Dushanbe, Tajikistan, March 3, 2014 – The main findings of the new World Bank report “Diversified Development: Making the Most of Natural Resources in Eurasia” were discussed in Dushanbe with government officials, businessmen, civil society organizations, independent experts, and development partners. The report, which studies economic development in the twelve countries of Eurasia, including Tajikistan, recommends focusing less on diversification of exports or production and more on investment in national assets, particularly built capital and economic institutions.
In the last two decades, natural resources have played a central role in the development of the Eurasia region: countries both rich and not rich in natural resources witnessed a substantial growth in their economies, a sharp reduction in poverty, and substantial improvements in other dimensions of standards of living, including education and health. Countries not rich in natural resources benefitted from the natural resource abundance of their neighbors through increased trade, capital flows, and remittances.
“Tajikistan along with other countries in Eurasia has become better at efficiently converting natural wealth into productive capital: since 2006, Tajikistan has built more in assets - physical and human capital - than the mineral wealth it has used up,” - said Ivailo Izvorski, World Bank Sector Manager for Economic Management and Poverty Reduction in Europe and Central Asia and one of the co-authors of the report. “Going forward, in line with recommendations of the report, it will be important for Tajikistan to improve the business environment, especially by providing a competition regime and secure property rights that level the playing field for enterprises and stimulate entrepreneurship. Improved economic institutions are important for countries that are not rich in natural resources – but they are absolutely essential for economies with resource abundance.”
In addition to institutions to regulate economic activity, the report suggests that all countries in Eurasia would benefit from institutions to better manage resource volatility and those that deliver efficient public services, including in education and health. In the case of Tajikistan, improved delivery of basic infrastructure services, such as drinking water, sanitation and electricity, is also crucial, given delayed maintenance and the rapidly increasing demand on the system.
Another important finding of the report is that integration into global markets is a key factor of success, as it helps create prosperity regardless of diversification. The report compares three sub-regions – East Asia, Central Europe, and Eurasia – and draws the conclusion that all of them succeeded by integrating into global markets using their comparative advantage: labor in East Asia, capital in Central Europe, and natural resources in Eurasia. Eurasia can do even better by expanding its trade with East Asia in addition to strengthening established links with Western Europe.