Countries and Regions

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p. 1 of 22 BACK | NEXT I. Summary II. Background and Rationale III. The ADB Initiative Towards Economic Cooperation in Central Asia IV. Sector Priorities and the Proposed Program 2001-2003 V. Addressing Poverty and Governance and other Cross-Cutting Concerns VI. Issues and Challenges

Central Asian Regional Economic Cooperation

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I. Summary

1. Strengthening regional economic cooperation is especially important for realizing the development aspirations of the countries in Central Asia,¹ particularly in view of their landlocked location far from the markets of industrialized countries. Economic growth and sustainable reduction in poverty in the Central Asian republics (CARs) demands developing new trading relations within the region and new trading partners and transport links to external markets.

2. Economic integration of the Central Asian republics within the Soviet Union, and the inclusion of these republics in a common administrative region for planning purposes, did not lead to sufficient investments in infrastructure to facilitate intra- or inter-republic integration and trade after independence. Present day borders cross economic zones, further complicating the problems of economic restructuring and investment.

3. Since late 1996, the Asian Development Bank (ADB) has been providing technical assistance to encourage regional economic cooperation among its developing member countries in Central Asia. Activities under Phase I (1997-1998) of this ADB initiative concentrated on identifying infrastructure needs and policy issues impeding cross-border trade and traffic specifically in the areas of energy, trade, and transportation.

4. As a result of Phase I activities, the high priority of rehabilitating the road linking Almaty in Kazakhstan with Bishkek in the Kyrgyz Republic was identified and a parallel set of loan and technical assistance (TA) packages prepared. This project is expected to be presented to the Board in the fourth quarter 2000 and is expected to receive cofinancing support from the European Bank for Reconstruction and Development (EBRD) and the European Union.

5. Subsequent activities in Phase II, commencing in 1999, have stayed tightly focused, emphasizing areas of comparative advantage for the ADB, particularly transport (the ADB has active national programs in the transport sector in all its member countries of the region) as well as in energy. Investment needs are being identified in these sectors and the policy environments analyzed to better understand the needs for loan and technical assistance. In support of this exercise, country workshops and intensive government consultations were conducted covering the transport and energy sectors. The trade environment has deteriorated and ADB’s policy dialogue, supported by regional workshops on trade issues and bilingual publications, needs to be continued and strengthened. Major efforts are underway to assist establishing institutional arrangements, which would facilitate systematically high-level consultation and consensus-building among the participating countries and between them and the ADB. In addition, moderate steps are being taken to broaden the ADB’s regional initiative in areas such as education and rural finance where the ADB has strong programs of assistance to the involved Governments.

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