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Competitiveness and Private Sector Development: Central Asia 2011

Competitiveness Outlook

image of Competitiveness and Private Sector Development: Central Asia 2011

With a total population of 92 million people, near universal literacy and abundant energy resources, Central Asia is an attractive destination for investment and trade.  The region is strategically located at the crossroads of Europe and Asia, and surrounded by some of the world’s fastest-growing economies such as Russia, India and China, who are increasingly investing in the region. From 2000 to2009, foreign direct investment flows into Central Asia increased almost ninefold, while the region’s gross domestic product grew on average by 8.2% annually.

While Central Asia is endowed with many natural and human resources that could drive its economies to even higher levels of competitiveness, the poor quality of the region’s business environment remains a major obstacle. Key areas for improvement include reinforcing legal and economic institutions; prioritizing the development of the small and medium-sized enterprise (SME) sector; and building the capacity of business intermediary organisations.

This Central Asia Competitiveness Outlook examines the key policies that would increase competitiveness in Central Asia and reduce dependence on the natural resource sector, namely through developing human capital, improving access to finance, and capturing more and better investment opportunities. It was carried out in collaboration with the World Economic Forum under the aegis of the OECD Central Asia Initiative, a regional programme that contributes to economic growth and competitiveness in Afghanistan, Kazakhstan, the Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan, and Uzbekistan. The Initiative is part of the wider OECD Eurasia Competitiveness Programme.

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Capturing More and Better Investments

Foreign direct investment (FDI) flows are increasingly important as a source of finance for Central Asian economies. To unlock their full potential, a second generation of reforms is needed to improve the investment policy framework. Key areas to address are land reform, removing sector restrictions and enforcing intellectual property rights. Policy makers from Central Asia also need to focus on diversifying the sectors receiving FDI and building further investment promotion and facilitation capabilities. Investment promotion activities should be based on efficient use of resources, linking promotion efforts to investment zones and industrial policy objectives, as well as supporting regional development.

English

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