Thursday, May 05, 2016

Are we heading on the path of Inclusive Development?

After experiencing dramatic structural changes and transition recessions following independence, Central Asian economies have been able to recover and experience high rates of growth and declining poverty rates over the last 15 years. The challenge for Central Asian countries over the next 30–40 years is to sustain a rapid growth path, pursue their transformation and integration into the global economy, and ensure a gradual convergence towards the more developed countries.

It is indeed well established that investments in human capital—education and health—not only have a direct impact on productivity and well-being but also facilitate the transmission of knowledge and technology, which in turn enhance a society’s innovative capacity.

The vision for Central Asian countries in human resources development is that by 2050, a strong human capital base will be in place, with knowledge and skills close to those of developed countries and the flexibility to adjust to the needs of rapidly changing economies. By then, it is also expected that young people in the region will have mastered not only their own national language but also some foreign languages, and acquired skills that can facilitate cooperation within the region and economic links with neighboring countries. A strong human capital base also means a healthier population whose well-being is thus enhanced. By 2050, countries will have improved the quality of health care through more efficient management, use of highly qualified personnel and modern technology, and increased attention to prevention and primary health care. Disparities in health outcomes within the region will have been reduced, and levels will be at or above those of upper-middle-income countries.

To achieve these goals, Central Asian countries will naturally have to take into account differences in their economic endowments and their initial levels of development, and they will also have to take advantage of past investments and build on the links that existed between them and the rest of the erstwhile Soviet Union.

Under the middle-income trap scenario, not all five Central Asian countries, which are, at the moment, at different levels of development and at different stages in implementation of reforms, will be on a converging path. While the fast reformers will have, by 2050, pursued their transformation and converged toward upper-middle-income countries, those lagging behind will still have kept elements of a command economy and failed to accelerate the pace of reforms. Under such a scenario, disparities within the region in health and education outcomes will have increased and migration flows will intensify toward countries which can offer better services and income opportunities.

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