Central Asia Regional Economic Cooperation

Role of Economic Cooperation in Central Asia

After gaining independence in 1991, the former Soviet republics in Central Asia faced the twin challenge of nationhood building and transition to a market-based economy. These tasks were made particularly formidable by a number of specific long term development factors (LTDFs) characterized by

• landlocked location and remoteness from major world markets
• small domestic markets
• rational use of complementary resource endowments especially in water and energy

These challenges combine to suggest that developing regional markets would save large transport costs, exploit scale economies, and yield gains from trade, including those based on resource complementarity. Effectively meeting these challenges to realize such gains and raise the living standards of the people requires joint action of the countries in the region. This is the fundamental rationale for regional economic cooperation.

Xinjiang Uygur Autonomous Region PRC is the western-most territory of the PRC, bordering the Central Asian republics (CARs). While the development path it has followed in the past decades differs from that of the CARs, it faces similar LTDFs as the CARs, and thus has similar needs for economic cooperation.