparative advantage as the basis for the international specialization of a country, citing the negative experience of European countries, which, when participating in the European integration process, faced the problem of decline in their traditional industries (especially heavy industry). Having studied analytical reports on the research of the competitiveness of the EU and its regions, the author found out that the neoclassical approach to regional competitiveness requires expansion, which can be achieved by combining neoclassical competitiveness factors (the ability of firms to use resources efficiently and increase productivity) with such factors as the wage rate growth and creating a favorable environment for residents and businesses. Emphasis is placed on the fact that economic primitivization is quite urgent for Ukraine due to its European integration course. Ukraine’s export strategy is based on the theory of comparative advantage, so, emphasis in this strategy is placed on the development of low value-added export industries, and it is especially actual for the machine building industry. The article emphasizes the institutional nature of economic primitivism, as it is not the subject for neoclassical, traditional economic analysis. The necessity of taking into account the qualitative, and not only quantitative, aspect of the analysis of economic activity is argued: in addition to the "cost minimization and profit maximization" approach, it is necessary to use the approaches suggested by J. von Th?nen, F. List and J. Schumpeter, based on the differentiation of industries by the economic return level and the synergistic effect.
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