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Socio-economic situation of Central Asian countries (1990s - early 2000)

16 March 2018

The article is about the socio-economic situation of the countries of Central Asia, and the formation of the main priorities of the Union of Central Asian states, trends in regional cooperation.

By the end of the 20th century Central Asian countries have all the necessary prerequisites for regional economic integration, and it opens up opportunities for the solution of the complex economic, social and environmental problems in the region. Especially geo-political position of the Central Asian region was of great strategic importance. The protection of national economies within the same geographical space is becoming a trend of global development. An organizational structure for deepening cooperation between the countries of Central Asia was created. Countries of the region have been developing unevenly, but the way to real integration is still open. In recent years, development policy has become a priority in many countries of Central Asia.

By the end of the 20th century it became obvious that the potential of the industrial age is pretty much exhausted, technological progress is not giving the expected high growth of labor productivity and economic dynamics. Most countries have experienced an acute shortage of resources to address pressing economic and social problems. World monetary and financial system has created the basis of prolonged and profound contemporary global technological crisis. There was a major upcoming problem — turn technology policy for the use of the best intellectual achievements and resources not to create weapons of destruction and self-destruction, and to overcome the technological crisis that swept the world in the early 21st century. A lot of contradictions, major global problems that can be solved on the basis of the partnership countries and civilizations have accumulated on the planet.

It is a struggle against international terrorism, the threat of global warming, global epidemic, overcoming the backwardness of many countries, energy security. The modern world of the early 21st century is a world of local civilizations, showing the spatial diversity of the historical heritage and modern human existence. And only the preservation and development of this diversity on a partnership approach can guarantee the future prosperity of these civilizations [1, p. 24]. The protection of national economies within the same geographical space is becoming a trend of global development. In this context, analyzing the possible solutions to the most pressing problems, the President of the Republic of Kazakhstan was convinced» …only together can ensure the sustainable economic development of States. What important trends of the modern world is the transformation of a unipolar world system in a multi-polar»[1, p. 253].
The Central Asian region due to its geopolitical position has strategic importance. In terms of integration into the world community has been a strategy of interstate cooperation of Central Asian countries, and through the Central Asian states agreed economic policy, to form a single economic space. The main priorities — issues of forming a common energy market, the interaction of transport systems and the development of transit potential, efficient use of water resources, increasing the productivity of irrigated agriculture and the introduction of modern technology in agriculture.

In the 1990s, countries of Central Asia, including Kazakhstan, Kyrgyzstan and Uzbekistan have gone through a period of profound structural changes that affected the development of their economic potential. Economic development of the countries of Central Asia in the first decade of independence consists of two periods: a sharp decline in the first half of the 90’s and timid, modest recovery in the second half. The economic situation in Central Asia was completely dependent on world prices for raw materials and metals, as well as the inflow of foreign investment. In all the states in the early 1990’s, there was a decline of the economy, and only since 1996, there is a trend of stabilization and economic growth.
The analysis of the structure of the economy led to the conclusion that more than 20% of GDP in these countries had on the industry. In particular, Uzbekistan and Kazakhstan, the priority sectors of the economy are mining, ferrous and nonferrous metallurgy, nuclear industry, Kyrgyzstan — hydropower. Kazakhstan has 3 commercial reserves of ferrous metals, non-ferrous 29, 2 precious, 84 kinds of industrial minerals and energy. It is the world’s largest producer of beryllium, niobium, gallium, titanium sponge and rhenium. Uranium Production Republic is ranked 7th, silver — 9th place, zinc and alumina — 10th place in the world [2, 45 l.].

Natural Resources of Uzbekistan is also quite diverse and create favorable conditions for the development of industries mineral complex of the economy. Uzbekistan is among the world leaders in the provision of stocks of silver, tungsten, and phosphate, potash, rare earth metals and other valuable minerals, in particular, the proven reserves of gold, uranium, molybdenum and copper in proven reserves of natural gas. For the extraction of cadmium Uzbekistan is the third largest in the world, uranium — the sixth, gold and natural gas — the eighth. In addition, the country is among the top 15 countries for the extraction of molybdenum, feldspar and some other industrial raw materials [2, 46 l.].

