. International Review of Management and Marketing | Vol 6 • Special Issue (S6) • 2016 121 International Review of Management and Marketing ISSN: 2146-4405 available at http: www.econjournals.com International Review of Management and Marketing, 2016, 6(S6) 121-125. Special Issue on "Management of Systems of Socio-Economic and Legal Relations in Modern Conditions of Development of Education and Society” Geo-economic Factors of an Intensification Development of Laos in Association of Southeast Asian Nation Conditions Lyudmila V. Shkvarya1*, Andrey V. Strygin2, Vasilij I. Rusakovich3 1Russian University of Peoples’ Friendship, Moscow, Russia, 2Moscow Automobile and Road Construction State Technical University, Moscow, Russia, 3Plekhanov Russian University of Economics, Moscow, Russia. *Email: dastard@rambler.ru ABSTRACT In Association of Southeast Asian Nation (ASEAN) since 2015 came into force the creation of the project “ASEAN Economic Community.” In this regard, it is important to examine the consequences of this process, particularly with regard to individual countries, in particular – the least developed, which include Laos. Laos is a member of ASEAN, is also directly involved in the process of formal and actual regional economic integration and the formation of the ASEAN Economic Community. In the XXI century the world economy undergoes a significant transformation, increased global instability. Among them – the deepening of regional economic integration processes in different regions of the world – in Western European Union North American Free Trade Agreement, ASEAN. The ASEAN countries occupy a strategic location on the route from the Indian Ocean to the Pacific, being at the crossroads connecting the Pacific basin to the Middle East, Africa and Europe. Keywords: Association of Southeast Asian Nation, Laos, Regional Economic Integration, Association of Southeast Asian Nation Economic Community JEL Classifications: O53, O50, F02 1. INTRODUCTION Sustainable economic union countries speaker attracts attention of researchers, including – in the conditions of the global financial crisis of 2008-2009, and in the subsequent period (Prakash and Ikumo, 2012). The researchers said: “In the aftermath of the Asian financial crisis, Association of Southeast Asian Nation (ASEAN) countries had two important aspects of economic growth. The first is the proliferation of bilateral and multilateral free trade agreements (FTA) and the second is the presence of a unique and complex production network, including both large firms and small and medium-sized businesses. As a result of the global financial crisis there was a need to further strengthen the interdependence in the region and the ASEAN countries have begun to conclude agreements on the FTA first with neighboring countries – China and Korea and then to Japan, India, Australia and New Zealand.” It is of interest the growing role of ASEAN in world trade: ASEAN retained not only high rates of economic growth, but also to foreign trade, as the intra-regional and extra-regional, including – with the Russian Federation, the mutual trade cooperation between Russia and ASEAN actively growing. Bilateral trade grew by 13%, from $19.9 billion in 2013 to $22.5 in 2014 (Reshetnikova, 2012). It is interesting to analyze the fact that ASEAN countries are increasing their presence in the global investment processes, so that the subject of several studies. Interest in FDI in ASEAN is largely predetermined by the protection of intellectual property in these countries, which is important in terms of transfer of high technologies. And finally, a great interest is the growth of regional economic integration in ASEAN, its existence “can be considered as one of the most successful examples of creating a regional integration grouping in the eastern world” (Shkvarya et al., 2014). However, some authors consider it is trade in services as an engine of integration into ASEAN and its liberalization are also on the agenda in the ASEAN (Panfilov and Strygin, 2011). Shkvarya, et al.: Geo-economic Factors of an Intensification Development of Laos in ASEAN Conditions International Review of Management and Marketing | Vol 6 • Special