Exploring the Belarus Economy
Located in Eastern Europe, Belarus is a landlocked country which borders Ukraine to the northeast, Poland to the west, and Lithuania and Latvia to the northwest. Its main trading partners are Russia and Ukraine, but its economy is mainly dependent on the Eurasian Economic Union (EEU). In this article, we will explore the economy of Belarus.
Government monopolies make it difficult for foreign companies to invest in Belarus
During the political crisis in Belarus, the business environment suffered a significant setback. The country’s economy was characterized by high concentration, which aggravated existing problems. In addition, the political environment was highly centralized and there was a lack of horizontal oversight.
The political system in Belarus is highly centralized, and there is no horizontal oversight. The president is the only political entity with the effective power to govern. The President has the power to appoint judges, and most political decisions are made by the presidential administration. The president also has the power to ask the parliament for approval of a prime minister.
The presidential administration is located at the apex of the vertical structure of state power in Belarus. This means that the president’s decision-making power is virtually unlimited. Moreover, the president is also a strategic referee between informal elite groups.
Belarus is a unitary democratic social state. There are two chambers of the parliament: the lower chamber, the House of Representatives, is elected by geographic constituencies. The upper chamber, the Council of the Republic, is elected by secret vote at local councils of deputies. The lower chamber has 110 members.
The Council of the Republic is the upper chamber of the parliament. It is responsible for implementing Lukashenko’s will. The Council of the Republic also represents the president in negotiations with international organizations.
Belarus’ banking system is characterized by high concentration. Large state-owned banks dominate the banking system. Large state-owned banks account for over 33% of the country’s total assets.
In addition, the Ministry of Economy regulates natural monopolies. The Ministry of Economy also works on the reduction of the number of commodity markets that have natural monopolies. MART has recorded a decrease in the number of antitrust cases in 2020.
The labor force is largely educated. The informal sector accounts for 35-40% of the country’s GDP. However, there is a lack of reliable data on the informal employment situation in Belarus. In addition, the labor force has a high degree of ethnic homogeneity.
The political situation in Belarus was aggravated by mass protests following the skewed presidential elections. These protests were repressed by the government. It also led to increasing vulnerabilities to Russian interference in domestic affairs. In addition, Belarus suffered from an economic recession.
Russia is Belarus’s main trading partner
Traditionally, Belarus’s economy has been dependent on the Russian market. Belarus exports to Russia account for about half of all exports in Belarus. Belarus exports to Russia are fairly diverse, and include products such as machinery, food, textiles and electronics.
Belarus imports from Russia are concentrated in energy goods. Belarus relies on Russian gas supplies for its energy security. The Belarus government’s chaotic crisis mitigation policy reveals the country’s helplessness during the unprecedented economic crisis.
Belarus’s economic situation is further aggravated by the government’s chaotic crisis mitigation policy. Belarus’s economy will suffer from the new sanctions regimes. These sanctions include bans on certain products, such as rubber products and potash fertilisers. These new sanctions will largely affect Belarus’s exports to the EU.
Belarus exports to the EU are primarily metals and timber. Belarus imports from the EU are more advanced products. The EU’s participation in the Belarus-Russia economic union, which aims to improve trade relations between the two countries, can hinder further development of the economic ties.
Belarus has a significant trade deficit with Russia. Its trade deficit with Russia in 2000 was $433 million. In February and March of 2022, the country’s foreign exchange reserves declined by US$1 billion. Despite this, Belarus exports to the EU increased by USD 9 million to France, and USD 21 million to Romania and Denmark.
In October of 2016, the European Union and Belarus established a trade dialogue. This dialogue facilitated expert exchanges on trade issues. The trade dialogue took place twice a year, in July and December, up to July 2020.
Belarus and the EU were expected to meet twice a year to discuss trade issues. However, the dialogue was suspended due to significant deterioration in Belarus’s human rights and democracy situation.
