Central Asian Economies Research Articles

Analyzing the Impact of Fiscal and Monetary Policies on Income Distribution in Central Asian Economies

Abstract This study examines the impacts of macroeconomic policies (i.e. fiscal policy through government consumption spending and total tax revenue, and monetary policy through broad money and real interest rate) along with other regressors such as inflation, Gross Domestic Product (GDP) per capita, remittances, exchange rate, and financial development on income distribution in four Central Asian countries from 1995 to 2020. After conducting unit root tests, the Autoregressive Distributed Lag (ARDL)/Pooled Mean Group (PMG) approach was implemented for empirical analysis. The results show that both fiscal and monetary policies have positive and negative effects on income inequality. Moreover, inflation is found to increase income inequality, while financial development, higher levels of per capita income, and foreign remittances decrease inequality in the panel and individual country analyses. These findings suggest that coordinated policies, along with increased remittances and financial sector development, are needed to reduce income inequality.

Trade openness, human capital, natural resource, and carbon emission nexus: a CS-ARDL assessment for Central Asian economies.

There is a call for global efforts to preserve the ecological systems that can sustain economies and people's lives. However, carbon emission (CEM) threatens the sustainability of humanity and ecological systems. This analysis looked into the influence of energy use (ERU), human capital (HCI), trade openness (TOP), natural resource (NRR), population, and economic growth (ENG) on CEM. The paper gathered panel data from the Central Asia region from 1990 to 2020. The CS-ARDL was applied to establish the long-term interaction among the indicators. The paper's findings indicated the presence of the environmental Kuznets curve (EKC) in the Central Asia regions. Also, the empirical evidence highlighted that energy use, natural resources, and trade openness cause higher levels of CEM. However, the research verified that CEM can be improved through human capital and urban population growth. The study also found that HCI moderates the interaction between NRR and CEM. The causality assessment indicated a one-way interplay between ENG, ERU, NRR, and CEM. The study proposes that to support ecological stability in these regions, policy-makers should concentrate on developing human capital, investing in renewable energy sources, and utilizing contemporary technologies to harness natural resources in the economies of Central Asia.

“We are the Turkestan Rothschilds”: Jewish Firms and Trading Houses in the Turkestan General-Government

The entrepreneurial activity of the Jews flourished in the Turkestan region after the conquest of the territory of Kokand and part of the Bukhara khanates by the Russian Empire. Starting from the 1870s, Jews who had long lived on the territory of the Bukhara Emirate began to move to the Samarkand and Fergana valleys. The main actors in the economy of Turkestan were the “national” groups of merchants who controlled the entire economic life of the region. On the eve of the conquest of the Turkestan region by Russian troops, Bukharan Jews and the so-called “Sartian” merchants played a significant role in international and domestic trade in the Khanates. In fact, the entire international trade of the khanates was in the hands of intermediaries – Bukharan Jews. With the arrival of the Russians in the region, they stepped up their activities in the newly created Turkestan and tried to take all the threads of the economy into their own hands. The main emphasis is on the activities of Jewish firms and trading houses and their role in the Central Asian economy. For the first time, archival documents are introduced into academic circulation, covering the trading operations of Jewish firms and trading houses in Russian Turkestan. The article also attempts to prove that the adoption of restrictive laws did not affect the successful development of the substantial Bukharan-Jewish capital in the Turkestan region. Based on archival documents, the author demonstrates that the imperial authorities, institutions, and structures actively interacted with substantial Jewish capital in the imperial periphery.

Retraction Note: The non-linear relationship between carbon dioxide emissions, financial development and energy consumption in developing European and Central Asian economies.

Retraction Note: The non-linear relationship between carbon dioxide emissions, financial development and energy consumption in developing European and Central Asian economies.

Impact of fintech readiness, natural resources, and business freedom on economic growth in the CAREC region

The CAREC region, particularly Central Asian economies, traditionally rely on mineral resources. However, there is an increasing awareness of the significant potential and growing interest in financial technology, and supportive business regulations. Hence, this study investigates the pivotal role of fintech, natural resources, and economic freedom in shaping the economic growth trajectory of the CAREC region between 2000 and 2020. So far, no publicly available fintech index exists for this region. This study constructed a comprehensive index considering digitalization and financial development to analyse fintech readiness. It applies fixed and random effect models to examine the relationships between these variables. To account for non-linearity stemming from structural shifts and global financial shocks, it employs method of moment quantile regression (MMQR). The findings from the fixed effect models substantiate the positive impact of fintech, economic freedom, and natural resources on economic growth, albeit with varying degrees of marginal influence. A one-percentage-point improvement in fintech, economic freedom, and natural resources yields economic growth boosts by 0.102%, 0.903%, and 0.176%, respectively. Parallel results emerge from the random effect models with differing magnitudes and parameter significance levels. The MMQR outcomes consistently highlight the potency of fintech and economic freedom, with their impact being more pronounced at higher and lower quantiles of economic growth, respectively. This suggests that countries in the CAREC region experiencing higher growth levels stand to gain more from Fintech adoption, while those with lower growth levels can reap greater benefits from enhanced economic freedom. This study sheds light on the multifaceted interplay of these factors, offering valuable insights for policymakers and stakeholders in the CAREC region.

