Current Situation of Economic and Industrial Development in Central Asia
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Current Situation of Economic and Industrial Development in Central Asia

With the promotion of China's One Belt One Road policy, Central Asia, located in southern Russia, has become the focus of future economic development.
Published: Oct 18, 2022
Current Situation of Economic and Industrial Development in Central Asia

Current Status of Economic Development in Central Asia:

After the disintegration of the Soviet Union into independent countries, the five Central Asian countries began to seek their development paths, including economic development models. However, the transition from the past administrative order management, state ownership, and planned economic system to a free market and the private economy is not a simple and easy reform, and various problems and difficulties in the process have also joined Eastern European countries or another former Soviet Union. Republics vary. However, the same is. Central Asian countries strive to move towards a free market economy, a choice common to all post-communist countries.

Central Asia located in the economic belt includes Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan, but these five countries have been in a state of low per capita GDP for a long time. From the perspective of the economy, internal affairs, and trade, whether they can drive the economy to take off is still a problem. It remains to be seen. The five Central Asian countries attract the attention of the outside world because their regions are rich in natural information and their energy reserves are amazing.

The total population of the five Central Asian countries is about 70 million. Since the disintegration of the Soviet Union 20 years ago, Kazakh, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan have developed their main industries in the export of natural resources and the processing of agricultural products. The manufacturing and light industries in the five Central Asian countries are still in the initial stage of development. The administrative efficiency of government departments is low, the corruption problem is serious, and there are relatively many administrative accidents caused by commercial regulations and customs clearance of goods. Moreover, the climate in Central Asia is dry and the desert area is wide. The industrial areas are all concentrated in big cities, and the residents mainly live in big cities. The overall population density is low (15.8 people per square kilometer on average).

Although Central Asia was part of the ancient Silk Road after the development of the Silk Road declined, the local private consumption is weak, and it is not suitable for becoming a commercial hot spot, even as a trade route between Europe and China. The domestic consumption of the five Central Asian countries is also difficult to increase. The five Central Asian countries have been relying too much on the export of natural resources for a long time. Although they can easily earn export money, they have also made themselves neglect the development of livelihood industries and light industries. If the economy can be significantly improved, the development of industry needs to be enhanced.

Characteristics of Economic Development in Central Asia:

After the disintegration of the Soviet Union, the Central Asian countries, like other republics, suffered from economic loss, resulting in disordered or interrupted production and sales pipelines in various countries. Cause severe economic recession and other abnormal phenomena.

  • Obstacles to trade and transportation, originally domestic trade, have become international trade; import and export trade has been greatly reduced by tariff barriers, bureaucratic corruption obstacles, and increased transportation costs.
  • Loss of subsidies, loss of financial subsidies originally from Moscow. Including government subsidies, price concessions, low-cost transportation, and energy services enjoyed by enterprises and households.
  • Loss of experienced administrative and technical personnel, Russians or other foreigners who were originally residing or dispatched to serve and work in Central Asia, feel discrimination from the newly independent country. They have tried to return to their home countries or were even forced to return to their home countries. At the same time, they have caused administrative shutdowns or production interruptions and reductions in their original work institutions and units.
Subjective and Objective Environment and Development Conditions of Central Asian Countries:

In terms of subjective conditions:

  • Central Asian countries already have a considerable economic foundation, but they are facing economic transformation, changing state ownership to private ownership; changing the planned economy regulated by the state in the past to a free market economy.
  • These countries with economies in transition face open competition from domestic and foreign enterprises, but the original industries lack competitiveness, including labor efficiency, product quality, innovation, etc.
  • The bureaucratic administrative management habits of the past are not easy to get rid of, and the widespread corruption and bribery will affect the investment and production, and operation activities of domestic and foreign enterprises.
  • The bureaucratic administrative management habits of the past are not easy to get rid of, and the widespread corruption and bribery will affect the investment and production, and operation activities of domestic and foreign enterprises.
  • The countries with successful economic development in Asia use their cheap labor to develop labor-intensive industries and expand the export value of products. And then gradually improve the quality of industries and promote the upgrading of industrial structures. The industries of Central Asian countries are mainly based on the production of raw materials, and the labor price is higher than that of other developing Asian countries; it is not conducive to attracting domestic and foreign capital to invest in labor-intensive industries.

