Abstract
Dear Readers,
In this special edition of the Global Journal of Emerging Market Economies, we are previewing chapters from the Emerging Market Forum’s forthcoming book entitled Central Asia 2050: Unleashing the Region’s Potential. This book brings together a team of international experts to analyze the economic, social, and political development of Central Asia over the next several decades. The teams consist of Theodore Ahlers, Cameron Hepburn, Shigeo Katsu, Harpaul Alberto Kohli, Srinivasa Madhur, Pradeep Mitra, John Nellis, Alexander Pfeiffer, Richard Pomfret, Michelle Riboud, Fred Starr, and Jonathan Walters, with ourselves and Harinder Kohli as the co-editors.
Central Asia today faces great opportunities as well as daunting challenges. The region has significant potential and a unique opportunity to accelerate its economic and social development and achieve widely shared prosperity.
Under the aspirational Vision 2050 posited in this study, the region will have achieved widespread prosperity and living standards such that by 2050, a vast majority of Central Asians will be middle class with commensurate income and quality of life. The average per capita income will have jumped from $10,000 in 2014 to $50,000 in 2050 (in 2011 PPP [purchasing power parity] terms). Social, institutional, and governance indicators will have also improved in and reached at least the levels of South Korea and Central Europe today.
Achieving this ambitious vision is plausible, though by no means preordained. It will require Central Asia to successfully confront and contend with many challenges facing it. Bold and sustained actions by countries will be required. Also, given the disparities of their current conditions and circumstances, national action agendas and the trajectory and speed of convergence will vary among the countries in the region. At the same time, the five Central Asian countries face many common opportunities, challenges, and risks.
The book identifies several specific areas where Central Asia will face important opportunities but also significant challenges in achieving the aspirational vision. In “Managing the Energy Transition,” Jonathan Walters explores how Central Asia can make the critical transition from Soviet-era energy systems to sustainable, renewable energy sources. In “Modernizing Agriculture,” Richard Pomfret calls for a more efficient development of the agriculture sectors. In “Creating a Competitive and Innovative Manufacturing and Service Economy,” Johannes Linn considers the development of modern manufacturing and service industries that are well integrated into global supply chains. In “Investing in Inclusive Human Development,” Michelle Riboud discusses how the region can improve their education and health sectors. In “Facing the Challenge of Climate Change,” Alexander Pfeiffer and Cameron Hepburn assess the potential impact of climate change on Central Asia and ways the region can mitigate these impacts. In “Pursuing Open Regionalism for Shared Prosperity,” Srinivasa Madhur looks at the concept of “open regionalism,” and challenges the region faces to better integrate into global and regional markets. Finally, in “Building Effective Institutions—The Biggest Challenge,” Theodore Ahlers and John Nellis tackle the problems of improving governance and institutions, arguably the most significant obstacles the region faces in achieving the aspirational vision.
Responding to the above opportunities and challenges to achieve Vision 2050 will undoubtedly be demanding as the wide range of actions and reforms proposed by the authors suggests. Failure to respond effectively could result in the Central Asian countries in a middle-income trap in which they would stop converging with today’s developed economies. This will be costly for the region.
It is estimated that in such a downside scenario (dubbed the middle-income trap scenario), per capita incomes will grow by less than 2 percent a year and will be only around $20,500 in 2050 or less than half of the aspirational scenario (2011 US dollars PPP). Given faster growth in the rest of the world, Central Asia’s per capita income will have fallen to about 60 percent of the world average from 75 percent today. Under such a scenario, the aspirations of a vast majority of Central Asians will remain unfulfilled, raising risks of social and political unrest.
Which of the two scenarios—the aspirational Vision 2050 or the middle-income trap—will come to pass will, of course, depend on many exogenous, external factors on which the Central Asian leaders and people will have little or no say. However, several important factors will be endogenous to the region and depend on the countries in the region, individually and collectively.
A major lesson from history is that Central Asia thrived most when it was open to bold thought, tolerance, and a commitment to intellectual and religious pluralism. Thus, openness to the rest of the world and to each other in terms of trade, investment, and ideas is important for Central Asia to pursue.
Many of the policy and institutional reforms noted in the book will take time to design and implement and the regional leaders, individually and collectively, will need to pursue them with a sense of urgency to achieve the aspirational Vision 2050.
Doing so will not be easy. Difficult choices will have to be made and implemented with a sense of commitment and urgency.
However, if so done, Central Asia can achieve the bold aspirations embedded in Vision 2050.