Issue (S6) • 2016122 However, trade liberalization as K. Itakura studies suggest mixed effects on the integrating countries. In some cases, such as the author’s calculations show, even the negative impact of liberalization is possible some countries, such as Laos and the Philippines (Itakura, 2014). The same applies to production integration in ASEAN. Although ASEAN as in any other developing region of the world, actively carried out industrial cooperation, which supports a number of studies (Kimura and Ayako, 2011), the effects of this cooperation are also different for individual countries. The aim of this study is based on analysis of the current state of socio-economic and external trade provisions of the ASEAN, to identify the role of Laos in ASEAN and to establish the possible directions of its participation in ASEAN, in particular, run under the ASEAN Economic Community in 2015, as well as the possible consequences this initiative for Laos. 2. RESEARCH METHODS For the purposes of analysis and critical scientific discussion, we turned to modern research and reports of international organizations (World Trade Organization [WTO], International Monetary Fund, etc.), The ASEAN official sources and articles in academic economic journals. The theoretical aspect of this study is to identify the current trends in the socio-economic dynamics and the role of the ASEAN integration process. The practical component of this research include the development of policy recommendations for the government of Laos. Total ASEAN area is 4.487 million km2, the total population of over 622 million people. (2014) and is growing rapidly, presenting a capacious (and growing) market, and a combined gross domestic product (GDP) of ASEAN countries exceeded $2.4 trillion at high and sustained its dynamics (Table 1 and Figure 1). All this enables the participating countries to have access to this vast market combined. This is especially important for Laos – a small country with no access to the sea. As can be seen from the analysis of the data presented, the ASEAN economies were quite resistant to the global crisis, and now ASEAN is the 7th largest economy in the world, which is ahead of Brazil and Russia (Yoo, 2016). The methodology validation is based on the research of Stavropol region. The combined GDP of grouping in 2015 exceeded $ 2.5 trillion, and by 2020 it is projected to reach 4 trillion cumulative growth rate of ASEAN’s GDP is quite high: It amounted to 4.9% compared to the world average of 3.5% in 2015, until 2020 the rate of growth is projected at 5.6%. This will enable ASEAN to become by 2050 the 4th economy in the world. At the same time the analysis of the data presented, that ASEAN remains high differentiation of the levels of economic development of the member countries of the association. Laos, Myanmar, Vietnam, Cambodia, among the least developed ASEAN countries. It is interesting to note that during the monitoring period, the total GDP of ASEAN has increased by 4 times, while the GDP of Laos – 7, and the economy of Laos has been the most rapidly and steadily growing in the unit in 2011-2014, i.e., grew more rapidly than the ASEAN average. In 2014, according to UNCTAD, the GDP growth rate was 7.3% in Laos, which is a very strong indicator amid global instability (Rylov et al., 2016), reaching a level of $12.3 billion, according to UNCTAD. This is a historic maximum of Laos. Table 1: Dynamics of GDP of ASEAN countries in 2000-2015, mln. USD Country 2000 2001 2002 2003 2004 2005 2006 2007 Brunei Darussalam 6001.281 5601.02 5843.367 6557.404 7872.191 9531.437 11470.49 12247.35 Cambodia 3666.638 3991.795 4289.402 4664.899 5337.89 6293.048 7274.502 8639.241 Indonesia 165,473.8 160,921 196,146.3 234,772.4 256,836.9 285,868.6 364,570.5 432,216.7 Lao People’s Democratic Republic 1665.31 1684.979 1758.293 2014.09 2376.062 2716.784 3541.451 4213.934 Malaysia 97,583.55 96,537.08 104,924.7 114,660.1 129,795.6 143,534.4 162,692.3 193,549.5 Myanmar 7275.326 7633.918 10,369.13 9924.908 10,253.85 11,930.83 13,851.58 18,232.53 Philippines 81,044.63 76,279.65 81,376.61 83,927.58 91,392.48 103,095.5 122,239.2 149,394.5 Singapore 94,308.33 87,701.14 90,640.32 95,956.61 