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Terms of trade and governance in recent developments of Central Asia Eshref Trushin The views are those of the author and do not necessarily reflect opinions of the USAID or BearingPoint. Overview of the presentation.
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Terms of trade and governance in recent developments ofCentral Asia Eshref TrushinThe views are those of the author and do not necessarily reflect opinions of the USAID or BearingPoint
Overview of the presentation • Considers two periods: one after Asian financial crisis of 1997 and the recent period of high export prices • Describes major recent macroeconomic trends in Central Asia • Speculates on interrelationship between macroeconomic trends and governance
Major Macroeconomics Trends in 2003-2005 Export prices grew faster than import ones
… Which facilitated the export boom • This helped to improve the government fiscal balances
… Also Shifted the Regional Economic Center from Uzbekistan to Kazakhstan
… Because Kazakhstan has conducted some comprehensive reforms Kazakhstan is rated #1 in the CIS: • by “Global Competitiveness Index Rankings 2006”, • the best financial sector (The IMF), • political stability (The World Bank)
HOWEVER, most governance indicators have been worsening in relative terms!
Conclusion • Essential improvements in terms of trade, exports, economic growth, wages, fiscal situation, external debt • Meantime, most governance and democracy indicators have been worsening • This probably indicates the fight of elites over increasing external rents and still questions sustainability of economic development
PS • Most international financial organizations predict high oil prices (above $50) due to instability in Iraq, growing demand and consolidation of OPEC • High export prices can sustain good economic growth in the region at 5-8% average in medium run. • Will this opportunity be wasted on growth without development?