ASTANA, December 09, 2010 - Central Asian countries can diversify their exports by connecting each country’s largest cities and their hinterlands to leading regional markets. This is the main finding of the World Bank’s new publication “Central Asia: Expanding Trade by Connecting with Markets” presented today in Astana to government officials and private sector representatives from Kazakhstan, Kyrgyzstan and Tajikistan.
“As the Central Asian countries are recovering from the current global economic downturn, their primary focus is on export and economic diversification through policies that enhance their competitiveness,” said Ms. Sebnem Akkaya, the World Bank Country Manager for Kazakhstan. “Designing a right set of effective policies is particularly challenging for countries that have small domestic markets, are landlocked, and relatively remote from large markets; they suffer from low domestic economic density, long distances to markets, and significant economic divisions between trading partners and major markets.”
The report utilizes the spatial framework developed in the 2009 World Development Report (WDR) to describe the circumstances of three selected countries of Central Asia and recommends that their policy makers anchor their export strategies on three spatial dimensions: urban (leading city), area (city-hinterland), and regional (integration with regional markets). The report argues that policy makers in these countries would benefit by taking a coordinated set of actions along the three dimensions to bring about “agglomeration economies” in cities that would add to the export base and promote economic integration. Kazakhstan, Kyrgyzstan, and Tajikistan are the countries described in the report, which also bears on general problems of the region.
“The analysis is prescriptive, offering a set of policy measures along several dimensions that would help diversify exports”, said Mr. Souleymane Coulibaly, the main author of the study. “It recommends focusing on the two leading cities – Almaty and Astana in Kazakhstan, Bishkek and Osh in the Kyrgyz Republic, and Dushanbe and Khujand in Tajikistan – connecting these leading cities with their agricultural hinterland to unleash the potential of the region’s agriculture-related activities, and improving the connections between the leading cities and major regional markets, such as China, India, Russia, and Turkey, along a north-south road corridor.”
More specifically, in order for Central Asia to expand and diversify exports, the report recommends that:
- Policy and investment actions at the urban (leading city) level are needed to promote more open and competitive environments and foster agglomeration economies.
- At the area (city-hinterland) level, policy actions must increase mobility of production factors within macro-regions anchored on leading cities.
- At the regional (integration with regional markets) level, investments and policy actions are needed to reduce transport costs and transport time to key regional markets, with Kazakhstan to play a leading role to make this regional effort work.
This report was prepared by a team led by Souleymane Coulibaly (World Bank, Washington, D.C.) and comprising Asset Nussupov (Kazakhstan); Zarina Kosymova and Shuhrat Mirzoev (Tajikistan); Shamsia Ibragimova (Kyrgyzstan); and Alexander Kitain, Vilas Pathikonda and Lotte Thomsen (Washington, D.C.). World Bank economists in the Country Offices Damir Esenaliev (Kyrgyzstan), Ilyas Sarsenov (Kazakhstan), and Utkir Umarov (Tajikistan) also made important contributions.