This document discusses trade, migration, and human development issues in Central Asia. It notes that economic integration is a growing priority but human development perspectives are sometimes lacking. Central Asia's commodity-dependent exports grew due to rising prices but vulnerabilities remain. The region has very high trading costs that slow export growth and regional cooperation. This trade pattern limits jobs in labor-intensive sectors and has ecological consequences. Migration and remittances are crucial to the region's economies but development finance needs to ensure gains are sustainable. Overall, Central Asia needs lower trading costs, support for small businesses, strategic management of migration and remittances, and policies aligning trade and integration with development.

1. Trade (and migration) issues
in Central Asia
Ben Slay
Senior advisor
UNDP Regional Bureau for Europe and CIS
Geneva, 7 May 2015
1

2. Why this research?
• Economic integration is
becoming a priority issue in
many Central Asian countries
 WТО membership
Kyrgyzstan, Tajikistan
Russia, China, India
 Eurasian integration
 Мigration and remittances
• Human development
perspectives are sometimes
lacking
 Vulnerability?
 Ecological consequences?

3. 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
2012
2013
2014
2015
2016
2017
2018
2019
2020
Metals
Energy
Cotton
UNDP calculations, based on IMF commodity price data. (Forecasts begin in 2015).
Global commodity
prices (annual
averages)
Peak

4. High trading costs slow
growth in export volumes
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.

5. Big exporters can cover high cross-border
trading costs—but small traders can’t
Small trader
from Batken
Imported equipment at the
Kumtor mining complex
Examples from Kyrgyzstan

6. High trading costs: Obstacles
to regional cooperation
28%
13%
3% 3%
8%
22%
10%
2%
16%
2001 2012
UNDP calculations, on the basis of ITC data.
• Shares of intra-
regional trade in
trade turnover:
low and falling
• Only Uzbekistan
shows growth in
share of trade
with other
Central Asian
countries
Shares of trade turnover with other
Central Asian countries

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

8. 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

9. . . . And ecological consequences
Aral Sea,
1989-2008
Source: Wikipedia

10. 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 (Kazakhstan)UNDP calculations, based on 2013 IMF, World Bank data.
Tajikistan
Kyrgyzstan
Nepal
Moldova
Armenia
Lesotho
Samoa
Haiti
Liberia
El Salvador
47%
32%
27%
25%
23%
23%
22%
20%
20%
17%
Remittance
inflows/GDP

11. Remittances reduce poverty
(data from Kyrgyzstan)
11
2010 2011 2012 2013
34%
37%
38%
37%
40%
43%
45%
44%
With remittances
Without remittances
61%
58%
56%
45%
38%
34%
23%
20%
47%
49%
41%
32%
Without remittances
With remittances
Source: Kyrgyzstat.
2013 data

12. Development finance—Do
remittances matter more than ODA?
7.8% 7.5%
4.5% 4.2% 4.1%
3.0% 2.8% 2.7%
ODA/GNI (2013)
12
10.9
7.5
5.3
4.2
3.5 3.3 3.0
2.1
Remittances/ODA (2013)
* As per UNSC resolution 1244 (1999).World Bank, OECD data; UNDP calculations.

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

14. Thank you
very much!
ben.slay@undp.org
http://www.kg.undp.org/content/
kyrgyzstan/en/home/presscenter/
pressreleases/2014/04/08/undp-
presented-a-human-development-
paper-on-trade-in-central-
asia.html