Exploring the competitiveness of Central Asian economies: a comparative analysis

Relevance. In Central Asia, growing economic and infrastructural challenges require urgent solutions and a shift from resource-dependent economies. Although each Central Asian country is following its own independent path, regional integration processes are crucial for enhancing competitiveness at both individual and regional levels. Research Objective. The study aims to conduct a comparative analysis of the competitiveness of Central Asian economies, identifying both their weaknesses and opportunities for sustainable development in the region. Data and Methods. The study relies on both secondary qualitative and quantitative data, drawing on international research on competitiveness and methodological provisions developed by the World Economic Forum. Identical indicators from the World Bank database are analyzed for an indirect assessment of the global competitiveness of Central Asian economies. Results. The study's findings reveal varying levels of competitiveness among the economies in question. Kazakhstan and Uzbekistan, in particular, have shown progress in this sphere due to the availability of natural resources, economic reforms, investments in infrastructure, and the development of human capital. Conclusions. In order to improve the quality of life for their citizens, Central Asian countries need to enhance their competitiveness, which can be accomplished by implementing measures such as diversifying economies, strengthening institutions, and attracting investment in innovative projects.

Cyclical variation of fiscal multipliers in Caucasus and Central Asia economies: an empirical evidence

Cyclical variation of fiscal multipliers in Caucasus and Central Asia economies: an empirical evidence

Research of the interrelation and interdependence of Central Asian economies: impact of the economy of Kazakhstan

This article is devoted to the study of the interconnection and interdependence of the economies of Central Asia (Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, Turkmenistan), which plays an increasingly significant role in the global economy, based on its strategic location, natural resources and growing economic potential. Studying the influence of the Central Asian economies on each other helps to understand the complex web of economic ties in the region and has practical implications for solving economic problems and stimulating sustainable development in the region. The purpose of the study is to identify and assess the degree of interconnection and interdependence between the macroeconomic indicators of the countries of the region and their impact on the economic development of Kazakhstan. The assessment is carried out by the method of correlation and regression analysis based on data on the GDP of the countries of the region. The article was prepared within the framework of the grant funding project of the Science Committee of the Ministry of Science and Higher Education of the Republic of Kazakhstan «The role of Kazakhstan in deepening regional integration of CA countries and its sustainable development goals within modern global trends» (BR18574168).

Natural resources and economic perspective: Manufacturing value added for Europe and Central Asian economies

A plethora of papers are available on the nexus of natural resources and economic growth; however, the attention to the nexus increased after the pandemic. Hence, our study contributes significantly to the literature by providing value-added manufacturing as another significant factor. Therefore, this study re-investigates the nexus of natural resources, manufacturing, and economic growth from 1989 to 2021. The study also included technological innovation and gross capital formation as additional determinants. Several time series methods are utilized, involving ADF with break years, conventional DF-GLS for unit root purpose, and Bayer-Hanck cointegration for long-term equilibrium. Moreover, the study included two parametric approaches: FMOLS, DOLS, CCR, and simple least squares with break years, and one non-parametric approach, quantile regression. Robust least squares and simple least squares are employed for robustness check analysis. The results reveal that natural resources have a resource curse which reveals that natural resources have a negative and significant influence on economic growth in European and Central Asian economies. Moreover, Gross capital formation and technological innovation significantly improve economic growth, while value-added manufacturing adversely affected the economic growth of European and Central Asian economies. The robustness protocols of the study provide similar, valid, and robust outcomes. This study recommends appropriate policies to policymakers for the sustainable use of natural resources, manufacturing with added value, advancements in technical innovation, and promotion of gross capital creation based on empirical findings.

Balancing resources and sustainability: Analyzing the impact of mineral resources utilization on green growth

This study investigates the impact of mineral resource utilization on green growth in selected Central Asian economies using autoregressive distributed lag analysis on data from 1995 to 2021. Our findings reveal that increased mineral resource extraction has a detrimental effect on the region's green growth index in both the short and long term due to adverse environmental consequences. Conversely, a 1% increase in hydropower production leads to a 0.10% and 0.19% improvement in the green growth index in the short and long term, respectively. However, higher carbon dioxide emissions weaken green economic growth due to environmental harm and increased healthcare costs. Urbanization also negatively impacts the green growth index in the long term, decreasing it by 0.06%. Policy recommendations include diversifying mineral resource exports, promoting green financing for sustainable resource projects, and expanding sustainable power generation to steer Central Asia toward a more environmentally sustainable economic path.

