ECONOMIC DEVELOPMENT SINCE 1991 233
Valley was around 960–1,050 rubles.
4
Since independence, differences in GDP per
capita have widened, bringing the 2008 totals for Uzbekistan to $2,660, for Kyrgyzstan
to $2,130, and for Tajikistan to $1,860.
5
While resources played an important part
in this evolution, the differences in economic development trace significantly to the
different economic policies pursued in each country. All were shaped by the practical
circumstances, way of life, and culture of their respective societies, but each chose
its own means of overcoming the lopsidedness of Soviet development.
Uzbekistan’s economic-development strategy from the outset called for gradu-
alism and the preservation of a decisive role for the state.
This was not an end in
itself but a means of maintaining key social services in health and
education, and
hence of preventing social unrest.
6
Uzbekistan feared that rapid market reforms
could jeopardize macroeconomic stability. While this brought much international
criticism in the early 1990s, it also assured a higher degree of social cohesion than
might otherwise have existed. As economist Richard Pomfret noted, “the strategy
of macroeconomic regulation and reform of the Uzbek economy appears in recent
years to be better than, and preferable to, that of Kyrgyzstan, which was oriented
toward rapid privatization and liberalization of monetary policy.”
7
Through most of
the 1990s Uzbekistan’s policy of slow reform produced better economic indicators
than most other post-Soviet states. More important, the preservation of the state’s
role created an income stream that enabled the government to maintain the social
sector, education, and heath care.
8
From the first days of independence, Bishkek carefully followed the recom-
mendations of the International Monetary Fund (IMF) and World Bank. President
Askar Akaev’s economic advisers met with such experts as Daniel Kaeser, Anders
Aslund, Aleksandr Agafonoff, Tetsuji Tanaka, Ernst Albrecht, Karl Hahn, and Tat-
suo Kaneda. Akaev was the only Central Asian leader to implement all the main
provisions of the “Washington consensus,” including privatization, deregulation,
the protection of property rights, reducing restrictions on foreign direct investment,
liberalizing
financial markets, and other suggestions.
In 1998 Kyrgyzstan became the first member of the Commonwealth of Indepen-
dent States to join the World Trade Organization (WTO). Unfortunately, the country
did not reap benefits from this, in part because its large neighbor, China, also became
a member, leading to the flooding of Kyrgyz markets with Chinese goods. The low
import duties prescribed by the WTO also worsened Kyrgyzstan’s relations with its
other neighbors, who adhered to the Common Customs Tariff. By joining the WTO,
Kyrgyzstan committed to binding tariff rates at a relatively low level,
9
opening
not just its own domestic market but potentially also those of neighboring states,
to goods and services from third countries.
10
To defend themselves, Kyrgyzstan’s
neighbors imposed trade restrictions and high taxes to protect their manufacturers
from an influx of Chinese goods arriving via Kyrgyzstan. Kazakhstan’s duties on
certain Kyrgyz goods ranged up to 200 percent.
11
Such duties in effect created a
Chinese wall of customs through the Ferghana Valley.
Thus weakened, the Kyrgyz economy became dependent on loans and foreign
234 ZOKIROV,
UMAROV
aid, both of which reached high levels relative to other post-Soviet economies.
These measures reduced social pressure until 2005, when events in the Ferghana
Valley led to the Tulip Revolution.
Tajikistan in 1989 had the USSR’s lowest productive
capacity and level of
economic development, and its per capita income was a mere 39 percent of the
level for the USSR as a whole. During 1991 and thereafter, Tajikistan’s economy
suffered two devastating additional blows from which it has yet to recover. The
first was the collapse of the Soviet Union, which severed benefits coming from
Moscow, and the second was the outbreak of civil war.
Prices in Tajikistan rose 115 times between 1990 and 1993, while incomes grew
by only 36 times; retail trade decreased by two-thirds by 1992 and by a further half
in 1993. Living standards fell even further than the decreases in production.
Owing to the republic’s precarious socio-economic condition, the United Na-
tions Development Programme (UNDP) Governing
Council granted Tajikistan
the status of “recipient country” in 1993. By war’s end Tajikistan required more
than 400 billion rubles to restore its shattered economy. Russia, Kazakhstan, and
Uzbekistan extended a twenty-year interest-free loan of 286 billion rubles to pay
for oil and petroleum products from Russia.
Since mid-1995 the Tajik government has worked closely with the World Bank
and IMF to establish programs for macroeconomic stabilization and structural re-
form. The government reform program designed for the period from 1995 to 2000
was supported by an IMF agreement that provided a Special Drawing Rights loan
of 15 million SDR (1 SDR = US$1.4) and by two World Bank initiatives. In 1996
the World Bank’s technical assistance program helped establish a state economic
institute, and in September of that year the World Bank extended an additional $55
million loan to reconstruct agriculture and social protection programs.
In 2002, the IMF launched a three-year $87 million project to finance anti-poverty
programs and stimulate economic growth. The conclusion of bilateral agreements
on debt restructuring, mainly with Russia and Uzbekistan, decreased Tajikistan’s
external debt to $1 billion (82 percent of GDP), which further strengthened the
country’s macroeconomic indicators.
High hopes were placed on land reform. In 2002 nearly 50 percent of coopera-
tively owned land was converted into farms (
dehkans) as personal allotments. In
2001 a land registry was formed, and in 2002 the land registration fee was decreased,
which simplified the process of registering land. That same year forty large state
farms were restructured. However, many of these state farms had accumulated large
debts, which made them unattractive to private buyers. The privatization process
stalled. Even today the Tajik economy remains in a precarious state.
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