Global thinkers gather in Baku to discuss economic prospects, challenges in Central Asia

08:26 PM | 21 Sep, 2022
Global thinkers gather in Baku to discuss economic prospects, challenges in Central Asia
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BAKU – The Central Asia Regional Economic Cooperation (CAREC) Institute, in partnership with the ADB-PRC Regional Knowledge Sharing initiative, the Economic Scientific Research Institute (ESRI), the Center for Economic and Social Development (CESD) and with support of the Asian Development Bank (ADB), organized the Sixth CAREC Think Tank Development Forum "Recalibrating Growth Dynamics for Inclusive and Sustainable Economies" in Baku, Azerbaijan.

Syed Shakeel Shah, Director of the CAREC Institute, welcomed the participants of the forum and emphasized the importance of the forum as a multilateral platform for discussing economic prospects and challenges in the region and exploring joint knowledge solutions. This year's forum is dedicated to discussing sustainability and inclusiveness, UN Sustainable Development Goals (SDGs), climate change, green energy, the impact of geopolitical uncertainty and economic recovery after the COVID-19 pandemic.  

Shixin Chen, Vice President of the Asian Development Bank, in his opening speech congratulated the CAREC Institute’s Think Tank Network for joining the South-South Global Thinkers – the Global Coalition of Think Tank Networks for South-South cooperation, which is jointly established by UNOSSC and UNDP. Vice President highlighted the negative impacts of the COVID-19 pandemic, climate change, geopolitical conflicts, and international confrontation on countries' efforts to achieve the SDGs that have led to a return to poverty, higher inflation, water shortages, health issues, natural hazards, loss of livelihoods, increased food and energy insecurity and school dropouts. To overcome these challenges, the ADB provides a broad spectrum of technical, financial and capacity development support to its developing member countries in the CAREC region.

Mr. Samad Bashirli, Deputy Minister of Economy of the Republic of Azerbaijan, in his address emphasized the importance of the forum in advancing the policy dialogue among CAREC governments, think tanks and development partners toward regional economic cooperation. Deputy Minister warmly welcomed the signing of the Memorandum between the Economic Scientific Research Institute of the Ministry of Economy of Azerbaijan and the CAREC Institute that will promote joint research and partnerships in the development and implementation of policies, programs and projects aiming to support the regional economic integration.

During the second session of the forum Dr. Albert Park, Chief Economist and Director General of the ADB, provided an extensive overview of CAREC economies and discussed about how much recalibration is needed for inclusive and sustainable growth in the region. Mobilization of taxes for development, mitigating climate change and gender inequality, strengthening digitalization and enhancing regional cooperation are key policy priorities for CAREC countries to ensure inclusive and sustainable growth.

Dr. Hans Holzhacker, Chief Economist of the CAREC Institute, and Dr. Kamalbek Karymshakov, Vice Rector of the Kyrgyz-Turkish Manas University, supplemented the discussion by sharing the results of their research. Dr. Hans Holzhacker emphasized that for catching up with the developed economies, CAREC economies require a productivity push, which must be driven by higher technical and vocational education, innovation, foreign trade, and direct foreign investment. For sustainable and inclusive growth in the CAREC region, a well-designed and tailored fiscal and monetary coordination mechanism needs to be developed.

Dr. Kamalbek Karymshakov highlighted the low-quality education and job-mismatch as the key impediments for sustainable economic development that need to be resolved.

During the third session, researchers from Azerbaijan, Kazakhstan, Pakistan and Uzbekistan shared the results of their research on access to healthcare, education, digital technologies and women's labor force participation. The COVID-19 pandemic has seriously affected the economy of Azerbaijan, which has taken several policy initiatives in education, health and the digital sector to overcome the crisis.

The impact of the pandemic on Kazakhstan’s economy was paramount, as services sector, investment and growth have reduced, oil prices have plummeted, and mortality rate went up. Kazakhstan must increase health care funding and improve women's labor force participation and digital accessibility to overcome the losses. The pandemic has also had a significant impact on Pakistan’s economy, both directly and indirectly, affecting socio-economic sectors including human well-being, stagflation, job security and stagnation of educational services. The country needs to reduce gender and geographic disparities in the digital sector by increasing digital literacy, especially in rural areas. Similarly, the pandemic has negatively impacted the economy of Uzbekistan in terms of healthcare, education, access to digital technologies, and female labor force participation. The country needs to invest in and accelerate technology-based teaching and learning across the country, with a focus on rural and low-income areas. Uzbekistan also needs to consider tax incentives for telecom operators that prioritize Internet connectivity and install fiber optic lines to improve broadband connectivity in rural areas.

