Central Asia’s current trade mix limits output and employment growth, and has detrimental environmental consequences. Promoting the right kind of trade and economic integration can lead to higher levels of employment and human development. View this presentation to learn what Central Asia can do to make the most of its integration opportunities.

1. Trade, migration, and human
development in Central Asia
Ben Slay
Team leader, poverty reduction
UNDP Regional Bureau for Europe and CIS
Dushanbe, 23 April 2014
1

2. Why this paper?
• Economic integration is
becoming a priority issue in
many Central Asian countries
WТО
Eurasian integration
Мigration and remittances
• Human development
perspectives are sometimes
lacking in these debates
Impact on vulnerable households?
Ecological consequences?

3. Trade, capital accumulation, and
human development
• Trade can help countries accumulate economic capital, by:
– Attracting foreign investment
– Acquiring modern technologies
• What about human capital?
– Are gains from trade reinvested in education and health?
– Does migration lead to brain drain, or brain gain?
• What about social capital?
– Does migration put excessive strains on families, communities?
– By which policy measures re-migrants’ acquired social capital
could employed for domestic development?
• What about natural capital?
– Does trade-related resource extraction place intolerable burdens
on ecosystems?
– Are non-renewable resources managed wisely?

4. Growth in export volumes lags in Central
Asia (except for Kazakhstan)
24%
22%
21%
19% 19%
18% 18% 18%
17%
15% 15%
14% 14% 14%
13%
12%
5%
3%
Annual average growth in
merchandise exports, 2000-2012
UNDP calculations, based on UN Statistical Division data

5. Central Asia’s exports grew thanks to rising
prices . . . What happens when they fall?
0
100
200
300
400
500
600
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Metals
Energy
Cotton
Food
0
20
40
60
80
100
120
Metals
Energy
Cotton
UNDP calculations, based on IMF commodity price data. (Forecasts begin in 2013).

6. High trading costs slow export
growth in Central Asia
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.

7. Big exporters can cover high trading costs,
but small traders can not
Small trader
from Batken
Imported equipment at the
Kumtor mining complex

8. Commodity composition of Central Asian
exports: Capital-, resource-intensive
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Other
Petrochemicals
Light industry
Other farm products
Machinery
Cotton
Metals and minerals
Energy
UNDP calculations, based on 2012 ITC data.

9. 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
1.1
1.4
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

10. . . . And ecological consequences
Aral
Sea, 1989-
2008

11. 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 (KazakhstanUNDP calculations, based on 2013 IMF, World Bank data.
Tajikistan
Kyrgyz Rep.
Nepal
Moldova
Armenia
Lesotho
Samoa
Haiti
Liberia
El Salvador
47%
32%
27%
25%
23%
23%
22%
20%
20%
17%
Remittance
inflows/GDP

12. Development finance—Do
remittances matter more than ODA?
Tajikistan Armenia Kyrgyzstan Georgia Kosovo*
8.4
3.8
3.0
2.2
1.8
Ratio of remittance inflows to ODA
receipts (2011)
World Bank, IMF, OECD data; UNDP calculations. * As per UNSC resolution 1244 (1999).

13. Remittances and poverty
reduction: Kyrgyz Republic
2010 2011 2012
34%
37%
38%
40%
43%
45%
W/ remittances W/out remittances
Income poverty rates
2010 2011 2012
26%
28%
31%
Remittances/GDP
IMF, World Bank data; UNDP calculations. Source: National Statistical Committee, Kyrgyz Republic.

14. Remittances and poverty
reduction: Tajikistan
30%
35%
40%
45%
50%
2009 2010 2011 2012
Poverty rate
Remittances/GDP
• Tajikistan’s national
data do not give
“before and after
remittances”
poverty rates . . .
• . . . But growing
remittances are
widely seen as
reducing poverty
here as well
Sources: Tajik Stat; UNDP calculations based on IMF, World Bank data

15. To make the most of its integration
opportunities, Central Asia needs:
• Lower trading costs
– Better transport infrastructure
– Modernization of 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

16. Thank you
very much!
ben.slay@undp.org