Economic Development in the Newly Independent States: The Case for Regionalism

Abstract

The Newly Independent States of the Caucasus and Central Asia face a formidable set of obstacles to economic development. The strategies pursued in other developing countries ‐ resource‐based, import substitution, export promotion, and neoliberalism ‐ do not provide satisfactory roadmaps for these states. This article argues that a regional development strategy constitutes the best hope for the NIS. While most economists look unfavorably on preferential trade arrangements, a carefully formulated regional strategy — which would combine a deepening of existing regional trade agreements, convergence towards the World Trade Organisation's non‐discriminatory norms, and support of trade financing reforms by international development agencies — could unlock the NIS's substantial potential for intra‐regional trade and enhance the region's appeal to Western investors. However, execution of such a strategy presupposes resolution of the political conflicts (inter‐ and intra‐state) that currently impede regional co‐o...