The fourth session of the forum began with a presentation by a UNDP representative on the progress on SDGs in the CAREC region, where there are different levels of progress of countries in achieving the SDGs and financing of the SDGs remains as a key issue. More innovative financing solutions are needed to cover the financing gap in some CAREC countries. Representatives of think tanks from the Kyrgyz Republic, Tajikistan and Turkmenistan shared their views on their countries' progress in achieving the SDGs, the bottlenecks and policy prescriptions for achieving the targets. The overall picture of Kyrgyz Republic looks very encouraging, but several pre-pandemic challenges persisted in 2021, such as diversifying the economy and attracting foreign investment, as well as providing better public services, especially in the health and education sectors. The achievements and realization of SDGs have been mentioned by Tajikistan and Turkmenistan. In both countries, the key issue is attracting funding for the SDGs and developing a SDGs funding mechanism.

The fifth session focused on climate change vulnerability and the case for green energy in the CAREC region. Four-“A” perspectives on energy security were presented for the CAREC region: between 2011 and 2015, the availability and the affordability of energy appear to have improved while the acceptability of energy appears to shrink considerably, and applicability of energy seems to be more likely the same. Participants discussed the transition to renewable energy sources, renewable energy and green energy zones initiatives. An “implementation strategy”, mainly the development of a regulatory framework, was mentioned as the key challenge. Major progress, commitment and initiatives in the form of domestic policies and international cooperation of China’s climate change were presented by the PRC think tank representative.  

The second day discussion of the forum started with the session on the impacts of geopolitical uncertainties, the COVID-19 pandemic and the climate change on the economic growth and inclusivity. Dr. Hamza Ali Malik, Director of the Macroeconomic Policy, and Financing for Development Division at the UNESCAP, stresses that the socio-economic impact of the COVID-19 pandemic was amplified due to lack of investments in resilience and people, and the economic recovery momentum, from the impacts of the pandemic, has been disrupted due to ongoing geopolitical uncertainties. As the result, fiscal and debt pressures have increased, making it challenging to support inclusive economic recovery and sustainable development. Rising inflation and associated increases in interest rates are likely to dampen economic prospects, adversely affect the poor and pose additional fiscal challenges. Representatives of think tanks from Mongolia, Georgia and Pakistan spoke about the current state of affairs in their countries. Mongolia is experiencing a decline in the export of minerals and FDI inflows that has resulted in the depreciation of the national currency; rising world food prices have caused inflation in the country. The Georgian economy has improved significantly and grew by an average of 10.5% over the first half of 2022, although inflation and unemployment remain high, meaning that underlying growth is not inclusive. In addition to the pandemic difficulties, Pakistan's current politics is causing social unrest and national polarization, undermining market confidence.

In the final session of the forum, Dr. Debapriya Bhattacharya, Former Ambassador of Bangladesh to the WTO and UN Offices, spoke about the importance of building alliances between governments, the private sector, civil society and development partners to ensure inclusive and sustainable economic growth. At the global level, countries need  promote a multilateral system which is rule-based and open, create inclusive platforms for non-state actors, strengthen transit regimes to ensure harmonized customs operation and multimodal transport with efficient border logistics, and create transcontinental communication networks,  trade facilities and IT connectivity, implement global and regional measures to address food and energy security challenges, and strengthen initiatives to deal with post-COVID-19 aftermath.

At the national level, countries must ensure country-led partnerships through revealed political commitment, promote democratic accountability making space for civic voice and action, create a business-friendly environment through well-performing institutions and processes, and engage with local communities based on inclusive and accountable participation. Representatives of Azerbaijan, Kazakhstan, Mongolia and Uzbekistan spoke about their countries' experience in building international and national alliances in order to ensure inclusive economic growth in their countries and promote the prosperity of the region.

Think tanks representatives agreed that the economic policies need to be people-centric, and not just promote GDP growth in the CAREC region. To ensure this, the CAREC members need to focus on building their fintech foundation, bolstering the ICT and digital infrastructures, ensuring regulatory quality, and enhancing the required capabilities to advance inclusive trade and finance. Developing countries with limited fiscal space will need to prioritize resources and efforts to areas with the greatest social development. The pandemic has shown that regional cooperation and integration with customized solutions can be a desirable goal for the region.

Forum participants commended the CAREC Institute's diligence in supporting the CAREC Think Tank Network, including the Research Grants Program, which encourages think tanks to conduct joint research on pressing regional issues, and the annual CAREC Think Tank Development Forum, which serves as a platform for the exchange of ideas and knowledge.

In closing remarks, Mr. Syed Shakeel Shah, Director of the CAREC Institute, called on think tanks to continue collaborating on joint research, knowledge production, and sharing of best practices in the CAREC region and beyond, and to play an active role in bringing research evidence into national policies. Regional cooperation through the CAREC Think Tank Network will better address current challenges to achieve inclusive growth and sustainable development in the region.