Ways to promote intra-regional trade and investment in Central Asia to boost the green recovery

The economic recession caused by the restrictions on the spread of the Coronavirus disrupted the economic life of many countries. The primary purpose of the paper is to measure the impacts of intra-regional trade and investment on the green recovery of five Central Asian economies over 2010–2021 through employing annual data and the panel co-integration approach. The results confirmed that the degree of green trade openness positively and significantly affects the green recovery. The estimated coefficient of direct foreign investment is negative. The patent coefficient is not statistically significant, and the official exchange rate has a positive effect. Financial development has a positive and significant coefficient. The paper has several policy implications, such as enhancing green FDI (Foreign Direct Investment), supporting green innovation, and promoting green trade liberalism for scholars and policymakers.

Central Asia – Russia: Opportunities and Limitations in Building a Joint Future (Foresight Analysis)

Central Asia now plays an important geopolitical role in the balance of power in Eurasia. Russia's role in the region is evolving, but it remains one of the leading ones. The pandemic and the conflict in Ukraine have shifted the situation out of homeostasis. So it is now important to address the issue of security, support for small and mediumsized businesses, and the preservation and development of cultural and humanitarian links. Based on the Foresight procedure this article draws conclusions about the way forward for multilateral relations in the “Central Asia-Russia” format on the basis of the outcome documents announced by the Heads of the Central Asian States and the Russian Federation after their meeting. Using the rapid Foresight tools (anticipation, design, programming and projection), conclusions are drawn about the important position of the Russian Federation as a regional actor in the external policies of the Central Asian States. Its current position is strong, but not uncontroversial. The thesis of the interpenetration of the Russian and Central Asian economies has also been elaborated, since the backbone of low-diversifcation economies are energy and energy-transit. At the same time, one cannot ignore the powerful resource of soft power. The vast area of frontier communicativeness formed by the Kazakhstan-Russian border is a unique resource that can be exploited in the future. The article was based on the results of a scientifc discussion held at the National Communications Development Research Institution (NIIRC), Moscow, Russia in 2022.

Currencies of greater interest for central Asian economies: an analysis of exchange market pressure amid global and regional interdependence

Central Asian Economies (CAEs) have diverse exchange rate policies. They have recorded higher volatility in the foreign exchange market since inception. High volatility of the transition era has drifted these economies towards partial dollarization. Monetary authorities in CAEs, (already have a challenge of maintaining monetary policy autonomy) have a gigantic task of price stability and stopping the spread of dollarization. This study is directed towards assessing the drivers and the determinants of foreign exchange market pressure in CAEs. The results, based on panel data analysis and the System GMM model, have provided useful insights about the exchange market pressure determinants particularly USD, Euro, Ruble, and Renminbi. The results show that China and Russia exchange market pressure has a negative effect on the exchange market pressure of CAEs. While the dollar index shows a positive impact on the exchange market pressure of CAEs. Overall, the findings imply that China and Russia currency appreciation results in a trade deficit across CAEs. The policy implication suggests that the floating exchange rate regime (inflation targeting regime) is not in favor of CAEs, and they must use managed-float to reduce their trade deficits.

‘Two parts – one whole’? Kazakh–Kyrgyz relations in the making of Soviet Kyrgyzstan, 1917–24

ABSTRACT This article argues that the Kazakh–Kyrgyz relationship in many ways shaped the emergence of Soviet Kyrgyzstan. Kyrgyz elites were willing to collaborate with Kazakhs while simultaneously trying not to be marginalized by them. Kazakh elites in the Turkestan ASSR’s government supported the first Kyrgyz nationalist project, the Kara-Kyrgyz Mountain Oblast (KKMO), in 1922. However, the division of Turkestan during the Central Asian national–territorial delimitation in 1924 and the increased linkage between national identity and political and cultural rights deprived the Kazakh–Kyrgyz regions of their socio-economic unity. Consequently, Kyrgyz leaders, to get their fair share of the disintegrating Central Asian economy as a separate group, had to contrast themselves to their Kazakh allies. The case of Soviet Kyrgyzstan shows that the intertwined relationship among Central Asian elites provides a more nuanced and complicated story of the formation of Soviet national republics in the region. Particularly, Central Asia’s settled/nomadic dichotomy and the inter-elite relationship within each population have been more influential than scholars have acknowledged.

