Balázs Horváth,Practice Leader, UNDP, Europe and the CISBratislava Regional Centre

Social and Economic Challenges in SPECA Countries

Bratislava, 20 May 2010

AfT Roadmap for SPECA Ministerial Meeting, Baku 1-2 December, 2010

Central Asia: Key region in Eurasia

While there is common inheritance…Soviet legacy left many difficult challengesGeography: all Central Asian countries are landlocked

Russia only large market with transport access China, India: farther, transport routes inadequate To the closest EU countries is about 3,000 km

There are significant national differences Size (area, population, GDP)Resource endowment Income level Market reformsEconomic and political stability

Central Asia is not a homogenous region

The effect of the global economic crisis ranges from large to none…

-5

0

5

10

15

20

25

IslamicRepublic ofAfghanistan

Azerbaijan Kazakhstan KyrgyzRepublic

Tajikistan Turkmenistan Uzbekistan

2008 2009 2010 est

Source: IMF World Economic Outlook, October 2010

But the broader impact on HD may be substantial, lasting, hitting mostly the

poor• Paper by 3 authors in BRC—on ECIS region as a whole

• Panel estimate: income elasticities of 12 HD indicators 29 ECIS countries, 1989-2008– poverty rates,– unemployment, – incidence of diseases, – under-five mortality, – life expectancy, – crime rates.

• Then: projecting HD indicators using GDP forecasts

Potential Impact of the Crisis

64.0

64.1

64.2

64.3

64.4

64.5

64.6

64.7

64.8

64.9

65.0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Male life expectancy at birth, years

Potential Impact of the Crisis

Poverty $5 at 2005 prices

25.0

30.0

35.0

40.0

45.0

50.0

55.0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

The region has huge opportunities…

• Huge natural resource endowments* oil, gas production already considerable

* large reserves remaining

* other mineral wealth

* massive hydropower , solar & wind potential

• Young population, generally good education levels Potential for: * dynamic labour force

* competitive economy

* demographic dividends, rather than time-bomb

• In past decade: expanding fast

• Growth economies now closer: China, India, Turkey, each other…

…but in some SPECA countries, per capita GDP remains very low

949 1,

761

1,93

9

1,96

3

5,71

2

14,7

06

1,01

9 2,04

3

2,45

5

6,16

9

8,10

1

10,4

69

0

2000

4000

6000

8000

10000

12000

14000

16000

Rw

anda

Afg

hani

stan

Taj

ikis

tan

Nig

eria

Sud

an

Kyr

gyz

Rep

ublic

Uzb

ekis

tan

Chi

na

Tur

kmen

ista

n

Aze

rbai

jan

Kaz

akhs

tan

Rus

sian

Fed

erat

ion

Per-capita GDP, in US$, PPP terms, 2008

Source: World Development Indicators

To promote trade and investment:Harmonized, predictable regulatory and legal frameworkstable economic growth for all people & all territoriesnew, well-paying and sustainable jobs poverty reduction, social inclusion

To promote joint interests, better manage/handle shared water, energy and environmental resources (e.g. Aral Sea)common infrastructurecommon challenges: environment, health, disaster preparednesslabour migrationillicit drug trafficking; crime and terrorism.

To fulfil potential and to reach sustainable development: regional cooperation needed

Trade can be a powerful source of economic growth & HD

It can bolster broadly based growth & progress toward MDGs;

Better resource allocation (efficiency, job gains) can raise growth and lead to poverty reduction & HD.

Final note: growth necessary but not sufficient for HD (GHDR).

In focus at this Conference: Trade and Human Development

Thank you for your attention…

United Nations Development Programme, Europe and the Commonwealth of Independent

States,Bratislava Regional Centre

http://europeandcis.undp.org

Balazs.Horvath@undp.org