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? 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) Armenia116 th Moldova149 th Belarus150 th Kyrgyz Republic184 th Kazakhstan186 th Tajikistan188 th Uzbekistan189 th 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 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 UNDP calculations, based on 2012 ITC data.ITC

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 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. Remittance inflows/GDP

11. Remittances reduce poverty (data from Kyrgyzstan) 11 Source: Kyrgyzstat. 2013 data

12. Development finance—Do remittances matter more than ODA? 12 * 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