Problems of Economic Transition in the CIS:
The Case of Kyrgyzstan
Rafis Abazov
La Trobe University
The Russian financial crisis of 1998 and continuos economic recession in the CIS provoked a mixed response among international specialists provoking debates on issues of development and transition strategies. From this point of view it is particularly interesting to analyse economic developments in Kyrgyzstan which is facing same problems and similar difficulties as other transitional states in the CIS and Asia. First, like many other transitional countries, during the last decade Kyrgyzstan experimented with the radical 'shock therapy' approach to economic transformation and attempted to implement recommendations of the World Bank and the IMF. Second, after the collapse of the USSR Kyrgyz Republic struggled to find its place in the global market, to shift its trade pattern, and to redirect its export to the countries other than the CIS. Third, despite its small size, Kyrgyzstan has become an important actor in the post-Soviet political arena and is considered to be one of democratic and liberal states in Central Asia. Kyrgyz experience is often viewed as a model that should be followed by other CIS states that face the needs of radical economic liberalisation and would like to expand their co-operation with the international financial institutions.
In this article, I will briefly analyse some recent trends in the economic and international policies of Kyrgyzstan. Current internal and external policies of the Kyrgyz state are analysed from an economic perspective. The technocratically oriented ruling elite of Kyrgyzstan perceives on-going economic crisis in the country as the biggest threat to its stability and security. Therefore, Kyrgyz leaders view the success of economic reforms as the core component of their general reform policy.
1. Economic Changes after Independence
Kyrgyzstan is a country of 4.5 million people with a moderately developed industry (machinery, mining, electrical power, military production, etc.) and a large agricultural sector (almost 60% of GDP). It is a landlocked country bordering China, Kazakhstan, Uzbekistan and Tajikistan. Nearest commercial seaports are situated one thousand miles away from the Kyrgyz borders. It is a multi-ethnic republic where the native Kyrgyz people comprise 58% of population, Russians - 17.1%, and Uzbeks - 13.8%. The disintegration of the USSR did not bring political chaos to Kyrgyzstan, and President Akayev held a firm grip of power since 1990. Akayev turned out to be a reform-minded leader who dealt quite skilfully with the conservative Jogorku Kenesh (Kyrgyzstan's parliament), the political opposition and traditional institutions (clans and tribal structures). During last decade in his policy he gradually evolved from liberal democracy towards establishment of a technocratically oriented regime, in which a powerful state bureaucracy plays the key role in promotion and implementation of transitional reforms.
In this section I will summarise some major implications of economic liberalisation and Kyrgyzstan's economic policies during the 1990s.
1.1. Transitional Recession and Macroeconomic Destabilisation
Kyrgyzstan, like many other CIS members, failed to avoid a steep transitional recession and the consequent macroeconomic destabilisation. There were several factors that made the Kyrgyzstan's economy especially vulnerable. These include:
Problems associated with the collapse of Kyrgyzstan's domestic manufacturing sector and consumer market of locally produced goods were further complicated by the loss of CIS market for traditional Kyrgyzstan's exports. Disintegration of the Soviet unified economic space and the continuing economic crisis in Russia and other countries of the CIS have greatly affected the post-Soviet economic development of the Kyrgyz Republic.
In 1991, the GDP of Kyrgyzstan fell by 3.6% followed by 15.9% in 1992; in 1993 it declined by a further 16.1% while in 1994 it shrank by 26.5% and in 1995 by 6.7%. By 1996 the country was producing only 53.5 per cent of its 1990 GDP. The situation in some sectors of the economy was even worse: between 1991 and 1996 the decline of industrial production reached 63.7% and in retail turnover - 66.5% while gross capital investment fell by around 89%. The contraction of Kyrgyzstan's economy was much greater than in the neighbouring Uzbekistan, which adopted a more gradual and cautious approach to economic reforms, or in Kazakhstan, where radical reforms were accompanied by a rather strong state intervention.
General macroeconomic destabilisation, which followed the disintegration of the USSR, for several years had practically paralysed the economy of Kyrgyzstan. In 1991 inflation had reached 85%; it increased to 855% in 1992 and to a further 1209% in 1993.
