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Article

Central Asia at 25

Bruegel Policy Contribution. 2017. No. 13. P. 1-22.
Batsaikhan U., Dabrowski M.

Central Asia, despite being referred to as a single region, represent five countries with diverse cultural and ethnic backgrounds and different ways in which political and economic transformation took place in the last twenty five years since independence from the Soviet Union. Within these countries, Kazakhstan and Kyrgyzstan have relatively advanced in market reforms, while Turkmenistan and Uzbekistan still have not completed their transition to a market economy and Tajikistan represents a middle case.

In many respects, historical legacy of the 20th century and unique geographical and geopolitical location did not help Central Asian countries in their efforts for economic development and integration.

After experiencing more than a decade of growth based on hydrocarbon boom, Central Asian countries are faced with increasing challenges resulting from declining commodity prices, trade and 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.

Major obstacles to the political reform and economic diversification efforts in the five Central Asian economies are posed by 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.