Developments The Skills Road More Than the Sum of its Parts - - PowerPoint PPT Presentation

Developments The Skills Road

More Than the Sum of its Parts

Central Asia

Presentation Outline

1. Geography, Growth and Jobs in Central Asia 2. Regional Trade, Business, and Connectivity 3. Regional Water-Energy Nexus 4. Emerging Challenges and Opportunitie Annex: The WBG in action - The Staff and Portfolio

• 1. Geography, Growth and Jobs in Central

Asia

GDP Growth and Poverty Reduction

GDP GROWTH SLOWS

from average 6.5% in 2010-13 to 4.3% in 2014 due to: Low commodity prices Weak demand and investment

MAIN GROWTH FACTORS

Oil, Services Trade and transport Industry, Construction

STABLE GDP GROWTH

• f 8-8.5% in 2010-14 thanks to:

Public investment Domestic consumption

MAIN GROWTH FACTORS

Construction Services Industry Domestic Consumption Investment

GDP GROWTH SLOWS (SOMEWHAT) from

average 13.1% in 2010-12 to 10.2% and 10.1% in 2013 and 2014

MAIN GROWTH FACTORS Public investment Trade

GDP GROWTH DECL from 10.9% in 2013

to 3.6% in 2014 due to: Low production at Kumtor

MAIN GROWTH FACTORS

Construction Trade Transport and Communication Industry

GDP GROWTH SLOWS

from average 7.4% in 2011-13 to 6.7% in 2014 due to: 8.3% fall in remittances Falling commodity export revenue

MAIN GROWTH FACTORS

Nat Gas Exports, Construction Agriculture Industry Services

Poverty rates in the region are steadily falling thanks to internal mobility, higher wages and transfers. Yet regional differences in poverty rates remain strong in Kazakhstan and Uzbekistan, and plunging remittances from Russia slowed the decline in poverty in Tajikistan and Kyrgyzstan.

KAZAKHSTAN UZBEKISTAN TURKMENISTAN KYRGYZSTAN TAJIKISTAN

$7b $8.5b $42b $68b $240b

TRADE AND POPULATION CENTERS

1.4 mill

17m 8m 6m 30m 5m 22m

Xinxiang Province

30m

NW+FATA

6m

NORTHERN

6+m

NORTHERN

26m

SELECETD FED SUBJECT AREAS

143m $2tr 1.4b $9tr 1.7b $2.4tr

SOUTH ASIA

400m $1.8tr

IRAN & MNA

500m $16tr

EU 25

TRADE AND POPULATION CENTERS OIL&GAS

MINING, COAL, CROPS

AGRICULTURE, TRADE, SERVICES, GOLD MINING, COTTON, ELECTRICITY

WHEAT WHEAT WHEAT

REMITTANCES CENTERS

Uzbekistan Tajikistan Kyrgyzstan Russia

TRADE AND POPULATION CENTERS

OIL&GAS

MINING, COTTON, ELECTRICITY

Consumer goods, equipment

46% 40% 2% 18% 69% 24% 19% 96% 10% 11% 18% 27% 7% 26% 20% 34% 2% 28% 4%

INTRA-REGIONAL EXPORT

Vegetable/Food Fuel Minerals Textile Other

KAZAKHSTA

UZBEKISTAN

TURKMENISTA N KYRGYZSTAN TAJIKISTAN

CA 3% EastAsia 18% EU27 , 52% Russia 7% Other 18%

EXTRA-REGIONAL EXPORT

Textile, Clothing, 25% Machinery, 50% Transport, 3%

IMPORT TO CA

Agric-r, Food 3% Transport 49% Machinery 4%

EXTRA-REGIONAL EXPORT

BARRIERS & OPPORTUNITIES

INTRA-CA TRADE AND TRANSPORT BARRIERS

NO OPERA TIONA L INTEROPERA BILITY

NO T ARIFF COORDINA T ION

TRANSACTI ON COSTS

LOW COMPETITIVENESS DESPITE PROXIMITY TO GROWTH CENTERS

TRAN SIT FEES

FLEET ST ANDARD S INCOMP A TI BLE WITH EU ST ANDARD S DIFFERE NT RAILWA Y GAUGE

GROWING OPPORTUNITIES OF EXTRA-REGIONAL TRADE

PHYSICAL IMPROVEME NT OF INFRASTRUCT URE

CA BECOMING VIABLE AL TERNA TIVE TO CHINA-EU MARITIME ROUTES GROWING INTRA-CA COOPERA TI ON ON TECHNICAL LEVEL INTRA-REGIONAL TRADE BARRIERS

Barriers to Trade: the poorest pays the highest price

EXTRA-REGIONAL TRADE BARRIERS OPPORTUNITIES

Kazakhstan Uzbekistan Kyrgyzstan Tajikistan

DB 2015 OVERALL RANK 77 141 102 166 Trading Across Borders Rank 185 189 183 188 Time to export (days) 79 54 63 71 Cost to export (US$/container) 5,285 5,090 4,760 9,050 Cost to export (% of PPP GDP/capita) 23% 98% 148% 360% Time to import (days) 67 104 73 70 Cost to import (US$/container) 5,265 6,452 6,000 10,650 Cost to import (% of PPP GDP/capita) 23% 125% 187% 424%

Source: Doing Business 2016.

