Greater Caspian Region Economy: Looking Into 2019

Summary

Long a focus for international energy policy, the countries of the Caspian, South Caucasus, and Central Asia, including Afghanistan, are increasingly recognized as essential parts of the new connections across Eurasia. New infrastructure, which includes energy pipelines, fiber optic cables and growing surface transportation networks, not only facilitates the integration of the region into the economies of Europe and East Asia, but also improves connectivity within the region—boosting trade, raising the region’s strategic profile, and providing a basis for further economic growth and international engagement.

Moreover, a number of countries in the region are announcing and pursuing economic reform programs. Many of these programs focus on improving the commercial environment for start-ups as well as established businesses, improving governance and the rule of law, and fighting corruption. These initiatives, in addition to seeking to boost economic activity in sectors such as agriculture and IT, also create opportunities for a range of American companies as well as for firms within the region. As reported below, the October 2018 World Bank report suggests an overall increase in the region’s Doing Business scores and ranking, and United States’ (U.S.) data shows an increase in trade with Afghanistan, Azerbaijan, Kazakhstan, and Uzbekistan.

That said, progress on economic reform in the region is uneven and even where it is moving forward, it is essential that governments continue reform efforts, including fighting corruption and boosting attractiveness to new and established firms. In addition, while governments will often look to attract new firms and investments, it is essential that they pay close attention to the conditions that promote the growth of companies already in their domestic markets. Such conditions are essential to creating businesses and new jobs and improving economic well-being and security.

Continued attention to furthering growth and increasing exports of the region’s oil and gas will be important, as will raising the profile and utilization of expanding surface transportation networks, including the new rail links.