Kyrgyzstan was the first country of the former Soviet states, participated in a financial restructuring. Kyrgyzstan has unique hydropower resources. Their rational use will solve the problem of security of the neighboring regions of Kazakhstan and Uzbekistan cheap electricity and water supply in return Ekibastuz coal and Uzbek gas, creating a normal process conditions for Central Asian energy systems in parallel and increase electricity exports to foreign markets. World community to remain a special relationship to the Central Asian region located in the center of the Eurasian continent and represents a great opportunity in terms of transit capacity, saturation energy, as well as capacity and market prospects. It is these years all States in the region have chosen different models of development. The Republic of Kazakhstan has chosen «Kazakhstan’s way» of development. To the Republic of Kazakhstan faced the need to find resources that can support the transition from centrally planned to market economies. It was necessary to define and create a set of socio-economic, political and financial factors affecting the attractiveness of the investment market and the amount of investment risk, i.e. favorable investment climate [3, p. 270].
One of the most important economic ideas of the President aimed at economic breakthrough of Kazakhstan is the Strategy «Kazakhstan-2030». In this document, he defined and scientifically substantiated the key directions of the state policy in the field of sequencing of reforms in all spheres of economic, social and public life, strengthening of statehood of Kazakhstan and the general political unity of the people. Strategy has become a large-scale project for further development of the country in the long run and withstood the challenge of time [4, p. 7]. The global economic crisis has revealed the urgent need for diversification of the national economy. At the beginning of 2000, Kazakhstan has acquired a functioning market economy. In late 2004, the GDP per capita reached two thousand seven hundred dollars, an increase of 9.3% compared with 2003, which brought the country to a leading position in the world in terms of economic growth. Kazakhstan has created the strongest banking sector. To avoid being part of the world «the arc of instability» [5, p.7], in the countries of Central Asia had all the conditions for sustainable development, improving the competitiveness of national economies, the formation of a common market in the future for goods and services and successful integration into the world community. Required condition to implement above objectives is to improve the integration and interaction of Central Asian states, concerted economic policy, the adoption of joint action in the fight against terrorism, extremism and drug trafficking. Therefore, it was necessary to create a mechanism that effectively resolved all issues of integration cooperation in political and economic terms. Development of integration processes in the framework of the Central Asian region has allowed defining the following positive trends in regional cooperation [2, p. 47–48].

The legal framework of the integration of development cooperation among states in the Central Asian region has been formed. Agreements on eternal friendship, cooperation and mutual assistance between Kazakhstan, Kyrgyzstan and Uzbekistan were signed. In April 30, 1994 between Kazakhstan, Kyrgyzstan and Uzbekistan signed an Agreement on the establishment of the Single Economic Space. It established the legal foundation for economic cooperation of Central Asian states and involves ensuring the free movement of goods, services, capital, labor and the introduction of a coordinated settlement, budget, tax, tariff, customs and monetary policy. For the purposes of implementing this Agreement at the international level have been developed program of action for the formation of the Common Economic Space and the program of economic integration of the Central Asian Economic Union (CAEU) to 2000, which identified measures to deepen the integration and interaction of participants in all sectors of the economy. In order to promote the integration processes in the real economy at the intergovernmental level, signed a number of agreements and contracts, important of which are:

  • Agreement on the use of energy and water resources, construction and operation of the Central Asian region;
  • Agreement between the Government of the Republic of Kazakhstan, the Kyrgyz Republic and the Republic of Uzbekistan on the use of water and energy resources of the Syr Darya River basin;
  • Agreement on the parallel operation of power systems of the Republic of Kazakhstan, Kyrgyz Republic, Tajikistan and Uzbekistan. In the social sphere has approved a program of cooperation in the field of migration, to establish legal, economic and organizational conditions for the free movement of labor.
An organizational structure for deepening cooperation between the countries of Central Asia was created. In order to implement the agreement on the establishment of a single economic space created by the Interstate Council, which is composed of the Heads of State and Government of the prime ministers, foreign ministers, defense, as well as their working body — the Executive Committee, which carried out the organizational, coordinating and advisory, forecasting and analysis, information functions, preparation and monitoring of the implementation of the decisions of the Interstate Council and its structures, interstate and intergovernmental treaties and agreements. With the transformation of February 28, 2002 in the CAPS organization CAC (Central Asian Cooperation), the Executive Committee was abolished and replaced by a Committee of National Coordinators — one from each country. Coordinators report directly to the heads of their countries and cooperate with the work of the Foreign Ministry of their republics.
Joint projects in energy, transport, communication, health and science have been implemented. One of the key factors for sustainable economic development of the Central Asian states is to conduct a coherent energy policy. Important in the field of energy is the transition of electric power systems of Central Asian countries to the parallel mode, which will improve the overall level of reliability and efficiency, meeting the demand for electricity in each grid, keeping the standard frequency bands harmonized, efficient use of transit potential of the Central Asian states. Covering the needs of countries of Central Asia and other CIS countries in the gas resources at the expense of operating the gas pipeline Central Asia — Center (CAC) and Bukhara-Ural gas pipeline, Bukhara-Tashkent-Bishkek-Almaty. The positive results of cooperation are the sharing of interstate highways and rail transport, ensuring the transit of goods to enter the markets of third countries. Active work is being done by ministries of health of the CAS to integrate issues of production and the provision of medical supplies and medications. Developed and operate in three states Uniform rules for quality control, certification and standardization of medicines, medical equipment and medical products produced in countries CACs. Expand communication states of Central Asia with international organizations. Depth analysis of the political and economic processes taking place in the Central Asian region, facilitate the collaboration of the CAC with international organizations. United Nations Development Program (UNDP), the European expert service of the European Union (EES EU), the German Foundation for International Development (USAID) took a part in solving the problems of Central Asian integration. Actual problems of integration and cooperation of the CAC is dedicated UN Special Program for the Economies of Central Asia (SPECA). However along with some positive trends in regional cooperation of Central Asian countries in general, there was a significant slowdown in the integration processes in the Community. The following problems remained unsolved [2, 53]:

— Absence of a mechanism for implementing the decisions;

— Different levels of market reforms in the economy in the states of the Central African Republic;

— Reduce the volume of mutual trade of the Central Asian region. Differences in the pace and extent of economic liberalization, the low level of economic cooperation between the CACs have become a major factor in reducing the volume of intra-regional trade. For 1994–2003 the share of trade between the countries of the Central African Republic in a total volume of import-export operations, and to trade with the CIS countries, respectively, decreased from 15.6% to 7.2% and from 25.6% to 18.1%;

— Low level of investment activity of the CAC. There were no significant intra-regional development and investment cooperation, including in the business sector.

However, the priority decisions in the region require a more serious problem of our time: the struggle against terrorism and extremism, increased drug trafficking. Sustained and stable development of the countries of Central Asia depended on their implementation. Therefore, in the short term activities of CAC should be aimed at strengthening regional security and the expansion of political cooperation. Questions of general economic interaction and the formation of the Common Economic Space should be considered through the creation of a real existing free trade zones, enterprise development and investment cooperation, conducting CAR states coordinated customs, tax and tariff policy, harmonization of monetary and exchange relations, active measures to harmonize national legislations. The main mechanism for the implementation of these directions is to create a Union of Central Asian States. However, to create a Union of Central Asian States there is a need to include measures for the implementation of specific areas of cooperation in the sphere of economic integration:

-Formation of the agreed principles of the customs, tariff, trade policy;

-Create Common financial market;

-Formation Common Market for goods and services;

-Create Common energy market;

-The rational use of water and energy resources;

-Create Integrated Transport System;

-Formation of Common Agricultural Market;

-Create Free Economic Zones.