Kazak azakhstan an Kyr yrgyz yz Republ blic Uzb zbekistan an Taj ajikistan an

Global distance to frontier score 72.68 66.01 62.60 54.19 Ease of doing business 41 67 87 132 Starting a business rank 21 35 42 57 Dealing with construction permits 92 20 151 152 Getting electricity 71 160 112 117 Registering property 19 6 87 102 Getting credit 70 28 42 109 Protecting minority investors 25 36 88 29 Paying taxes 18 138 115 172 Trading across borders 122 83 159 132 Enforcing contracts 9 137 32 54 Resolving insolvency 47 126 75 147

Central Asian economies have varying scores on the areas covered by Doing Business in 2014/2015

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GROWTH OUTLOOK

INTERNAL FACTORS

• COMPETITION
• FINANCIAL SECT
• SOEs
• FISCAL FRAMEWORK

EXTERNAL FACTORS

• OIL PRICES
• RF ECON PERF
• CHINA ECONO PERF
• EEU

INTERNAL FACTORS

• STRUCTURAL REFORMS
• EXPANSION OF REAL

INCOMES IS TO SLOW IN 2015

EXTERNAL FACTORS

• RF & CHINA ECON

PERF.

• DECLINING

REMITTANCES FROM RUSSIA

INTERNAL FACTORS

• GROWING CONCERN

ABOUT STRUCTURAL REFORMS

• INCREASE IN PRIVATE

PARTCIPATION

EXTERNAL FACTORS

• GAS PRICES
• CHINESE INVESTMENTS
• IRANIAN SANCTIONS

INTERNAL FACTORS

• SUPPLY-SIDE

CONSTRAINTS

• POVERTY REMAINS

HIGH

• UNSTABLE GOLD

PRODUCTION

EXTERNAL FACTORS

• EEU INTEGRATION

EXPECTED TO ALLEVIATE ECONOMY

• DECLINING

REMITTANCES FROM RUSSIA

INTERNAL FACTORS

• REFORMS

(FINAINCAL SECTOR, ENERGY)

• JOBS
• LOW INVESTMENT

EXTERNAL FACTORS

RF ECON PERF MIGRATION

KAZAKHSTAN UZBEKISTAN

TURKMENISTAN KYRGYZ R. TAJIKISTAN

Meeting the Jobs Challenge

Source: Back To Work: Growing with Jobs in Europe and Central Asia (2013).

• 20
• 10

10 20 30 40 50 Bulgaria Ukraine Georgia Moldova, Republic of Latvia Lithuania Belarus Russian Federation Croatia Romania Estonia Bosnia and Herzegovina Hungary Poland Serbia Slovakia Czech Republic Slovenia Macedonia, TFYR Armenia Montenegro Albania Azerbaijan Kazakhstan Turkey Kyrgyzstan Turkmenistan Uzbekistan Tajikistan Percent ECA Countries: Change in 15+ Population 20 10 - 20 30 (%)

Challenge 1: A young growing population (j obs, migration)

Central Asia will need to create a million new jobs every year by the end of the decade…..

Challenge 2: S kills are a constraint for employers (but few

• ffer training to employees)

1 2 3 4 5 6 7 8 9 num ber of countries EU10+1 and Turkey Western Balkans LI CIS MI CIS AZE BIH KOS MKD SRB SVN ARM GEO KGZ ALB BGR TUR Mean = 30.2 TJK UZB CZE EST HRV LVA POL SVK UKR MDA LTU ROM MNE HUN KAZ RUS BLR

Source: Authors’ calculations based on BEEPS 2008. Note: LI = Low Income, MI = Middle Income, x = % of firms (in respective countries) that consider education as an obstacle, Figure shows data obtained from the fourth round of the BEEPS carried out in 2008–09, which covered approximately 11,800 enterprises in 29 countries. See “Abbreviations” for a key to country abbreviations.

