Global Journal of Emerging Market Economies

This article explores how Central Asia can achieve the aspirations of Vision 2050 in the energy sector. Under this vision, the region’s energy resources will have been developed in an efficient and sustainable manner by 2050. The complementarities between those energy resources will be effectively exploited by cross-border trade within the region and by substantial exports of clean energy to China, South Asia, Europe, and elsewhere. There will be an appropriate balance between renewable and nonrenewable energy, and hydrocarbons resources will have contributed to competitiveness and diversification of the economy, and will not have been wasted. This article reviews what the future may hold for energy technologies, since their development will critically affect the choices for Central Asia’s energy transition. The article then considers the legacy of Soviet energy policy and what, in broad terms, Central Asia needs to do to achieve a successful energy transition. Subsequent sections consider specific aspects of the electricity, hydrocarbon, and renewable energy sectors. Possible options are then explored on how Central Asia might benefit from a global climate change deal in developing its renewables, while also addressing some of the troubling challenges of cooperation for developing the region’s water resources for hydropower production and effective water storage.

This article analyzes the prospects for agriculture in Central Asia up till 2050 and makes recommendations about what is needed to achieve the aspirational vision. Geography and climate favor two major export crops, cotton in the south and wheat in the north, but a pressing issue is the appropriate amount of area to be devoted to these crops and how to produce them efficiently; the answer will change as technological improvements are adopted, wages increase, and capital is substituted for labor, and as the water situation is affected by climate change and other factors. The traditional livestock sector that shrank drastically after 1991 could revive as incomes increase and diets change, and niche products could also be developed. The article is structured around these four subsectors (cotton, wheat, livestock, and niche products), but also recognizes the influence of national policies toward land, water, and rural development.

This article first considers the current state of diversification of the production and export structure of Central Asian economies. It then explores alternative approaches to the diversification, competitiveness, and innovation transformation challenge. Taking as given the prevailing trends of technological progress at a global level, this article analyzes the relevance of the various overlapping and strategic components of these approaches for the five Central Asian countries, which would allow an effective absorption and adaptation of available technologies and foster a culture of innovation in Central Asia. The key policies common to all the approaches include effective institutions and a favorable business environment for domestic and foreign investors; effective human resource development; strong connectivity nationally and internationally, in terms of transport infrastructure, logistics, and IT access; and the fundamentals of sound macroeconomic policy and a well-developed, resilient financial sector. In addition, this article will consider targeted interventions in support of the development of modern cities, of an internationally competitive innovation system, and of selected manufacturing and service activities.

This article addresses issues relevant to building an effective human capital base in the five countries of Central Asia and proposes ways to enhance prospects not only for each country but also for the region as a whole. It will deal with the two main components of human capital: education and training, and health. For each of these, the analysis will start by examining recent trends, identifying similarities and differences between countries, and reviewing policy directions and recent reforms. Common issues, as well as those specific to a particular country, will be discussed before proposing a possible program of actions that could help the countries achieve their vision. The analysis is constrained by the limited availability of reliable statistical data. Detailed information on all aspects of human development is not always available for all countries. There is, in particular, very scarce information about human development outcomes and policies in Turkmenistan, which limits the capacity to make policy recommendations for this particular country. For other countries, when data are available, comparability is sometimes made difficult by differences in reference period, definitions, coverage, and sources. Some caution is therefore advised in the interpretation of data.

Central Asia faces serious environmental challenges, many as a legacy of Soviet times. Many of these environmental issues involve the use and abuse of scarce water resources. The huge investments in irrigation infrastructure by Soviet planners resulted in a vast diversion of water flows from the two main rivers of the region—the Syr Darya and the Amu Darya—into arid areas to feed the rapid expansion of region-wide cotton production, and to supply the rapidly growing urban centers in Central Asia. Since water was treated as a free good, it was used wastefully and unsustainably. In addition, Central Asia has to deal with many environmental hot spots caused by industrial and mining activities initiated in Soviet times. Add to this the lack of effective treatment of industrial and residential waste water and solid wastes in the growing cities of the region, and it is clear that Central Asia faces a tremendous environmental challenge, which needs to be addressed both at a national and a regional level to ensure that by 2050 the vision of a livable and sustainable future for the region is assured. These environmental challenges, which are generally well known and understood, will further be aggravated by the likely global and regional impacts of climate change, which until recently have not been as well understood and sufficiently considered, let alone addressed. This article focuses only on the climate change impacts and possible ways for Central Asian countries to address them in the coming decades.

In pursuing the aspirations embedded in Vision 2050, this article identifies some key areas for individual and collective action by the Central Asian countries to pursue open regionalism and outlines the crucial elements of a regional agenda. Central Asia’s open regionalism will be a multispeed and multitrack process, prioritizing and sequencing of which will not be easy. Given the time horizon that is being considered in this article, it is important to note that not all collective actions proposed in this article are to be achieved in the immediate future, nor even over the next decade or so, but over the next three and a half decades. Within this overall framework, the article takes stock of the state of play in terms of both intraregional and interregional integration, and addresses the imperatives, opportunities, and challenges in seven broad dimensions, not necessarily in order of relative priority: connecting countries and the region; integrating trade and production; cooperating on water and energy; cooperating on capital flows; managing migration; supporting regional institutions; and balancing national and regional interests—the leadership issue.

This article discusses the importance of institutional capital for future well-being, seeks to assess current institutional performance, and identifies drivers of change and areas for priority action. The thesis of this article is that the economic and political institutions must evolve as much over the next 35 years as they have since the breakup of the Soviet Union, if Vision 2050 is to be realized and sustained. Whether these institutions evolve to the desired level or not, and whether the necessary change comes as a swift, continuous adaptation or as disruptive breaks, depends on many things. The long time required for institutional evolution and the vested interests opposed to institutional change make sustained political commitment essential for successful change. Most important will be the foresight of Central Asia’s leaders and the deepened involvement of the people of Central Asia in the political and economic life of their countries. This article examines how institutions, and intangible capital more generally, generate growth and identify the changes required—over a 35-year horizon—in the asset composition of Central Asian countries to realize Vision 2050. It benchmarks the institutions of Central Asian countries against world averages and comparators in East Asia and Central Europe. Additionally, this article identifies drivers of change that could be leveraged to promote the desired institutional evolution. The final section discusses areas requiring concerted attention if Central Asia’s institutions are to deliver the future to which citizens of the countries aspire.