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On the socio-economic prospects of Central Asia

On the socio-economic prospects of Central Asia

Today, the world is not yet fully aware of the economic role and prospects of Central Asia. To a large extent, due to inertia, the region is still not perceived by the international community as a significant player on the economic map of the world.. However, the region is changing and today its role needs to be assessed in a new way..

States of Central Asia (Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan) made significant progress in their development in recent 20 years. Their combined GDP grew more than seven times over this period., amounting to 2021 year 347 billion dollars. USA. Share of Central Asia in world GDP at PPP 2000 grew up in 1,8 fold. The average annual economic growth rate of the countries of Central Asia amounted to 6,2% for the last 20 years (developing countries as a whole grew at a pace 5,3%, and the world as a whole, on average 2,6% annually). The Central Asian states have established themselves economically and have serious development prospects. Growth in export earnings, remittances from labor migrants and the volume of foreign direct investment contributed to the increase in incomes of the population and the reduction of poverty. In most countries in the region, GDP per capita at PPP increased by 3 fold.

The turnover of foreign trade in goods of Central Asian countries amounted to 165,5 billion dollars. at 2021 g. and for the last 20 grew up in 6 time. The location of the Central Asian countries at the crossroads of transport routes creates opportunities for the development of transit potential, both in relation to the transport of goods, and to involve the countries of the region in cross-border production chains. Mutual trade between the countries of the region is developing at a faster pace than foreign trade, its weight in the total turnover is consistently increasing, reaching 9,9% according to the results 2021 of the year. A significant impetus to the development and increase in the volume of intra-regional trade after 2017 year gave Uzbekistan.

Volume of accumulated incoming direct investments (PII) to the region is estimated by the EDB at 211 billion dollars. USA. For the last 20 years, this figure has grown by more than 17 time. With the overall positive dynamics of FDI growth, their structure, as a country, and industry, has its own characteristics. Long period of closedness of some countries of the region, remoteness from the main economic centers, being landlocked adversely affects the perception of the region by international investors.

Despite the progress made, according to economists, there are a number of systemic problems (calls), hindering the socio-economic development of the Central Asian states. Significant barriers include the quality of the institutional environment, bottlenecks in regional transport networks, social problems, macroeconomic risks, insufficient level of harmonization in regional trade and economic relations. Countries in the region need to overcome four key structural challenges - landlocked; resource dependence and low level of financial sector development; mismatch in the water and energy sector; climate change. Central Asian countries, acting in concert, will have more opportunities to overcome structural development problems. Increasing pressure on the energy system in the context of growing economic activity and the connectivity of the countries of the region by common river basins make their cooperation in the water and energy sector uncontested.

No less important are concerted efforts to develop transport infrastructure and combat climate risks. Unbundling "bottlenecks" in the development of infrastructure industries (transport, CENTURY) will improve productivity in the economy, expand trade and economic partnership with neighboring countries, improve commodity diversification of production and exports. Improving institutional conditions will accelerate structural transformations in the economies of the countries of the region. Insufficient level of cooperation in the water and energy complex leads to annual economic damage. Unrealized benefits are valued at 0,6% of the region's total GDP in agriculture and 0,9% GDP - in the energy complex.

The structure of the investment portfolio is far from optimal, because it does not take into account regional interests. Aggregate investment proposals in the water and energy complex are estimated at 52,8 billion dollars. with a predominance of investments in the generation segment, while the water infrastructure has reached its operating life limit, needs updating and upgrading. Implementation of energy projects, including in the field of green energy, will improve the energy balance and, in the future, switch to the export of electricity. Dynamic development of transport infrastructure and growth of population mobility are taking place in Central Asia. There are huge successes: the length of railways and roads with hard surface is growing, new seaports were built in the Caspian, airports, transport and logistics centers and border crossing points.

In recent years, the volume of container transit has been rapidly increasing, both along the traditional China-Kazakhstan-Russia-EU route., as well as in the Trans-Caspian. The Eurasian transport framework should be the solution, thanks to which the Central Asian states, landlocked, will be connected with each other and with external trading partners. The frame is already formed, and now the development of its individual elements is underway. It will become a route network, which will ensure the conjugation of various international transport corridors, passing through Central Asia, and will allow organizing new container services and supply chains. This will provide an opportunity to build sustainable and safe transport and economic ties., reduce transport costs for the economies of Central Asia.

The preferred format for the development of economic integration of the Central Asian states is the Eurasian Economic Union (YeAES). Participation in the EAEU will provide countries with a unified regulatory environment, access to an extensive common labor market, the capital, goods and services, removal of obstacles in mutual trade and development of industrial cooperation. The strategic role of Central Asia on the economic map of the world will increase, especially for Russia and China. Central Asia ceases to be a periphery compared to major economic players in the vast Eurasian space. The transformation of the region largely depends on internal efforts, private investment, as well as from the implementation of major multilateral programs. The region can become financially stable and dynamically developing in the space of Greater Eurasia with effective regional cooperation mechanisms, with active participation in the value chains of national businesses, producing competitive goods and services for internal and external consumers. The emergence of Central Asia as a prosperous region will help resolve other sensitive geopolitical issues in this part of the continent, in particular, the involvement of Afghanistan in economic relations with neighboring countries.

Vladimir CHUSHKIN

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