112,697.3 125,429 146,014.2 178,259.1 Thailand 126,147.9 120,051.9 134,300.9 152,280.7 172,895.6 188,847.3 221,035.9 262,081.2 Vietnam 31,172.63 32,685.2 35,064.11 39,552.5 45,427.85 52,917.29 60,913.45 71,015.59 GDP ASEAN 614,339.4 593,087.6 664,713.2 744,311.2 834,885.7 930,164.2 1,113,603 125,8834 Country 2008 2009 2010 2011 2012 2013 2014 2015* Brunei Darussalam 14,393.51 10,732.66 12,370.5 16,691.38 16,953.95 16,111.11 14,971.38 15,467.00 Cambodia 10,351.92 10,401.84 11,242.28 12,829.54 14,054.44 15,249.68 16,435.48 17,000 Indonesia 510,228.6 539,580.1 709,190.8 845,931.6 876,719.3 868,345.6 848,025.3 881,831 Lao People’s Democratic Reppublic 5285.17 5585.017 6743.619 8060.6 9397.286 10,759.61 11,666.98 12,303.0 Malaysia 230,811.6 202,257.5 247,533.5 289,037.6 304,725.7 312,433.7 326,113.3 338,272 Myanmar 25,864.44 32,934.81 41,517.78 57,933.92 61,571.04 63,030.97 67,627.82 68,728 Philippines 174,235.5 168,373.6 199,637.2 224,147.2 250,240.1 272,066.7 285,098 297,036 Singapore 190,318 190,164.4 233,292.3 272,316.1 284,298.6 295,744 301,193.1 304,968 Thailand 290,174.3 279,982 338,778.3 366,946.4 393,185.4 420,167.4 405,533 409,799 Vietnam 91,094.05 97,180.25 115,931.8 135,539.5 155,820 171,222 186,598.6 194,096 GDP ASEAN 1,542,757 1,537,192 1,916,238 2,229,434 2,366,966 2,445,131 2,463,263 2,539,500 GDP: Gross domestic product, ASEAN: Association of Southeast Asian Nation Shkvarya, et al.: Geo-economic Factors of an Intensification Development of Laos in ASEAN Conditions International Review of Management and Marketing | Vol 6 • Special Issue (S6) • 2016 123 Finally, the stable growth of per capita income in the unit, as seen from Figure 2. GDP per capita average of the ASEAN in 2014 amounted to 3.9 thousand dollars (in the world – $10.7 thousand). the highest rates in Singapore and Brunei – $54.6 and $35.4 thousand, respectively, in 2014. In 2014, Laos has reached a historic high for the value of turnover – both exports and imports - for the study period (Table 2). Statistics show that the role of Laos in the foreign trade of ASEAN (as well as in the regional GDP) is minimal, although it has steadily increased. Thus, in 2000 the turnover of Laos in ASEAN’s total trade turnover amounted to 0.07%, and 0.2% in 2014 (Table 3 and Figure 3). Favorable foreign policy and the accession to the WTO in February 2013 allowed Laos more actively integrate into the regional and international economy and diversify its geographic markets. The traditional – and largest – trade partners are Laos, Thailand, Vietnam and China, and Thailand account for up to 2/3 of the foreign trade turnover of Laos. At the same time, Laos is exporting its products to the markets of over 40 countries, including the US, Japan and Australia, the UK, France, Germany and other European Union countries, as well as in Russia. As can be seen from the analysis of the presented data (Table 4), for the typical Laotian trade deficit (as a whole, and in the regional trade). In 2014, it amounted to $40.6 billion, i.e. 10% of the foreign trade balance of the country. And although its volume was reduced in comparison with the 2011-2013, the trade deficit recorded in the country for long periods due to inadequate infrastructure and non-diversified export base. These same problems as the research shows, are stored in foreign trade and Laos, and the ASEAN countries (Table 4). In general, as research shows, intra-regional trade in Laos is on the rise in terms of value (Table 4). As our research shows, the volume of trade with Laos, the ASEAN countries increased during the study period (Wisnu, 2013), more than 5 times, including export – by 6.2 times, imports – by 3.4 times, indicating that faster growth of exports to Laos ASEAN countries in the XXI century. An example of the intensified development of Laos after the country’s entry into ASEAN confirms the inevitability of cumulative, not only the effect of socio-economic development, but also can serve as a model for the construction of regional geo-economic models (Panfilov and Strygin, 2011) economic integration of other regions of the planet. 