In his 2013 work, How to Get Filthy Rich in Rising Asia, Mohsin Hamid documents the fate of an ambitious emerging market youngster as he rises from rags to riches and moves from countryside to city, surrounding himself with ever-greater comfort as he grows more affluent. It is a story that has been told many times; as individuals outgrow their neighbours financially, they move to a wealthier part of town, to a more stable country, to a more attractive side of the planet.
Countries cannot do that; their geography is quite literally their destiny. That is why their economic ambitions must be rooted in good neighborly relations; relations that make the most of, rather than seek to avoid physical interdependency. This is one of the precepts at the heart of the World Economic Forum’s Scenarios for the South Caucasus and Central Asia report, released September 10 as the result of an 18-month consultation engaging over 500 stakeholders across and beyond the regions.
The report finds that certain nations, acting individually, have in recent years been able to produce impressive economic results. But it also shows that the ability of the South Caucasus and Central Asia as regions to be players in the 21st century economy hinges on a collective, rather than a fragmented approach. The region’s (increasingly warm) “frozen political conflicts,” in particular the Nagorno-Karabakh situation, are well known. Less understood is that unsettled political questions have encouraged a trend of “frozen economic resources.” A good example of this phenomenon is Uzbekistan’s use of economic embargoes to coerce Tajikistan into abandoning plans to build the Rogun hydropower dam.
Bypassing neighbours will simply not be a viable economic strategy for any country thinking it can become a poster-nation for speedy modernization. Because the inevitable incentive of globalization’s losers is to play spoilers, economic growth that is built in disregard, or, worse, at the expense of one’s neighbors will always leave hanging a sword of Damocles above the heads of its short-term beneficiaries. Such is the risk run by those who fail to understand that non-inclusive economic success can be undone faster than it can be built.
Of course, achieving substantive regional cooperation is easier said than done: many of the issues separating states in the South Caucasus and Central Asia are deeply divisive and not easily resolved. Yet, while it is easy to be skeptical, reasons for optimism exist. Over the course of many conversations while researching our report, we found a remarkable appetite for greater collaboration among actors of many origins, particularly on the economic front. We also found that more collaboration is already underway than first meets the eye. Substantial flows of informal trade and other private-sector initiatives could serve as a bottom-up force for linking regional economies, hopefully encouraging better political relations in the long run.
Bringing down “economic borders” in the regions – which are among the highest in the world – could help countries achieve their four main economic goals: to maximize the potential of their energy resources, integrate into global supply chains, create a diversified economic base and develop a high-standard workforce. Building strategies to pursue each of these goals, however, requires an awareness of how the context surrounding the region may affect its plans. The world is changing and the South Caucasus and Central Asia must change with it.
The Forum’s Scenarios for the South Caucasus and Central Asia were designed to highlight some of the potential opportunities and risks that may emerge from such transformations. One scenario, for instance, warns of the perils of a world increasingly characterized by regional economic blocs. Another narrative serves as an invitation to prepare for the possibility of a world economy turned markedly environmentally-conscious as a result of climate changes.
Most importantly, the report also invites decision-makers in the regions to consider some new windows of opportunity that may open before them in years to come. While their economic policies have often focused on the region’s Chinese, Russian and European neighbours, for example, has the potential of emerging market partners to its South been fully explored? As the world economy grows increasingly immaterial under the effects of technological change, could the region overcome its landlocked status by tapping into soft supply chains?
This may seem like an odd moment to suggest raising our eyes to the long-term horizon of 2035, given the urgency of the political tensions that are constantly clamouring for decision-makers’ immediate attention throughout Eurasia. Yet it is precisely when short-term volatility threatens to soak up all of our attention that it becomes especially important to take a step back and look forward for shared, fundamental interests that can be best achieved through greater collaboration.
Kristel Van der Elst is Senior Director and Head of the World Economic Forum’s Strategic Foresight Team, where Andrew D. Bishop is a Senior Manager.