When the Soviet Union began to fall apart, and new, independent nations were forming in its place, world economists wondered what would become of these new governments. How would they compete in the global economy? Would they be able to develop into prosperous nations?
Whenthe Soviet Union began to fall apart, and new, independent nations wereforming in its place, world economists wondered what would become of these newgovernments. How would they compete in the global economy? Would they be ableto develop into prosperous nations?
Inthe immediate aftermath of the breakup of the Soviet Union, these new nations in Central Asia were disorganised andnot ready for the complexities of a world economy that was racing towards the21st century. There were years of political corruption and seeminglydevastating civil wars. However, hope remained that countries such as Georgia, Uzbekistan and Kazakhstan would recover becausethey had the most important thing necessary to invigorate an economy – naturalresources.
Thosewho held on to the belief that these new nations had what it took to be major playersin the world economy have recently been proven correct. A new report by theInternational Finance Corporation and the World Bank found that since 2005, theCentral Asian region, along with Eastern Europe, leads the world inenhancing the business climate for local firms.
Theregion is now the second most business friendly in the world, ranked higherthan East Asia and the Pacific. The question that needs to be asked is howdid this happen? How did these countries go from struggling to a state of surgingso fast? The answer to that question is through governmental reforms.
CentralAsian countries created an environment of business ease by making it easier toregister property, pay taxes, enforce contracts and resolve insolvency. Since2005, European and Central Asian economies have implemented nearly 400 institutionaland regulatory reforms. That is more than any other region in the world.
Inan article on finchannel.com, director of Global Indicators and Analysis of theWorld Bank Group Augusto Lopez-Claros said, Manyof these reforms have been implemented in the context of EU accessionnegotiations. Economic integration and the desire to catch up with moreprosperous partners have been a powerful incentives to promote ambitious reformagendas. Based on this information, it seems that the future will onlyget brighter for investors looking to invest their funds in Central Asia.
One country that has made exceptional progress in terms of businessleaps since 2005 is Georgia. Rankedninth in the 2013 report, it has made 35 institutional and regulatory reformssince 2005 and improved in six areas in 2012 alone – more than another othereconomy in the world. Some of these reforms strengthened its securedtransactions system, made getting electricity easier by simplifying the processof connecting new customers, and reduced the time to export and import bycreating customs clearance zones.
These types of reforms are happening all overthe region, and because of it, many see Central Asia as a future hub of the world economy. The abundant natural recoursesare getting tapped in each area because the governments understand thepotential its nations have as economic powers. It is the investors obligationto take advantage of this enormous opportunity.