3. DISCUSSION Transformation of ASEAN Economic Community in 2015 is the subject of comprehensive research. Many authors, based on the whole a positive experience of ASEAN’s development, it is believed that this is the direction of ASEAN activities will be successful in the long-term (Pismennaya et al., 2015; Prakash and Ikumo, 2012). However, we close the view that the success of this project cannot be expected to automatically, and it assumes a solid job in each country “in dealing with internal reforms, gaps in infrastructure, lack of adequate human resources and institutions. In addition, this company, whose decisions and actions will contribute to the effective integration” (Bas Das, 2012). In addition, the negative effects of regional economic integration remain, in particular, the erosion of MFN (Shkvarya et al., 2014) that can uniquely affect the national interests of Laos and its economy. It is saved and amplified the need for Laos to conduct serious work “in dealing with internal reforms, gaps in infrastructure, the continued lack of adequate human resources and institutions. In addition, it is necessary the development of private companies, whose decisions and actions will contribute to the effective integration” (Shkvarya et al., 2014). Figure 1: Dynamics of gross domestic product in Association of Southeast Asian Nation countries in 2000-201, mln. USD Figure 2: Dynamics of per capita gross domestic product in the Association of Southeast Asian Nation countries in 2000-2014 Figure 3: Intra-regional trade in Association of Southeast Asian Nation countries in 2000-2014, bln. USD Shkvarya, et al.: Geo-economic Factors of an Intensification Development of Laos in ASEAN Conditions International Review of Management and Marketing | Vol 6 • Special Issue (S6) • 2016124 Consequently, the government of the country need to carry out further reform of the national economy – how to strengthen it, and to improve its participation in ASEAN, in particular, to strengthen the process of regional economic integration. These efforts – internal and external – will enable the country to diversify the national economy, to reform and strengthen the private sector, to promote the development of export potential, as well as the transport component 4. CONCLUSION Conducted a retrospective analysis of the socio-economic development of Laos, taking into account the specifics of its geo- strategy in particular South-East Asia, the geopolitical development of the region in terms of the integration of convergence ASEAN countries showed the real value of cumulative, a factor for intensification of the economic growth of both the Lao and the wider possibilities of using its geostrategic resources in the whole region. At the same time, the results of the analysis in regional and international economic relations make it possible to talk about the creation of a more attractive investment climate for the further intensification of socio-economic development of Laos, geostrategic resources that are of interest not only in the Asian sub-region, but also become the subject of the Asia-Pacific region generally. REFERENCES Bas Das, S. (2012), Achieving the ASEAN Economic Community 2015: Challenges for Member Countries and Businesses. Singapore: ISEAS. Itakura, K. (2014), Impact of liberalization and improved connectivity Table 2: Foreign trade of ASEAN countries in 2000-2014, bnl. USD Country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Export Brunei 3.9 3.6 3.7 4.4 5.1 6.2 7.6 7.7 10.3 7.2 8.9 12.5 13.0 11.4 10.5 Cambodia 1.4 1.5 1.9 2.1 2.8 3.1 3.7 4.1 4.7 4.2 5.1 6.7 7.8 9.3 10.8 Indonesia 65.4 57.4 59.2 64.1 70.8 87.0 103.5 118.0 139.6 119.6 158.1 200.8 188.5 183.3 176.3 Laos 0.3 0.3 0.3 0.3 0.4 0.6 0.9 0.9 1.1 1.1 1.7 2.2 2.3 2.3 2.7 Malaysia 98.2 88.0 94.1 104.7 126.6 141.6 160.7 176.0 199.4 157.2 198.6 228.1 227.5 228.3 234.1 Myanmar 1.6 2.4 3.0 2.5 2.4 3.8 4.6 6.3 7.0 6.7 8.7 9.2 8.9 11.2 11.0 Philippines 38.1 32.1 35.2 36.2 39.7 41.3 47.4 50.5 49.1 38.4 51.5 48.3 52.1 56.7 62.1 Singapore 137.8 121.8 125.2 159.9 198.6 229.6 271.8 299.3 338.2 269.8 351.9 409.5 408.4 410.3 409.8 Thailand 68.963 65.0 68.108 80.324 96.248 110.936 129.722 153.9 177. 