Central Asia’s nations have markedly increase mutual direct investment in each other's economies in recent years,
To-date, more and more countries have been paying attention to deepening integration processes with neighboring countries. This is especially true within regions. There is an increase in the so-called regionalization.
In international relations, regionalism is the expression of a common sense of identity and purpose combined with the creation and implementation of institutions that express a particular identity and shape collective action within a geographical region.
Regionalism is the response of countries to external conditions, an opportunity to strengthen its position in the global market and joint solution of existing intra-regional problems.
These processes are also relevant for the Central Asian countries. At the same time, regionalization in Central Asia is due not only to economic interests and external shocks, but it is also a natural, one might say, organic process. The countries of the region base their association on the identity of culture and history, as well as their interpenetration in the territories of all the countries of the region.
Experts from Uzbekistan’s Institute for Macroeconomic and Regional Studies (IMRS) calculated the level of strengthening of intra-regional socio-economic relationships between the Central Asian countries based on the Cooperation Index.
The calculation has been made according to the following indicators: mutual trade; value of trade; and investment, tourism and migration flows.
To calculate the Index, data from 20217-2021 were used.
As a result of this survey, the following results were obtained:
1. In 2021, the Cooperation Index of the Central Asian nations stood at 38.4 percent, which is 9.9 percent higher compared to 2017.
2. The greatest growth was noted in mutual investment in each other’s economies – 5.6-fold increase.
3. The share of intra-regional trade in total trade turnover of the countries of the region increased 1.5 times.
4. Intra-regional tourism accounts for 80% of all tourism destinations preferred by the citizens of the Central Asian countries.
5. Cost of trade between Central Asia’s countries is on average 4 times lower than their trade with other trading partners.
6. The intra-regional migration accounts for 15.3 percent of the total number of citizens traveling to the Central Asian nations for the purpose of work and residence.
Kazakhstan
Meanwhile, the National Bank of Kazakhstan (NBK) says Kazakhstan, which is the largest economy of region, managed to attract 28 billion US dollars in foreign direct investment (FDI) in 2022, which is the record FDI volume over the last decade.
At the same time, Kazakhstan last year invested more than 4.2 billion US dollars in the economies of other countries (the record FDI volume over the last five years), with 197 million US dollars invested in Kyrgyzstan’s economy and 70.4 million US dollars invested in Uzbekistan’s economy.
Uzbekistan
According to official statistical data from Uzbekistan’s authorities, a total FDI flow in Uzbekistan’s economy last year amounted to more than 8 billion US dollars, which 3.5 times fewer compared to Kazakhstan’s indicators.
Kazakhstan direct investment in Uzbekistan’s economy amounted to 7.4 million US dollars and Kyrgyzstan’s direct investment in Uzbekistan’s economy reportedly amounted 61,000 US dollars.
Kyrgyzstan
According to official data from Kyrgyzstan’s authorities, a total FDI flow in the country’s economy last year amounted to more than 1 billion US dollars (approximate the same amount was invested in Kyrgyzstan’s economy in 2021).
The top three investors accounting for more than 70 percent of investment flow in Kyrgyzstan’s economy are:
Turkiye – 321 million US dollars;
China – 275 million US dollars;
Russia – 133 million US dollars.
Kazakhstan reportedly tops the Central Asian nations in terms of investing in Kyrgyzstan economy – 52.4 million US dollars.
True, this amount is very different from the above official data of Kazakhstan – 197 million US dollars.
Tajikistan
According to data from the Agency for Statistics under the President of Tajikistan, Tajikistan last year attracted about 430 million US dollars from other countries in foreign direct investment.
This is the lowest rate among the countries of the region: 65 times lower compared to Kazakhstan; 18 times lower compared to Uzbekistan; and 2.3 times lower compared to Kyrgyzstan.
Experts attribute the strong lag of Tajikistan to the unfavorable geographical location, unfavorable investment climate and business environment, as well as to bureaucracy and corruption, weak rule of law, high tax burden, lack of stock market and so forth.
Turkmenistan
Official open source do not have any data on the inflow and outflow of direct foreign investments to/from Turkmenistan.
According to data provided by Turkmen media outlets in 2021, Turkmenistan’s major investors were Japan, South Korea, Saudi Arabia, Germany, and the United States. Most of the foreign capital is reportedly channeled to the country’s oil-and-gas industry.
