The Tajikistan: Promoting Export Diversification and Growth study released by the Asian Development Bank (ADB) in August 2016 employs an inclusive growth diagnostic framework for analyzing the various factors that have hampered private investment and productive employment in Tajikistan.
Five major challenges have been identified: 1) improving access to finance and reducing its cost; 2) providing stable and uninterrupted power supply; 3) improving the quality of transport infrastructure and logistics; 4) strengthening governance and the rule of law; and 5) addressing market imperfections that constrain new investment and economic activities.
High-quality health and education services as well as strong social protection will also be essential to the country’s more inclusive growth, according to the study.
The study shows that Tajikistan will need to explore more productive business and investment opportunities beyond its existing drivers of growth to be able to sustain its high economic growth in the long term. To significantly augment revenues from its aluminum and cotton exports, it has to diversify into other export products while improving the quality of its other current exports. For this, the country’s domestic production capabilities need to be strongly enhanced and its industrial structure upgraded from low-value, low-skilled production to a high-value, high-skilled one.
Tajikistan reportedly needs to deepen its industrial base and improve performance in agriculture and services to achieve its goal. The major challenges it faces in its quest to become a modern and vibrant industrial economy are generating more private investment, diversifying and upgrading exports, and creating nonfarm employment opportunities. The country can meet these challenges by addressing underlying reasons for low private investment and improving the business climate.
The study notes that a vigorous industrial sector that generates sufficient decent employment opportunities is the key to Tajikistan’s future growth. The country particularly needs to achieve sufficient export dynamism to induce productive investment, create adequate and decent jobs, and manage healthy foreign exchange reserves to help maintain macroeconomic stability and absorb external shocks.
In addition, while agriculture is still the main employment provider, there is great potential for improving its output and productivity. Strong productivity growth in agriculture would help release its excess labor to the growing industry and service sectors while keeping wage pressure under control for the emerging new sectors.
With strategic and targeted policy interventions to support innovative business models on a competitive basis, the Tajikistan government can meet the real challenge of promoting productive industry and service sectors, the study says, noting that this will in turn help absorb workers released from a more productive agriculture sector and those generated by population growth.
Read more: http://news.tj/en/news/tajikistan/economic/20170119/235718