In terms of objective conditions:

  • Central Asia is an inland area and lacks maritime transportation channels; although it is possible to go south to the sea via Iran, Afghanistan, or Pakistan, it is not a safe and convenient channel. The geographical environment makes Central Asia the center of the Eurasian continent, although it has certain strategic significance, it is not a necessary place for the pulse of modern marine economy.
  • The politics of Central Asia lacks an effective democratic mechanism, there is a potential conflict crisis in ethnic relations and a conservative social atmosphere. And radical Islam forces are just around the corner, and it may even become the Balkan region of Eurasia. Invisible obstacles to economic development and investment opportunities.
  • The five Central Asian countries have different natural resources and development potentials. Kyrgyzstan and Tajikistan are poor countries that lack resources and rely on agriculture and animal husbandry. Kazakhstan, Uzbekistan, and Turkmenistan have rich resources, especially since the former two have the most potential for development.

Kazakh's Economic and Industrial Development Status:

More than half of the deserts and semi-deserts in Kazakhstan, although the area of agriculture and pastures is large, the main industries are metallurgical refining, energy mining, fossil fuels, machinery, and other industrial development, because of the rich oil, natural gas, and metal minerals, light These commodities alone account for 60% of the export trade, and the European Union and the United States are also investing heavily in the extraction of natural resources.

Since Kazakh became independent in 1991, under the long-term governance of Nursultan Nazarbayev. Not only his family controls important political and business resources of Kazakh, but also the situation of government corruption, crony privilege, and corruption of the rule of law has not improved significantly for more than ten years. Although Kazakhstan is a country with a relatively high GDP per capita in Central Asia, the gap between the rich and the poor is still widening.

After international oil prices and raw materials fell in 2011, Kazakh exports fell the most by more than two-thirds. Nursultan Nazarbayev carried out land privatization and leased land to foreign countries (such as China), but many dissenting people believe that the government is overly inclined to China and may be suspected of selling out its sovereignty. Land reform had to be suspended due to the opposition of many peasants. Kazakhs can expect to gradually transfer the power to the next generation of the family, and their foreign policy will not change in the short term. China will increase its economic influence on Kazakhs by expanding trade with Kazakhs.

Uzbekistan's Economic and Industrial Development Status:

Uzbekistan is the most populous country in Central Asia. Islam Karimov, who became the first president of Uzbekistan in 1991, has been president for 27 years. Uzbekistan has long imposed a party ban on all opposition parties. New political parties must be approved by the government to form a party. The media is also strictly controlled by the government. Under its almost dictatorial regime, corruption of government officials is serious.

Although Uzbekistan produces gold, crude oil, copper, natural gas, and cotton, a few privileged people control the main economic growth profits of Uzbekistan. If there is no good political and business relationship, it will be relatively difficult for foreigners to invest in Uzbekistan. The exchange rate is regulated by the government, and its intervention in the economy is quite serious. Various ills have jointly affected the outflow of the population. There are not a few Uzbeks who emigrate to Kazakh, Russia, and other surrounding countries to live. In recent years, to cooperate with China's One Belt One Road policy, Uzbekistan has increased its trade with China and has resumed air traffic with neighboring Tajikistan. Uzbekistan's economy has not shown particularly outstanding performance except for the major changes in export commodities.

Kyrgyzstan and Tajikistan's Economic and Industrial Development Status:

Kyrgyzstan and Tajikistan, on the other hand, are countries with very low per capita GDP. The economy is dominated by agriculture and animal husbandry, and the trade deficit has been running for many years. The political administration is inefficient, and the laws and regulations are backward. Therefore, it is difficult to attract large-scale foreign investment from Europe and the United States. Although Kyrgyzstan and Tajikistan have actively introduced foreign capital in recent years to build hydropower facilities, expand the cotton industry, and increase the processing and export of agricultural products, it is still quite difficult to significantly improve economic growth.

Nearly 80% of Turkmenistan is a desert with a dry climate. Its main economy comes from the natural gas and oil industries. Although most people rely on primary industries such as cotton, wheat, or animal husbandry, the economic output value is quite low. The most important thing is natural gas. Exports and the biggest buyer in recent years have been China.

Turkmenistan's Economic and Industrial Development Status:

Turkmenistan changed its previous foreign policy. In the past, Turkmenistan exported natural gas to the Ukrainian market, but the transportation process was dominated by Russia for a long time, which was not good for Turkmenistan. Therefore, Turkmenistan turned to sell natural gas to China and introduced Chinese companies to invest in energy construction.

Turkmenistan's annual GDP growth rate once maintained an astonishing growth rate of more than 10%. However, since the collapse of international energy prices in late 2014, Turkmenistan's economic growth has begun to weaken, due to excessive reliance on a single industry or commodity. If natural gas prices remain low for a long time, Turkmen's economy is bound to be severely hit.

Published by Oct 18, 2022 Source :moneydj

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