1

Trade (and migration) issues in Central Asia

Ben Slay

Senior advisorUNDP Regional Bureau for Europe and CIS

Geneva, 7 May 2015

Why this research?• Economic integration is

becoming a priority issue in many Central Asian countries WТО membership

Kyrgyzstan, TajikistanRussia, China, India

Eurasian integration Мigration and remittances

• Human development perspectives are sometimes lacking Vulnerability? Ecological consequences?

Central Asia’s exports grew thanks to rising prices . . . What happens when they fall?

0

100

200

300

400

500

600

Metals

Energy

Cotton

UNDP calculations, based on IMF commodity price data. (Forecasts begin in 2015).

Global commodity prices (annual

averages)

Peak

High trading costs slow growth in export volumes

Landlocked economies

Ranking in World Bank’s “Trading Across Borders” category (Costs of doing business)

Armenia 116th

Moldova 149th

Belarus 150th

Kyrgyz Republic 184th

Kazakhstan 186th

Tajikistan 188th

Uzbekistan 189th

Out of 189 countries, total (2013). Turkmenistan was not ranked.

Big exporters can cover high cross-border trading costs—but small traders can’t

Small trader from Batken

Imported equipment at the Kumtor mining complex

Examples from Kyrgyzstan

High trading costs: Obstacles to regional cooperation

28%

13%

3% 3%

8%

22%

10%

2%

16%2001 2012

UNDP calculations, on the basis of ITC data.

• Shares of intra-regional trade in trade turnover: low and falling

• Only Uzbekistan shows growth in share of trade with other Central Asian countries

Shares of trade turnover with other Central Asian countries

Commodity composition of Central Asian exports: Capital-, resource-intensive

Kazakh

stan

Kyrgyzs

tan

Tajikis

tan

Turkmenist

an

Uzbekis

tan0%

20%

40%

60%

80%

100%

Other

Petrochemicals

Light industry

Other farm products

Machinery

Cotton

Metals and minerals

Energy

UNDP calculations, based on 2012 ITC data.

This trade pattern has socio-economic consequences

• It limits output, employment growth in labour-intensive sectors– Light industry– Wholesale, retail trade– Tourism

• These are also sectors with high shares of female employment Kazakhstan Kyrgyz Republic

1.11.4

1.9

3.6

Trade

Tourism

UNDP calculations, based on 2012 data from national statistical office web sites.

Ratio of sectoral share in total female employment to sectoral share in total

male employment

. . . And ecological consequences

Aral Sea, 1989-2008

Source: Wikipedia

Migration, remittances, and development

• World’s most remittance-dependent economies are in Central Asia

• Remittances completely finance Tajikistan’s merchandise trade deficit– They cover 50-75% of the

merchandise trade deficit in Kyrgyzstan

• Labour markets in Tajikistan, Kyrgyzstan are de facto deeply integrated with Russia (Kazakhstan)UNDP calculations, based on 2013 IMF, World Bank data.

Tajikistan

Kyrgyzstan

Nepal

Moldova

Armenia

Lesotho

Samoa

Haiti

Liberia

El Salvador

47%

32%

27%

25%

23%

23%

22%

20%

20%

17%

Remittance inflows/GDP

11

Remittances reduce poverty (data from Kyrgyzstan)

2010 2011 2012 2013

34%

37%38%

37%

40%

43%

45%44%

With remittancesWithout remittances

Osh

Jalala

bad

Batken

Naryn

Talas

Issyk

-KulChuy

Bishke

k

61%58%

56%

45%

38%34%

23%20%

47%49%

41%

32%

Without remittancesWith remittances

Source: Kyrgyzstat.

2013 data

12

Development finance—Do remittances matter more than ODA?

7.8% 7.5%

4.5% 4.2% 4.1%

3.0% 2.8% 2.7%

ODA/GNI (2013)10.9

7.5

5.34.2

3.5 3.3 3.02.1

Remittances/ODA (2013)

* As per UNSC resolution 1244 (1999).World Bank, OECD data; UNDP calculations.

To make the most of its integration opportunities, Central Asia needs:

• Lower trading costs– Better transport infrastructure– Better border management

• Investments in the productivity of small producers, traders—for poverty reduction

• More strategic management of:– Migration flows– Remittances

• Policies to align trade, integration with sustainable development principles

Thank you very much!

ben.slay@undp.org

http://www.kg.undp.org/content/kyrgyzstan/en/home/presscenter/pressreleases/2014/04/08/undp-presented-a-human-development-paper-on-trade-in-central-asia.html