At the beginning of the 2000s, the development of countries and sectors of the world economy influenced by processes of globalization, which involved it to the orbit of its influence Central Asian countries. However, the benefits of globalization are realized in the integration and regional levels. The analysis of the development of cooperation between the countries of Central Asia led to the conclusion that the integration processes in the region have not reached the desired pace. Many questions remain to be solved in the interaction of the real sector of economy, social and cultural spheres. Therefore, the implementation of the idea of a Union of Central Asian States in the face of increasing threats to security and stability in the region is particularly significant.

February 18, 2005, in his annual address to the people of Kazakhstan the President N. Nazarbayev suggested to create a Union of Central Asian States, saying that «further integration — is the path to stability and progress in the region, economic, military and political independence… the only way to ensure security and will deal effectively with terrorism and extremism. Such a union, finally, responds to the interests of ordinary people living in our region». Initiative N. Nazarbayev had an objective basis, including the cultural identity of peoples belonging to the same language group, complementary economies, developed transport infrastructure and a common border. These republics are the participants in the CIS. The Central Asian countries have all the necessary prerequisites for regional economic integration, and it opens up opportunities for the solution of the complex economic, social and environmental problems in the region. Region in 2000–2009 strengthen the integration of the global economy, carried out economic and trade ties with 192 countries of the world. Over 60% of the total foreign trade of the countries of Central Asia accounted for the EU (30%), Russia (18%) and China (13%). The growth rate of foreign trade turnover with China is ahead of both the EU and Russia. The most popular exports from the region are oil, gas, coal, metals and other resources of the mining industry, as well as wheat, cotton, leather and vegetables [6, p. 108].

Uzbekistan persistently seeks to diversify the economy. The country ranks 6th in the world in production of uranium annually produce about 90 tons of gold. In 2008, the country ranked 3rd in the world in the export and the 6th largest producer of cotton.

Kyrgyzstan, despite the economic situation stabilized, not fully restored to its potential. The main export-oriented industries are mining and energy. One of the world’s largest gold deposits «Kumtor», total reserves are estimated at 716 tons, and production provides a significant portion of foreign exchange earnings, 40% of industrial production and about half of exports. 1 place in the world republic takes on stocks and production of mercury has large reserves of energy resources.

Turkmenistan has significant reserves of natural gas. Oil and gas industry provides more than 40% of GDP. The country produces about 15 billion kW. h. electricity, textile industry develops.
In Afghanistan, the growing industries — telecommunications and construction, produced grains, fruits, vegetables, cotton. Sheep and goats reached of 20 million in 2009. [6, p. 126].

Kazakhstan intends to provide assistance to the countries of Central Asia, particularly Kyrgyzstan and Tajikistan, and pay particular attention to the economic recovery of Afghanistan. At the same time, the region faces a number of difficulties. The most painful are growing drug trafficking, shadow economy and increasing level of poverty. The largest producer of the drug opium in the world is currently Afghanistan (93%) [6, p. 132]. Comparative analysis indicated that the population of Afghanistan is far behind in the developed and moderately developed countries in terms of living, per capita income and GDP production.