The Russian economy is in a state of crisis. The economic crisis has negatively affected Belarus’s GDP. The World Bank expects that Belarus’s GDP will decline by 6.5% in 2022. Belarus’s exports will fall as well, because of US trade embargoes on potash fertilisers and fuels. The country also faces other challenges.
Belarus’s poverty rate is one of the lowest in Europe
Despite its relatively low GNI, Belarus is a very high human development country. It ranks 53rd in the 2020 UNDP Human Development Report and has the lowest poverty rate in the Commonwealth of Independent States (CIS). The report includes experimental indicators of carbon emissions and gender inequality.
Belarus has a strong reputation in science and technology, engineering, numeracy, and literacy. It has universal access to water, sanitation, and healthcare. It also has an above average rating for Eastern Europe. However, Belarus’ labor force has a legacy of the Soviet system. This means that women are employed mostly in lower-paying sectors. They also have a gender wage gap.
The government has set ambitious goals for the socioeconomic development program in the next two years. However, the government failed to implement the main goals of the program. The government has discussed changing the constitution, decentralizing the political system, and strengthening the role of the executive in economic decision-making.
The country has a judicial system that consists of the Constitutional Court and a system of general jurisdiction courts. The president is directly responsible for appointing judges. The government has imposed restrictions on private businesses during the election campaign and during post-election mass protests.
The political system is highly fragmented and unstable. The party system is small and politically unstable. The president is elected for five-year terms without limits. The political opposition has suffered from structural problems and has little influence on decision-making.
There are 43,545 organizational structures of public associations in Belarus. These include local-council deputies, public associations, trade unions, and foundations. The number of parties has been growing over time. The country has not signed the European Charter of Local Self-Government.
The presidential election campaign was a success in many respects. It brought civic awareness and nation-building. However, the campaign also brought problems. The OSCE said that the election process was “insufficiently impartial”. In September 2016, parliamentary elections brought about improvements. The opposition parties continued to promote changes. However, most democratic institutions fail to function properly.
The political system in Belarus is largely dependent on the president. Technocrats have lost control of the government.
Eurasian Economic Union (EEU) is the country’s main integration project
Despite a resounding rejection by Belarusian President Alexander Lukashenko of the Kremlin’s ultimatum in December, the Kremlin continued to exert increasing pressure on Belarus. Belarus’ fiscal situation deteriorated significantly during the 2020 fiscal year. A 3.6 billion dollar increase in government expenditure was offset by a $2 billion drop in government revenue. During the 2020 fiscal year, Belarus experienced a significant drop in trade turnover. The country ranked 49th out of 190 economies in the World Bank’s Doing Business report.
Belarus has a bicameral parliament (the House of Representatives and the Council of the Republic), with 56 and 110 members respectively. The upper chamber is elected by secret ballot at local councils of deputies, while the lower chamber is elected by geographical constituencies.
The judicial system is based on territorial delineation. All judges are appointed by the president. During the political crisis, courts obediently carried out the will of the authorities.
Belarus has a well-developed property registry system. It has one of the lowest private sector shares in Europe. The labor force is largely a legacy of the Soviet system. In addition, the country has a highly monopolized commodity market. The Ministry of Economy regulates natural monopolies. It also recognizes a high level of concentration in financial-industrial groups and holding companies.
The labor movement in Belarus has been subject to preventive detention and administrative arrests. Most detainees were later sentenced to heavy fines.
Belarus has made democratic concessions in recent years to facilitate western cooperation. However, the post-election crisis has reversed recent progress. The country’s international positioning has also been reversed.
Belarus has a relatively well-educated workforce, which is a legacy of the Soviet system. It also has a high degree of religious homogeneity. In 2020, the country ranked 24th in terms of trade across borders, 30th in terms of starting a business and 14th in terms of accessing credit.
Belarus’ political leadership claims to pursue long-term goals. However, short-term interests often supplant long-term goals. Belarus’ international engagement is often dictated by the crisis in relations with Russia. Belarus has recently begun human rights dialogues with the United States.