Eurasian outlook
Runners cross the Bosphorus Bridge during Istanbul's Eurasia Marathon Fun Run in 2013. (Credit: EvrenKalinbacak/Bigstockphoto.com)

The Astana Economic Forum 2019 is going to be held on 16-17 May 2019 and will pay specific attention to regional macroeconomic development and the integration of Eurasian economies.

If there is one region most emblematic of the rising geo-economic and geopolitical powers of today it is Eurasia. This region has been a focal point for investment and infrastructure development for the past two decades. Particular hotspots include Georgia, Armenia, Turkmenistan, and Uzbekistan. The European Bank for Reconstruction and Development (EBRD) is one of the largest investors in Central Asia, with total investments of US$14 billion in 2018.

Eurasia has been a focal point for investment and infrastructure development for the past two decades.

Eurasia has a vast land mass and huge economic potential. Each country in the region has comparative advantages enabling it to compete at the global level. Georgia, for example, is a gateway to the neighbouring landlocked countries so can act as a terminal for goods and a transportation hub by being a bridge between Europe and Asia. Most of the countries in the region have some kind of free trade agreement with both Europe and Asia – especially with China – therefore Eurasian countries can easily facilitate trade between the two continents.

Eurasian growth

A closer look into the growth of the countries in the region is provided in the figure below, which depicts changes in GDP (in constant prices) since the collapse of the Soviet Union, with 1991 as the base year for benchmark purposes (1991 = 100). Most of these countries began to recover after 1995, a few years after the breakdown of the Soviet Union.

Eurasia has huge economic potential

It seems that most of the countries in the region reached their 1991 level of GDP between 2003 and 2005 and then increasingly developed their economies. In 2017, GDP levels for each of Turkmenistan, Uzbekistan, and Turkey were more than three times as large as in 1991. GDP for each of Azerbaijan, Kazakhstan, and Armenia was more than twice its 1991 level, although these increases were less pronounced in other countries in the region like Georgia and Russia.

China and the Eurasian future

Since 1991, Chinese GDP has seen an exceptional eleven-fold increase (not depicted in the figure). Chinese growth is a pointer to the wider region’s development potential. The EBRD estimates an overall Central Asian growth rate of 4.4% for 2019, which indicates Central Asia is growing faster than any other region where the EBRD operates (2.3% for 2019).[1]

Note: AZE=Azerbaijan, ARM=Armenia, BEL=Belarus, GEO=Georgia, KAZ=Kazakhstan, KGZ=Kyrgyzstan, MDA+=Moldova, MNG=Mongolia, TJK=Tajikistan, TKM=Turkmenistan, RUS=Russia UKR=Ukraine, USA=United States, UZB=Uzbekistan, Source: Author’s calculation, World Development Indicators, World Bank (2019)

In terms of economic integration within Eurasia, the relationship between the region’s countries and their growing relations with China represent clear-cut economic self-interest rather than political interest. There is a measure of political interest from Russia as it seeks more economic allies in the region but certainly not for other countries, which already have positive economic prospects.

Eurasian geopolitics

In the current global order, multilateralism is mostly a focal point for non-Western countries, meaning that the integration of economies seems inevitable. The rise of China is an opportunity for neighbouring countries to be economically and politically linked to it. Linking smaller economies across Eurasia to the Chinese economy could lead them to have a bigger role in the new world order.

Central Asia is growing faster than any other region where the EBRD operates

From a geopolitical point of view, after the independence of countries in Eurasia (especially Central Asia and the Caucasus) from the Soviet Union, the United States tried to retain a presence in these two regions by investing in energy and other sectors, but now the US is absent. The big powers in the region – Russia, China, and Turkey – do not want the presence of the US in the area.

In particular, Central Asia is a significant strategic location as a transportation hub and is a great source of oil, gas, and minerals that can fuel growth in India and China. As part of the Belt and Road Initiative, China is now developing several major new routes to reduce its dependency on the Strait of Malacca, predominantly for oil imports. China, therefore, sees Central Asia and the Caucasus as alternatives. This indicates the geopolitical and geo-economic importance of Eurasia and Central Asia to China and Russia’s rebalancing of global order.

 

[1] Central Asia is a sub-group of the Eurasian region. It consists of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, and Mongolia according to the EBRD definition.

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The views and opinions expressed in this publication are those of the original author(s) and do not necessarily represent or reflect the views and opinions of the Dialogue of Civilizations Research Institute, its co-founders, or its staff members.
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Behrooz Gharleghi

Senior Researcher, DOC Research Institute, MY

Behrooz Gharleghi is a senior researcher at DOC Research Institute. Previously he was working as an associate professor at the Faculty of Business and Management, Asia Pacific University of Technology and Innovation, Malaysia, from 2013 to 2018 and he served as the head of the Graduate School of Business at the university for 2017. He has published several articles in the area of financial economics, monetary economics, and business management. He has led on and collaborated in various internal and external research projects, especially from the Malaysian Ministry of Higher Education. Recently he received the 'Outstanding Researcher in Economics' award from the Venus International Foundation's 'Venus International Research Awards' in India in October 2017. He holds a PhD in Economics from the National University of Malaysia.