Measuring the Impact and Financing of Infrastructure in the Kyrgyz Republic

We examine the impact of the Osh–Sarytash–Irkeshtam and Sarytash–Karamyk road construction projects in the Kyrgyz Republic on regional social and economic development. We also discuss financing infrastructure in the Kyrgyz Republic context. Evaluation of impact is based on estimations from the panel dataset for the period 2005–2017 using both regional and district-level information. The findings indicate that the road construction projects had a positive effect on poverty reduction and retail trade growth, which was especially evident in the sample of two mountainous districts. The long-term sustainable economic effects of road construction require the creation of a business ecosystem along the road. International road construction should be accompanied by external trade promotion initiatives and the reduction of barriers at borders. The efficiency of road infrastructure also depends on improved regional cooperation, which necessitates consideration of the road not only as a transit or transport corridor, but also more comprehensively as an economic corridor with a potential wider economic effect. The development of public–private partnership for infrastructure investment is another strategic direction for government policy, which should be associated with policies to decrease regulatory burden, private investment risk, and increase institutional development.

WORKING PAPER NO: 988