Countries and Regions

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p. 15 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 A. Encouraging Poverty-Reducing Growth B. Addressing Governance Issues and Other Cross-Cutting Issues C. Supporting for and Involvement of the Private Sector VI. Issues and Challenges

Central Asian Regional Economic Cooperation : V. Addressing Poverty and Governance and other Cross-Cutting Concerns

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A. Encouraging Poverty-Reducing Growth

39. The central goal of the ADB’s initiative in support of regional cooperation in Central Asia is to establish an environment conducive to poverty-reducing economic growth. Regional cooperation can mitigate the effect of small domestic markets and extreme distance to industrialized countries that determine the economic landscapes in each Central Asian republic. Improved transport systems and policy environments supportive of trade would help arrest the widespread economic decline in the region. Most immediately the impact would be felt by the large number of small traders, many of whom are women⁸ that have moved from restructuring state enterprises and government agencies into the private sector. Improved road transport is especially needed to encourage the development of small businesses that require flexible, low-cost for low-volume shipping. Equally important, however, is improved rail transport to lower the costs of operations and reduce the disincentives to new investment in large enterprises. Strengthening the potential for restructured farms and firms would limit the ongoing labor redundancies and unemployment. Of course a sustainable impact on poverty or employment would require concomitant reform efforts to establish market-oriented institutions within each country.

40. Regional cooperation also offers scope for addressing some very difficult poverty issues such as the lack of adequate infrastructure in border areas. A common problem in many parts of the world is that the provision of adequate infrastructure tails off towards border regions, reflecting in part the difficulties of providing infrastructure services to areas divided among different national jurisdictions. Transport systems are particularly important, however, in Central Asia borders also cut across electricity transmission lines, irrigation systems, and oil and gas pipelines exacerbating the difficulties in maintenance and operations.

41. In the energy sector, commercialization of and a widening of regional energy trade would encourage business investment and employment and income prospects in Central Asia. Lower cost energy supplies with an appropriate policy environment, including low-income support mechanisms such as life-line tariffs, would reduce existing energy shortages, lower inflationary pressures, and improve living conditions of many poor families especially those in urban areas. Energy shortages, electricity cutoffs and service interruptions for heating systems, are considerable hardships for poor families. Assuring adequate energy supplies, especially in winter, would reduce these hardships and improve the health situation for poor families.

42. The ADB’s initiative in support of rural finance and the prospective activity in education also have the potential for addressing poverty concerns. These are both areas in which ADB has developed regional specific expertise through projects in the national assistance programs. In education, the ADB is the lead financing agency in the region. The rural finance initiative seeks to improve the policy environment for especially small businesses that can provide the income and employment base needed for rural poverty alleviation. In education there is the real prospect of encouraging a regional sharing of the lessons learned in ADB-supported sector reforms and also to support concrete programs of exchange—exchange of teaching materials and of training services—to ensure that children receive instruction in the language of their choosing. The former would be particularly important in helping the region exploit its potential for human resources-based development. The latter could do much to alleviate potential ethnic tension as well as ensure that the opportunity to develop appropriate skills is not denied minority children in the different countries.

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