8 152.4 193.3 222.6 229.2 228.5 227.6 Vietnam 144.5 150.3 167.1 201.5 264.9 324.4 398.3 485.6 626.9 571.0 72.2 96.9 114.5 132.0 150.5 Total of export 560.163 522.4 557.808 656.024 804.748 945.436 1128.222 1302.3 1376.3 1327.6 1050 1224.3 1252.2 1273.3 1295.4 Import Brunei 1.1 1.2 1. 6 1.3 1.4 1.5 1.7 2.1 2.6 2.4 2.5 3.6 3.6 3.6 3.6 Cambodia 1.9 2.1 2.4 2.6 3.2 3.9 4.8 5.4 6.5 5.8 6.8 9.3 11.0 13.0 13.5 Indonesia 43.6 37.5 38.3 42.2 54.9 75.7 80.7 93.1 127.5 93.8 135.3 176.2 190.4 187.3 178.2 Laos 0.5 0.5 0.4 0.5 0.7 0.1 1.1 1.1 1.4 1.5 2.1 2.4 3.1 3.0 3.3 Malaysia 82.0 73.7 79.8 83.3 105.2 114.3 130.4 146.2 156.3 123.8 164.6 187.5 196.4 206.0 208.9 Myanmar 2.4 2.9 2.3 2.1 2.2 1.9 2.6 3.3 4.3 4.3 4.8 9.0 9.2 12.0 16.2 Philippines 37.0 34.9 41.1 42. 6 46.1 49.5 54.1 58.0 60.4 45.9 58.5 63.7 65.4 65.1 67.5 Singapore 134.5 116.0 116.4 136.2 173.6 200.0 238.7 263.2 319.8 245.8 310.8 365.8 379.7 373.0 366.2 Thailand 61.9 62.0 64.6 75.8 94.4 118.2 128.8 140.0 179.2 133.7 182.9 228.8 250.0 250.7 228.0 Vietnam 156.4 162.2 197.5 252.6 319.7 367.6 450.2 626.8 807.1 699.5 848.4 106.8 113.8 132.0 149.3 Total of import 521.3 493 542.8 596.6 801.4 932.7 1093.1 1339.2 1665.1 1356.5 1716.7 1153.1 1222.6 1232.7 1234.7 Turnover 1081.46 1015.4 1100.6 1252.6 1606.1 1878.1 2221.3 2641.5 3041.4 2684.1 2766.7 2377.4 2474.8 2506.0 2530.0 Change (%) −6.1 8.4 13.8 28.2 16.9 18.3 18.9 15.1 −11.7 3.1 −14.1 4.1 1.3 1.0 ASEAN: Association of Southeast Asian Nation Table 3: Intra-ASEAN trade in 2000-2014, bln. USD Index 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Export 98.2 86.3 91.9 116.6 141.8 165.4 191.0 217.2 250.6 198.9 263.0 310.4 325.1 330.2 327. 1 Import 84.3 75.6 81.6 10. 4 128.8 154.3 178.4 200.8 233.7 181.7 236.3 275.1 286.5 286.7 287.6 Turnover 182.5 161.9 173.5 127.0 270.6 309.7 369.4 418.0 484.3 380.6 499.3 585.5 611.6 616.9 614.7 Change (%) −11.3 7.16 −26.8 113.1 14.4 19.3 13.2 15.9 −21.4 31.2 17.3 4.5 0.9 −0.4 ASEAN: Association of Southeast Asian Nation Table 4: Trade with ASEAN in Laos in 2000-2014, mln. USD Index 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Export 165.8 151.5 139.1 153.0 156.2 307.2 583.0 572.1 693.7 526.5 884.7 1150.6 1202.1 1204.8 1020.8 Import 429.3 396.9 344.2 340.9 506.2 689.4 837.8 835.1 1083.0 1043.3 1502.7 1775.8 2162.9 1923.9 2031.3 Turnover 595.1 548.4 483.3 493.9 662.4 996.6 1420.8 1407.2 1776.7 1569.8 2387.4 2926.4 3365 3128.7 3052.1 Change (%) −7.8 −11.87 2.2 34.1 50.45 42.56 −0.96 26.3 −11.6 52.1 22.6 15 −0.7 −2.4 ASEAN: Association of Southeast Asian Nation Shkvarya, et al.: Geo-economic Factors of an Intensification Development of Laos in ASEAN Conditions International Review of Management and Marketing | Vol 6 • Special Issue (S6) • 2016 125 and facilitation in ASEAN. Journal of Asian Economics, 35, 2-11. Yoo, J.G. (2016), An economic effect analysis of ASEAN FTA on FDI flows into the ASEAN countries. Journal of Distribution Science, 14(1), 39-49. Kimura, F., Ayako, O. (2011), Production networks in East Asia: What we know so far. Asian Development Bank Institute, (ADBI). Working Paper Series. Number 320. Tokyo: ADBI. Panfilov, I., Strygin, A. (2011), The World Economy and International Economic Relations. Moscow: Inlight. Pismennaya, E., Karabulatova, I., Ryazantsev, S., Luk’yanets, A., Manshin, R. (2015), Impact of climate change on migration from Vietnam to Russia as a factor of transformation of geopolitical relations. Mediterranean Journal of Social Science, 6(3S2), 202-215. Prakash, A., Ikumo, I. (2012), ASEAN in the Global Economy - An Enhanced Economic and Political Role. Senayan: ERIA Policy Brief. Reshetnikova, M. (2012), Interdependence of National Economies as the Main Factor of Global Economy Uncertainty Acceleration. In: Research, Theory and Practice: Materials of the International Research and Practice Conference. Wroclaw: Wroclaw University. p38-42. Rylov, D., Shkurkin, D., Borisova, A. (2016), Estimation of the probability of default of corporate borrowers. International Journal of Economics and Financial Issues, 6(1S), 63-67. Shkvarya, L., Rusakovich, V., Lebedeva, D. (2014), Key areas of trade, economic and financial cooperation of the Russian Federation with the ASEAN countries. Management of Economic Systems, 12(72), 84. Wisnu, D. (2013), Why ASEAN could stay strong? Journal of ASEAN Studies, 1(1), 15-21.