Analyzing energy trade policy in Central Asia using the intercountry trade force approach

The main purpose of this study is to examine the energy trade pattern of Central Asian economies, which are regarded as significantly rich in natural resources. To this end, the generalized method of moments (GMM) based on the intercountry trade force approach, and data from 2001–2018 are employed. The empirical results confirm the significant impacts of the gravity index, free space of trade, and urbanization level in shaping Central Asia’s energy trade patterns. Our main conclusion is that variables have different impacts on the trade directions of imports and exports. In addition, geographical location and language factors are crucial for shaping the energy trade policies of Central Asia. The study’s main economic policy implication is in fostering the free flow of energy to achieve better economic integration in Central Asia. In addition, to promote the energy infrastructure of the region, cooperation and participation of the countries in regional projects like the Belt and Road Initiative (BRI) of China is recommended.

Agrarian Reform and Water Resource Management: A Case Study and Lessons from Tajikistan

This paper examines the preconditions for collective action in the context of Water User Associations (WUAs) in Tajikistan. The paper uses qualitative case studies of five WUAs from three cotton-producing districts of Khatlon region in Tajikistan. Findings suggest that the ability of WUAs to generate collective action for the benefit of the rural community depends on factors internal and external to WUAs. The WUAs in our study tended to exhibit top-down organizational forms which might not bode well for their sustainability. WUAs were set up by donors in a setting where large, collectivized farms and vestiges of command agriculture persist alongside small individual farms. The presence of large farms among smaller holdings makes it difficult for WUAs to distribute water equitably among its members. Local government officials tend to favor the interest of big planters over small independent farms and can exert pressure on WUAs to skew water distribution. By studying the institutional challenges facing water resource management in Tajikistan, a major natural resource challenge facing all the Central Asian economies, the paper identifies opportunities for speeding up the process of agrarian reforms currently underway in all the transition economies.

The role of the developed and developing economies in the Central Asian countries’ economic growth

The current state of economic development of the countries of Central Asia is controversive. Their GDP grows faster than the global GDP, but their economies from the other hand are extremely ineffective in distribution of wealth, the use of gained resources. In order to overcome this, multiple mechanisms are created, namely the development banks and institutions, BRI, EAEU etc. These institutions represent the interests of the major regional players. The article concentrates on the interests of Asian countries and Russia, giving a glance on the mechanisms these countries use and their real power in the region. The author conducted statistical analysis, used dilogical approach to the gains and losses of the economies of Central Asia in the context of their cooperation with major players – PRC, Russia, Japan and others. The risks of such cooperation were revealed too, firstly, the risks for economic growth, but including the risks of social character. The results of the study demonstrate that the current situation is far from positive, as every positive influence is controversed by negative. In this regard, the major finding s include this controversy, the recommendations for easing the issues of economic cooperation, the practical proof of the tightening grip of PRC on the region and the weakening influence of Russia in Central Asia.

Prospects for China’s BRI and Strategic Influence in the Post-COVID-19 Central Asia

COVID-19 brings a momentous decline for global economic activities but its consequences for China’s Belt and Road Initiative (BRI) remains imminent. Despite the economic shocks of the Pandemic, BRI remains a top priority for China which allows Beijing to improve regional connectivity and expand its economic outreach far off to Europe and the American shores. On the other hand, the Central Asian economies are hard hit by the pandemic with a reduced regional trade, decline in oil prices and its commodities, deep slump in remittances, and the slackening manufacturing ability. The revival of BRI and its immediate success is desirable to the COVID-19 hit Central Asian economies. This is because BRI has bound the region together in terms of infrastructural development where China, under the rubric of BRI, is spearheading major developmental projects, pouring investment in energy sector, offering debt, and improving bilateral trade with regional economies. For this reason, the Central Asian countries desire immediate revival of close economic cooperation which could links the economic fortunes of regional countries to Beijing and brings the BRI to the fore in regional priorities. The paper highlight the impact of COVID-19 over Central Asian economies, the significance BRI for the region; its geopolitical importance for China; and the growing Chinese influence in the post-Pandemic Central Asia using Bourdieu’s Theory of Symbolic Power. Finally, using qualitative content analysis, the paper argues that the economic impact of COVID-19 are short-term and of limited nature and it will only increase prospects for BRI in the post-Pandemic Central Asia with vital strategic utilities for China’s geopolitical profile in the region.

Book Review: The Central Asian Economies in the Twenty-First Century: Paving a New Silk Road

Book Review: The Central Asian Economies in the Twenty-First Century: Paving a New Silk Road

Economic growth and human capital in Iran: A phenomenological study in a major Central Asian economy

Economic growth and human capital in Iran: A phenomenological study in a major Central Asian economy