Building better economies at the crossroads of Asia and Europe

What is it about?

Countries in the Caucasus and Central Asia (CCA) regained their independence in the early 1990s. Since then, they have undergone major economic changes. But even after three decades, the CCA economies are still catching up with the modern economy. Overcoming challenges that have an economic impact can speed up this process. These include poverty, inequality, brain drain, and climate change. Also, many CCA economies are still strongly influenced by the government. Despite growing steadily, the private sector is not fully developed yet. This gap needs to be addressed. Accordingly, the authors of this work suggest better ways to use the resources in the CCA countries. This would help build successful and sustainable economies. Importantly, the authors also define roles for the private sector and the government.

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Photo by Gleb Lucky on Unsplash

Photo by Gleb Lucky on Unsplash

Why is it important?

The CCA countries could markedly benefit from being on par with the modern economy. According to the authors, they can achieve this in four ways. Firstly, the government’s influence over the private sector should be reduced. Instead, the government should support the private sector. Secondly, government reforms should focus on improving social safety nets. This includes education, healthcare, and other public facilities. Thirdly, the CCA countries must tackle climate change. They should carry out plans to limit its impact on their economies. Fourthly and finally, they should invest in their people. This would reduce poverty and inequality. KEY TAKEAWAY: The CCA countries can achieve better economic growth by ensuring effective governance, and less regulation. Their progress could be strengthened by supporting the less fortunate. By focusing on these objectives, the CCA countries could soon close the gap with their economically advanced neighbors. Disclaimer - This summary was prepared by Kudos Innovations Ltd and does not necessarily represent the views of International Monetary Fund (IMF).