Share of firms that say skills are a major or very severe constraint to their business

Meeting the Jobs Challenge

Responding to the Jobs and S kills Challenge

• 1. Development of Country Specific Jobs Strategy

and Action Plans (Operations, TA and Analytical work)

• 2. Jobs and Skills Projects
• 3. Using the Jobs lens to all design all operations.
• 4. Getting ready for returning migrants in

Uzbekistan, Tajikistan and Kyrgyz Republic

• 2. Regional Trade, Business and

Connectivity

Trade procedures are a particular problem

Time to export Time to import Cost to export Cost to import Docs to export Docs to import

Mean KZ TJ UZ KR

5265 1400 10650 6452 6000 TJ/UZ KZ KR 10 6 11 9

KZ TJ UZ KR

79 17 71 54 63

KZ TJ UZ KR 5285

1195 9050 5090 4760 KZ/TJ UZ KR 12 7 13 11

KZ TJ UZ KR

67 19 70 104 73

All four countries are in the worst performing 5%

• f DB Trade Across Borders

Common obstacles exist across all countries in the region Nearly all goods are physically inspected at the border, leading to very slow clearance, due to lack of risk-based clearance Physical infrastructure is often weak as a result of under-investment in logistics, warehousing, etc. All countries have limited automation of trade procedures and low intra- governmental coordination leading to

• nerous trade procedures.

Mining Energy Services Agribusiness

Strong potential for hydro, wind, and solar energy generation with increasing regional demand (south Asia) Long term investment horizon requires stable investment climate; lack of creditworthy offtakers; Growth sector for all countries with higher value added services in consulting, accounting, legal, etc. Limited infrastructure; Lack

• f

robust technical and vocational training; Trade in services barriers (professional licensing, etc.) Grain, cotton, textiles, wheat, dairy, fruit and vegetables with large regional demand (Russia, East Asia & South Asia) Lack of ability to meet end market standards; low productivity; Poor trade logistics; heavy state presence crowds out private investment Enormous reserves

• f

gold, silver, coal, antimony, and other rare earth minerals. Lack of security in licensing; poor stability in tax policy and incentives; very high trade costs

Despite strong economic potential…

Investment remains constrained for several reasons:

Potential

18

Transport Corridors

 CAREC  SASEC  Uz Roads  Pap-Angren Rail  CARS 1-2-3  Jumbo KZ Roads  TAT Railways

Importance of Infrastructure Development Recognized by Government

• Poor infrastructure identified as a key bottleneck to sustained economic growth,

development of infrastructure - necessary to reduce exposure to natural resources(1)

• Ambitious plan to upgrade infrastructure network using private capital, especially in

the transport and communications sectors

• Current macroeconomic trends (oil prices) reinforce importance of private capital

(1) Source: “Prosperity, security and ever growing welfare of all the Kazakhstanis”, message of the President of the Republic of Kazakhstan, 2015.

Meeting the Infrastructure Challenge

BAKAD: First Large Privately Financed Infrastructure Project

• BAKAD: 66-km bypass road north of

Almaty, $800 mln investment

• Key link in the Western China-Western

Europe Transnational Corridor

• Public-Private Partnership (PPP) fully

financed with private capital

• “Signaling effect”

Regional ICT: Many possible routes

Multiple routes are possible, depending on the interest of the investor(s) and number of countries joining, for example: Start and end points could be: Karachi, Moscow, Frankfurt, Almaty, Shanghai—each of these points is connected to multiple global fiber

• ptic networks (serving as major

hubs on the global Internet) Routes could be via (combinations

• f):

1. Afghanistan, Tajikistan, KR 2. Azerbaijan and Georgia (to Frankfurt) 3. China Various routes could connect with existing or planned fiber optic networks including TASIM (via Baku)

• r HSIB (supported by the SCO);
• ther countries can join in the

future—no restrictions are foreseen

• 3. Regional Water-Energy Nexus

Water paradox in Central Asia

Multi-country dimension: sharing waters and potential benefits of cooperation

 ROGUN  FDPM  SYNAS 2  CAWARM  CAWDEP

(+996) 770433117 (+996) 770433117

Regional Energy Trade

 CASA  TUTA  TAPI  And more

People, Agriculture, and Water Overlay

• Agriculture still at the core of society, economy (20-50% of

jobs) and political stability at local and regional level,

• Depends on irrigation, trans-boundary rivers, multiple uses

including energy generation in upstream countries

Central Asia: Among the Most Vulnerable Region to Climate Change

TJ KG UZ TM KZ

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• 4. Emerging Challenges and

Opportunities

• Expanding and Deepening Trade

Linkages (South Asia, China, Europe, Russia)

• Boosting Private Investm ent Rates
• Enhancing Skills and Jobs in support of

Com petitiveness and Diversification

• Supporting Water and Energy Security

towards win-win solutions

Thank you !