An article by Mr. Ayumi Konishi, an employee of the Asian Development Bank (ADB), entitled Time for SMEs in CAREC to Move Beyond Borders notes that one of the most daunting challenges for the countries participating in the Central Asia Regional Economic Cooperation (CAREC) program is how to create decent, sustainable jobs.
Mr. Konishi notes that for far too long, many CAREC countries have relied on the capital-intensive extractives sector to drive their economic growth. However, the slowing down of the global economic growth and reduced commodity prices resulted in the substantial increase in unemployment, especially among the youth.
The author says the improved connectivity of the region provides opportunities for small and medium-sized enterprises (SMEs) in CAREC countries to inject new life in these economies.
SMEs are the backbone of economic activity in Asia and the Pacific, and critical to sustain inclusive economic growth and social development. More than 96% of total enterprises in the region are SMEs, which account for about 42% of total GDP and employ 62% of the workforce.
Compared to the extractives industry, which even at its peak created few sustainable jobs, SMEs have enormous potential to fill CAREC’s employment gap via labor-intensive sectors such as agriculture or tourism, Mr. Konishi noted.
In agriculture, for instance, CAREC countries have huge markets for food and beverage export within and around the region. To seize this opportunity, however, there is an urgent need to boost productivity and improve the sanitary standards of the products as well as the certification mechanisms, to guarantee the safety and quality that will also facilitate their efficient cross-border movement the author said, noting this would require upgrading the capacity of agriculture value chains supported by innovation in SMEs in agricultural and logistics businesses.
SME development is crucial for CAREC countries to diversify their economies, become more resilient to external shocks, and sustain growth. SMEs can take the lead in innovation – we all know that new business ventures always start small, the ADB expert noted.
According to him, to realize their potential as drivers of growth and job creation, SMEs in CAREC should move beyond national borders. Regional economic integration efforts within CAREC have significantly improved both connectivity and trade potentials.
