Central Asia at 25. Bruegel Policy Contribution Issue n˚13 | May 2017

Batsaikhan, Uuriintuya and Dabrowski, Marek (2017) Central Asia at 25. Bruegel Policy Contribution Issue n˚13 | May 2017. [Policy Paper]

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Abstract

Central Asia, though referred to as a single region, consists of five culturally and ethnically diverse countries that have followed different political and economic transformation paths in the last 25 years since independence from the Soviet Union. Kazakhstan and Kyrgyzstan have in relative terms made strides in market reforms, while Turkmenistan and Uzbekistan still have not completed their transitions to a market economy and Tajikistan represents an intermediate case. In many respects, the historical legacy of the twentieth century and their unique geographical and geopolitical location have not helped Central Asian countries in their efforts towards economic development and integration. After experiencing more than a decade of growth based on hydrocarbon booms, Central Asian countries are faced with increasing challenges resulting from falling commodity prices, declining trade and lower migrant remittances. The main policy challenge is to move away from commodity-based growth strategies to macro-oriented diversification and adoption of a broad spectrum of economic, institutional and political reforms. However, structural diversification is easier said than done. The major obstacles to political reform and economic diversification in the five Central Asian economies are internal and external geopolitical factors and deeply embedded institutional weaknesses within countries, particularly in areas where economic management interacts with authoritarian political systems and legal institutions. Our analysis suggests five key policy lessons that could serve as points of departure as these countries move ahead.

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