Wheatley Library floor plan

Map of the Whealtley Librar

Regional Trade Arrangements and Economies in Transition: The Central Asian Countries

When it dissolved in 1991, the members of the Council for Mutual Economic Assistance (CMEA) contained half a billion people (Table 1) - more than either the European Union or NAFTA today - and these countries were largely insulated from the market-driven international economy. This paper analyses the progress of the reintegration of the formerly centrally planned economies into the global trading system, focusing on the relationship between multilateral processes and regional integration schemes, and taking the Central Asian countries as a case study. Almost all the countries in transition from central planning have accepted the WTO rulebased system in principle, and the potential danger of regionalism proving more attractive than multilateralism has not eventuated.trade agreements, post-Soviet economies, Central Asia

Central Asia after Two Decades of Independence

After becoming independent in 1991, the five Central Asian countries pursued differing transition paths from the defunct central planning. This paper analyses the connection between economic policies and performance during the 1990s and 2000s. Performance over the two decades has been determined by resource endowments rather than by policy. International relations, which were predicted to centre on a new Great Game among external powers, have been more muted than anticipated, centring on geopolitics and pipelines, and with a consequence of hampering desirable economic cooperation within Central Asia. Prospects for significant change in the near future are limited because by the end of the 1990s the window of opportunity for policy initiatives had shut and entrenched political regimes had no incentive to sponsor major reforms.

Coordinating Aid for Regional Cooperation Projects: The Experience of Central Asia

For the Central Asian countries the dissolution of the Soviet Union led to economic disintegration as old coordination mechanisms disappeared and new national borders appeared. This paper analyses why it has been difficult to coordinate aid for regional cooperation projects (eg. on the Aral Sea or trade facilitation) whose economic benefits appear positive. Bilateral aid flows to Central Asia have been dominated by geopolitical rather than economic considerations, and have been at best narrowly national in focus and at worst regionally divisive. Regional organizations composed of Central Asian countries and various neighbours have also competed rather than cooperated, so that the most plausible source of coordinated aid for regional cooperation projects is the multilateral agencies. A key role for aid donors is to provide technical assistance in analysing and explaining benefits, and how these affect various interests. Initial advantages which multilateral agencies had as impartial providers of technical advice were undermined in 1992-3 when the IMF’s strong position in favour of retaining the ruble turned out to be mistaken advice. In the 1990s aid directed to the Aral Sea problem produced few benefits because, despite the magnitude of the gross benefits from reversing the desiccation, littoral countries see differential benefits and costs; pure win-win situations are more likely from regional cooperation in trade facilitation. Subsequently the multilateral agencies have had a better focus, sharing priorities in the destination of aid and agreeing on a functional division of labour, but this has not yet translated into effective assistance for regional cooperation.

Resource Management and Transition in Central Asia, Azerbaijan, and Mongolia

The paper presents a comparative analysis of the resource-rich transition economies of Mongolia and the southern republics of the former Soviet Union. For Uzbekistan and Turkmenistan, the ability to earn revenue from cotton exports allowed them to avoid reform. Oil in Azerbaijan and Kazakhstan was associated with large-scale corruption, but with soaring revenues in the 2000s their institutions evolved and to some extent improved. Kyrgyzstan and Mongolia illustrate the challenges facing small economies with large potential mineral resources, with the former suffering from competition for rents among the elite and the latter from lost opportunities. Overall the countries illustrate that a resource curse is not inevitable among transition economies, but a series of hurdles need to be surmounted to benefit from resource abundance. Neither the similar initial institutions nor those created in the 1990s are immutable.Oil, Gas, Minerals, Central Asia, Resource Curse

Exploiting Energy and Mineral Resources in Central Asia, Azerbaijan and Mongolia

Recent literature has focussed on institutional degradation and revenue volatility as major sources of a resource curse. Formerly centrally planned countries may be especially vulnerable due to their mutating institutions and macropolicy inexperience. This paper examines these issues through case studies of six former Soviet republics and Mongolia. The principal focus is on the methods of involving foreign partners in exploration and exploitation of natural resources and, to a lesser extent, on the use of revenues during resource booms. The consequences of alternative resource ownership patterns are difficult to model due to path dependency and the significance of the conjuncture of circumstances. Kazakhstan in the 1990s was a prime example of rent-seeking institutional degradation, but an exceptionally positive conjuncture in the 2000s (soaring oil prices, large oil and gas discoveries, and new pipelines) triggered institutional and policy evolution. Uzbekistan, by contrast, had less resource-rent-driven institutional degradation in the 1990s, but stagnated in the 2000s. Turkmenistan and Mongolia highlight the missed opportunities from not involving foreign partners, while Azerbaijan and the Kyrgyz Republic illustrate the less predictable outcomes following quick deals with foreign investors. Institutions matter, but the case studies suggest more complex relationships than revealed by simple correlations between indicators of institutional quality or of ownership patterns.oil, gas, minerals, Central Asia, resource curse

The Financial Sector and the Future of Capitalism

Financial sector innovation and development has been an integral part of the rise of capitalism over the last half millennium. The innovations of the last three decades of the twentieth century were a continuation of the trend; they contributed to an era of global prosperity, but also increased the probability of bank failures as bankers and policymakers inexperienced in the new instruments made mistaken decisions. The likelihood of crises was increased by public policies which increased moral hazard. Governments regulate the financial sector due to asymmetric information between depositors and deposit-taking institutions; restricting entry or the lending activity of financial institutions is inefficient, so the weight is now placed on deposit insurance with moral hazard consequences. The policy challenge is to reduce moral hazard without repressing the financial sector and creating adverse selection in lending practices. Since the mid-1980s cheap money policies have exacerbated moral hazard associated with inadequate financial sector regulation by encouraging highly leveraged investments. The post-2007 financial crisis was one of many crises with idiosyncratic catalysts but with common underlying causes: cheap money available to participants in the integrated but imperfectly regulated global financial market eventually led to loan defaults and bank failures. This is not the end of capitalism, but a reminder of the difficult balancing acts involved in policing the financial sector which is at the heart of capitalist economies.financial development; Moral hazard

Coordinating Aid for Regional Cooperation Projects: The Experience of Central Asia

For the Central Asian countries the dissolution of the Soviet Union led to economic disintegration as old coordination mechanisms disappeared and new national borders appeared. This paper analyses why it has been difficult to coordinate aid for regional cooperation projects (e.g., on the Aral Sea or trade facilitation) whose economic benefits appear positive. Bilateral aid flows to Central Asia have been dominated by geopolitical rather than economic considerations, and have been at best narrowly national in focus and at worst regionally divisive. Regional organizations composed of Central Asian countries and various neighbours have also competed rather than cooperated, so that the most plausible source of coordinated aid for regional cooperation projects is the multilateral agencies. A key role for aid donors is to provide technical assistance in analysing and explaining benefits, and how these affect various interests. Initial advantages which multilateral agencies had as impartial providers of technical advice were undermined in 1992-93 when the IMF?s strong position in favour of retaining the ruble turned out to be...aid, Central Asia, trade