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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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The Competitiveness Potential of Central Asia

Central Asia’s advantages of strategic location, high literacy rates and vast natural resources, coupled with growing foreign direct investment (FDI) and enhanced productivity, have led to above-average growth over the past 10 years. However, to sustainably raise its competitiveness, the region must make further gains in productivity. This chapter provides an overview of the key findings of the report in priority areas for reform: education, access to finance and investment policy and promotion. It notes that education must provide skills demanded by the market through dialogue with employers; SMEs, essential for growth, must have easier access to finance; and the investment climate must be enhanced by improving investment policy and promotion. A case study on Kazakhstan, the final chapter of the report, outlines possible strategies – which may be applicable to other economies of the region – to diversify sources of FDI and enhance sector competitiveness.

English

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