The OECD has worked closely with the countries of Central Asia and the South Caucasus region, as well as the Republic of Moldova and Ukraine, for over 30 years. The objective of this work is to promote policy and institutional reforms necessary to achieve resilient, inclusive and sustainable growth. OECD engagement in the region also supports the development and implementation of policies to enhance competitiveness, improve the business environment and facilitate the shift to greener, more inclusive, and innovative growth models.
Eurasia
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Eurasia and the OECD
Key messages
Across the region, investment and entrepreneurship are constrained by the dominance of state-owned enterprises (SOEs), uneven competition, burdensome regulations, and an often weak rule of law. The OECD works with governments to address these challenges, providing analysis, policy advice and implementation support through seminars and analytical regional and country-specific reports. Creating adequate framework conditions for private sector development will require a redefined role for the state, competition and regulatory reforms, as well as reforms to the SOE sector.
While global supply chains proved to be resilient during the COVID-19 crisis, they are facing renewed pressure due to Russia’s war of aggression against Ukraine. Even before these dual shocks, limited trade and transport connectivity issues held back the Eurasia region’s intra-regional trade and integration into global markets.
OECD work supports the Eurasia region in taking steps to improve connectivity, deepen international integration, stimulate productivity growth, and to create new opportunities for local and foreign entrepreneurs and investors. OECD research conducted in partnership with the International Transport Forum points to the need to address physical infrastructure bottlenecks and “soft infrastructure” challenges via trade facilitation reforms and greater trade openness. The OECD also works with countries in the region to improve institutional frameworks for infrastructure provision and operation, and to ensure that new infrastructure investment prioritises long-term sustainability.
Closing digital divides across countries, regions and social groups is critical and will require investments in both hard infrastructures and better policies, particularly with respect to skills and market openness. Capacity to manage risks of, and disruptions caused by, cybersecurity threats and disinformation must also be strengthened, in both the public and private sectors. Recent OECD studies of digitalisation policies in Kazakhstan, Moldova and Uzbekistan will be followed by similar studies in Armenia and Ukraine, to be completed in 2024, as well as the provision of implementation support and capacity building for stakeholders in the region.
While the region’s carbon footprint has shrunk significantly since independence in the early 1990s, the environmental cost of growth in the Eastern Partner region and Central Asia remains high. The OECD works with the region through diverse channels to promote the integration of environmental considerations into broader processes of economic, social and political reform, in particular via the Sustainable Infrastructure Programme in Asia (SIPA) and the inclusion of Eurasia Partner countries in broader OECD initiatives like the Inclusive Framework on Carbon Mitigation Approache (IFCMA). Eurasia countries have much to do if they are to migrate to growth paths that are more inclusive and compatible with environmental and climate goals. Key priorities include significant reforms to taxes and subsidies – and, in particular, the phasing out of fossil-fuel subsidies, better institutions and processes for selecting and developing new infrastructure projects, and credible, well-designed strategies for decarbonising key sectors.
Context
Trend growth rates across the region have been falling since the 2000s
The Eurasia region has grappled with multifaceted economic challenges in recent years, including stress on public finances and higher inflation, magnified by a complex geopolitical landscape.
Even before the COVID-19 pandemic, the region’s growth rates, while above those of the OECD area, were too low to support convergence with OECD productivity and income levels.
If Eurasia countries are to recover from this series of external and regional shocks and re-establish a growth trajectory that enables faster convergence with OECD countries, it is vital that policies to support recovery are aligned with long-term structural needs.
Recent political shifts have sharpened Eurasia’s connectivity challenges but opened new opportunities
The Trans-Caspian International Transport Route – the so-called “Middle Corridor” – which connects China to Europe via multimodal transport routes in Central Asia has been at the centre of renewed discussion.
Harnessing the corridor’s full potential will require it to become a motor of trade integration, stimulating trade across the region rather than developing solely as a transit route.
This will require substantial further trade facilitation reforms, as well as deeper co-operation across the Middle Corridor countries on standards, interoperability of systems and harmonisation of regulatory and documentary requirements.
Progress in these areas would foster trade growth and better integration into global value chains.
Enhancing business environment reforms and the digital transformation in Eurasia
Policy reforms for strengthening the business-environment can create better conditions for both local entrepreneurs and foreign investors, while helping countries in the Eurasia region harness the potential benefits of the digital transformation.
Addressing digital divides will require important investment in new infrastructure, as well as skills, and may also require addressing barriers to competition in the information and communications sectors in some countries.
Related publications
Events
Programmes of work
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The Anti-Corruption Network for Eastern Europe and Central Asia is a regional outreach programme of the OECD Working Group on Bribery, established in 1998. It supports member countries in their efforts to prevent and combat corruption, through country reviews, practitioners’ networks and country-specific technical assistance.Learn more
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Platform to support a transition towards net-zero and green economy in the region of Eastern Europe, the Caucasus and Central Asia (EECCA).Learn more
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Enhancing regional dialogue, competitiveness and improving the business climate.Learn more
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SIGMA is a joint initiative of the OECD and the European Union. Its key objective is to strengthen the foundations for improved public governance, and hence support socio-economic development through building the capacities of the public sector.Learn more