Despite the crisis, there was an increase of foreign trade in the region. Thus, the foreign trade turnover of Kazakhstan and Central Asian countries in 2008 amounted to more than $ 2 billion, Euros in 2007 — 1.5 billion, in 2006 — 1 billion. [6, p. 160]. One from the ways out of the crisis is to combine the capacity of States to ensure the sustainable development of the region’s economy by broadening and deepening mutually beneficial partnership. The integration relations at the enterprise level intensified during the economic crisis. In 2000, Kazakhstan had 144 joint ventures, including 53 of the Kazakh-Kyrgyz, 91 — Kazakh-Uzbek Company. And in 2008, with the participation of the capital of Central Asian countries of Kazakhstan functioned 570 companies [2, p. 135]. In the period from 2000 to 2007, Kazakhstan’s economy grew at an average rate of 10.2% [7, p. 73]. According to the American expert William Courtney, «Kazakhstan — the most prosperous country in Central Asia. Interethnic tolerance as a whole is stable. Kazakh rulers and diplomats have the skills of regional leadership… Kazakhstan has good relations with Russia, China, the West and all the Central Asian neighbors. These relationships help protect Kazakhstan from undue influence from any direction. The land of Abay will be one of the most important middle powers in the world. Having started the democratic reforms, Kazakhstan will accelerate your progress and help lead Central Asia towards a safer and just future»[8].

Countries in the region are developing unevenly, but still open the way to real integration. In recent years, development policy has become a priority in many countries of Central Asia. To improve competitiveness, raise the level of human well-being and to achieve a significant improvement in the future of the region, the economic policies of Central Asian states should be based on a holistic, generalized concept. Momentum of economic development: the acquisition of technology, knowledge about alternative energy, transfer of domestic consumption to alternative sources [9]. One of the main directions of Kazakhstan is to strengthen regional and global stability. The scale of the macro-economy and the GDP per capita (12 thousand dollars) Republic is a leader in the Central African Republic. From 1994 to 2011, per capita GDP of the country grew by more than 12 times, which is well above the growth rate of this indicator for the first twenty years of independent development of such Asian countries as South Korea, Singapore and Malaysia [10].

Advantages and features of Kazakhstan are in promotion of the concept of Eurasian integration. Within this framework, Kazakhstan is regional cooperation in the format of the Customs Union, EurAsEC, CIS, SCO and other international organizations. As a part of these organizations, Kazakhstan has more opportunities to deepen the Asian vector of integration and solutions to common economic problems diversify the economic structure, export, investment and technology flows. Kazakhstan faces the course of development of agriculture in the country, and alternative energy sources. The main task is to offer traditional national heritage to the global market.


1.Nursultan Nazarbayev, the strategy of radical renewal of the global community and partnership of civilization. Astana LLP ARCO, 2009, p. 264.

2. Academy of Science of Kazakhstan, 136, 299.

3 Kazakhstan today: Under the general monograph. Ed. BK Sultanova.-Almaty: KISR under the President of Kazakhstan, 2009, 416 p.

4. The President of Kazakhstan N.Nazarbayev and modern Kazakhstan, volume 1. N. Nazarbayev and socio-economic development of Kazakhstan: a collection of documents and materials in three volumes, B. Sultanov, Almaty, KISR under the President of Kazakhstan, 2010, p. 256.

5. T. Ismagambetov, Structuring new geopolitical space of Central Asia: Regional features and prospects//Central Asia and the Caucasus. Journal of Social and Political Studies. Number 2 (20), 2002, p. 7–25.

6. Central Asia in terms of geopolitical transformation and the global economic crisis: Proceedings of the VII Annual Conference of Almaty. (Almaty, June 9, 2009.) / B. Sultanov. Almaty: KISR under the President of Kazakhstan, 2009, p. 340.

7. Socio-economic development of the Republic of Kazakhstan. January-December 2008, Agency of the Republic of Kazakhstan on Statistics, 2009, p.73.

8. W. Courtney, speech at the conference «Kazakhstan — United States: 20 years of partnership in the name of security and development», which was held in Astana on May 18 2012, http://rus.azattyq.org/content/kazakhstan_and_central_asian_security_william_courtney/24590203.html (date accessed: 12.07.2013).

9. http://bnews.kz/ru/videonews/post/147754/ (Date of access 11.07.2014)

10. D. Mukhamedzhanova, Asian vector of economic integration of Kazakhstan. http://www.kisi.kz/site.html?id=866123.11 (Date accessed: 26.06.2013).

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