UNDP Presented a Human Development Paper on Trade in Central Asia

08 Apr 2014

imageOne of the presentation participants is reading the paper. Credit: Kairatbek Murzakimov / UNDP.

Bishkek, Kyrgyzstan – Reduce in at- and behind-the-border barriers to trade, invest in the competitiveness and productivity of the small-scale producers and traders, and assure that efforts to facilitate WTO and Eurasian integration reflect the human development needs of, and opportunities for the Central Asian countries. These are the main recommendations of the new human development paper on trade in Central Asia that was presented by UNDP on April 8 in the UN House in Bishkek.

The paper titled “Central Asia Trade and Human Development” was presented by UNDP Resident Representative in Kyrgyzstan Alexander Avanessov, UNDP Regional Poverty Practice Leader Ben Slay and UNDP Aid for Trade Project Team Leader Joern Rieken.

“This meeting, and the research being presented here, is part of the third phase of UNDP’s regional Aid for Trade project, which is funded by the Government of Finland’s Wider Europe initiative. The project is aimed at supporting national efforts and priorities for regional and global economic integration,” noted Alexander Avanessov in his opening remarks. He added that under this third phase of the project UNDP is to deliver about $500,000 annually in the Kyrgyz Republic in the next four years.

The paper focuses on several important points for Kyrgyzstan. Today Eurasian integration, within the framework of the EurAsEC Customs Union, is widely viewed through the east-west political lens. In Central Asia, however, such perspectives can obscure more than they illuminate. Kyrgyzstan may, or may not join the Customs Union, but this does not change the deep integration of its labour market with the labour market of the Russian Federation that has already occurred. In many ways, in ways that matter for ordinary people, integration has already happened – but it has happened in a spontaneous manner.

“The question is – can formal integration processes help the Kyrgyz Republic to better manage these integration trends?  And if so, how?” says Ben Slay, one of the authors of the paper. “In this respect, the paper points to the benefits that the Kyrgyz Republic could receive if Eurasian integration process could help formalize migration and remittances flows, especially to benefit migrant workers and their families”.

In addition, the paper notes that despite being a WTO member since 1998, the Kyrgyz Republic continues to face very high cross-border trading costs. While some of these costs can be ascribed to the country’s landlocked status, these costs are high even when compared to other landlocked countries. These high costs tend to limit the Kyrgyz Republic’s exports to natural resource-intensive products, the production of which is not generally labour intensive. They also limit prospects for the expansion of production and employment in more labour-intensive sectors like food processing, textiles, and clothing production. And while large companies can cover these cross-border trading costs, small business people can not. This further limits the employment- and income-generating impact of trade for poverty reduction.

“Efforts to reduce these trading costs, and to build the capacity and competitiveness of small farmers and traders to engage in cross-border trade, are very important for poverty reduction and development in the Kyrgyz Republic. UNDP’s Aid for Trade project is working closely with national (and regional) stakeholders to find ways to lower these costs, and to build this capacity” explained Joern Rieken, leader of the project.

This paper builds on UNDP’s 2005 report by updating the case for policies and programming that can help global and regional integration promote human development in Central Asia.

International trade can promote human development by increasing GDP and creating new income- and employment-generation opportunities – particularly for vulnerable communities. Both trade theories and national experience point to potential pro-poor outcomes for low- and middle-income countries that specialize in the production and export of labour-intensive goods and services.

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