| Project Detail |
The regional knowledge and support technical assistance (TA) will enable the economies of Caucasus and Central Asia (CCA) to assess the demand for new forms and directions of regional cooperation in light of the implications of the Russian invasion of Ukraine and conflicts in the region by (i) systematically collecting additional information on the related socioeconomic developments, (ii) analyzing regional trade flows, and (iii) reviewing alternative transit options. All three TA outputs will include policy recommendations for the Asian Development Bank (ADB) and the CCA governments, as well as the production of policy briefs and other publications or reports that will be accessible online.
Project Name Reinvigorating Regional Cooperation in South Caucasus and Central Asia Amid External Shocks
Project Number 57061-001
Country / Economy Regional
Armenia
Azerbaijan
Georgia
Kazakhstan
Kyrgyz Republic
Tajikistan
Turkmenistan
Uzbekistan
Project Status Active
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 10121-REG: Reinvigorating Regional Cooperation in South Caucasus and Central Asia amidst external shocks
Technical Assistance Special Fund US$ 350,000.00
The regional knowledge and support technical assistance (TA) will enable the economies of Caucasus and Central Asia (CCA) to assess the demand for new forms and directions of regional cooperation in light of the implications of the Russian invasion of Ukraine and conflicts in the region by (i) systematically collecting additional information on the related socioeconomic developments, (ii) analyzing regional trade flows, and (iii) reviewing alternative transit options. All three TA outputs will include policy recommendations for the Asian Development Bank (ADB) and the CCA governments, as well as the production of policy briefs and other publications or reports that will be accessible online.
Project Rationale and Linkage to Country/Regional Strategy
Spillovers of recent shocks on the region. The Russian invasion of Ukraine and regional conflicts in 2022, produced multiple political, economic, and social spillovers on the CCA economies. The implications for CCA include high inflation, supply chain disruptions, reorientation of trade flows, the emergence or increase of re-exports to the Russian Federation, changing patterns in labor, and other international migration. Some of these spillovers had positive effects on the CCA economies, e.g., large-scale re-exports of goods to the Russian Federation; inflow of Russian migrants and associated growth in exports of travel, hotel, rental, financial, and other services to this economy; and relocation of businesses from the Russian Federation to many economies in the CCA. Contrary to initial expectations, most countries of the region appeared to become net beneficiaries of these changes, demonstrating good economic growth rates in 2022. However, many negative effects (e.g., supply chain disruptions, higher trade costs, high inflation, and damage to the investment climate from a general level of uncertainty and increased risk perceptions) are likely to be lasting, while some positive effects (inflow of skilled Russian migrants and their capital, and part of re-exports) may be fading away. The CCA economies may face many social and economic development challenges in the long term.
The response to these challenges would imply finding new trade partners and investment sources, reducing trade costs, restructuring value chains, and accommodating many other actions by the governments, societies, and companies in the region. Most CCA countries are members of the CAREC program, which serves as a flexible and effective platform for regional cooperation in the region. Strengthening and reinvigorating regional cooperation under CAREC will be crucial in the new context (para. 3). Based on this, CAREC and other regional stakeholders may then review and adjust the existing and added channels of cooperation to meet the new challenges.
Scarce and fragmented data on the shock impacts. The new context requires the systematic collection of additional information on any developments related to the Russian invasion of Ukraine that are not sufficiently reflected in official statistics and existing studies and which receive only fragmented coverage in the media. The impacts of the Russian invasion of Ukraine include, but are not limited to, changes in (i) the populations welfare attributable to this crisis (consumer prices; wages and employment in the domestic labor market; gender, regional, and other inequalities; labor and other migration patterns; and remittances); (ii) production, trade, and transit systems (supply chain disruptions; new supply chain development; creation, diversion, and destruction of exports and imports of goods and services, including tourism and financial ones; changes in the product and partner compositions of trade; emergence or increase of re-exports to the Russian Federation; exploration and development of new transit routes; relocation of businesses to and from the region); (iii) the regime of and compliance with sanctions, and anti-money laundering review and reporting duties; (iv) financial systems (currency exchange arrangements; demand for banking services; acceptance and/or issuance of different types of banking cards; currency composition of trade and other international financial flows); (v) governments economic and social policy responses to the crisis (trade, fiscal, monetary, labor market, and other policies); and (vi) incentives for or barriers and adjustments to the ongoing and planned regional cooperation and integration initiatives. Many of these changes are still ongoing, which makes it necessary to track them continually starting as soon as possible to ensure that the policy advice based on available evidence remains relevant.
The TA is aligned with ADBs Strategy 2030 and its seven operational priorities (OP1OP7), specifically OP6 on strengthening governance and institutional capacity, and OP7 on fostering regional cooperation and integration. It is also aligned with the Central Asia Regional Economic Cooperation (CAREC) 2030 strategy and its operational clusters 2 (trade, tourism, and economic corridor) and 3 (infrastructure and economic connectivity). The TA will bring regional benefits to CCA countries through the joint management of new challenges inflicted by the Russian invasion of Ukraine and conflicts in the region, and by invigorating regional cooperation to maintain sustainable trade and growth in CCA. |