1.2. Economic Liberalisation
At the start of transition some Western economists, particularly those in the World Bank and in the IMF, suggested that the only feasible way to reform CIS economies, including that of Kyrgyzstan, was implementation of a policy of "Shock Therapy". According to the 1991 World Development Report, this policy 'implies that reforms are implemented quickly in concentrated period lasting less than two years' with a focus on reaching a macroeconomic equilibrium. A free market was seen as the only perfect model of economic development, while elimination of subsidies, price controls and the decentralisation of the foreign trade regulations were viewed as inevitable. It can be stated that the government of Kyrgyzstan was consistently trying to strictly follow all of the recommendations that were given by international experts from the IMF, the World Bank, EBRD and other international institutions.
In 1992 the government introduced the Programme of Economic Reforms, which, among other things, put an emphasis on three major tasks:
By mid-1992 Kyrgyzstan abolished most of its central planning institutions; it also withdrew subsidies to major state-owned enterprises and simultaneously liberalised all consumer prices except bread, prices for which were controlled for one more year. In contradiction to Uzbekistan that rejected 'shock therapy' and chose to concentrate its efforts on gradual reforms focused on achieving changes at the microeconomic level; the Kyrgyzstan's government put all of its efforts into macroeconomic stabilisation. Mass liberalisation of prices meant that in the first year of reforms Kyrgyzstan had also removed state subsidies for oil prices and prices of other energy resources. This led to a rapid transition to world prices, but paralysed the transportation system even causing a partial shut down of Kyrgyzstan's airports in the early 1990s. Ironically, due to breaks in air communications in Kyrgyzstan experts from the World Bank and the IMF experts that were coming to the Republic had first to fly to Uzbekistan (which at that time was heavily subsidising its national air carrier).
Kyrgyzstan was first among Central Asian Republics (CARs) that in May 1993 left the Russian Rouble zone and introduced its national currency, Som. This step largely predetermined the following collapse of the Rouble zone in the other CARs; Kazakhstan and Uzbekistan were forced to leave the common currency zone in late 1993 under far less favourable conditions. While initially some Kyrgyz leaders were suggesting introduction of state controls on currency and goods turnover, the government of Kyrgyzstan finally declared as its primary strategy a course towards full liberalisation of all economic activities. This included introduction of a free exchange of Som for hard currency, a free international trade regime, and an 'open door policy'. The issue of regulation of banking sector was also on the government's agenda; the latter has decisively moved towards closing of insolvent banks, including the largest El-Bank (former Sberbank).
In 1991-92 the Kyrgyz government announced its programme of mass privatisation. It was aimed at restructuring of all major sectors of the national economy and a gradual transformation of Kyrgyzstan into 'Switzerland of Central Asia'. Between 1991-98 the government privatised all major segments of public assets. According to official report, by 1998 80.1 percent of industrial, 97.2 percent of trade and food services and 100 percent of household services were privatised.
I contradiction to some other CIS countries, since the early 1990s Kyrgyzstan was engaged in a deep restructuring of its agricultural sector. The notorious 'kolkhozy' (collective farms) were broken into thousands of small private farms. According to official estimates, there are 55,000 farms now in Kyrgyzstan. In October 1998 the Kyrgyzstan's government held a referendum on the private ownership of the land with a majority of votes cast for privatisation of land.
Approaches to the strategy of reform and privatisation were quite different in Kyrgyzstan and Uzbekistan. Uzbekistan consistently implemented the policy of promoting small and medium enterprises (SMEs) and supporting family businesses, but was very slow in reforming its economy, including agriculture. At the same time Kyrgyzstan targeted macroeconomic changes, i.e. speedy transferring public assets into private hands, but had neither a comprehensive policy aimed at post-privatisation measures nor a package of measures aimed at supporting SMEs.
1.3. Results and Achievements: Economic Recovery of 1996-1998
The 'shock therapy' and consistent efforts of Kyrgyzstan's government to revive its economy by the mid-1990s have started to bring positive results. The macroeconomic stabilisation in Kyrgyzstan was achieved in 1995-1996, when inflation was put under control (by 1996 its annual rate was a manageable 29%), currency had stabilised and major macroeconomic indicators started to improve. It was only in 1996, after six consecutive years of economic decline, that Kyrgyzstan's economy started to show first signs of revival. The years 1996-97 became an important turning point for the economy of the country. By the end of 1997 the Kyrgyz Republic completed its mass privatisation programme and in the spring of 1998 the parliament approved measures aimed at privatising of large state-run monopolies (energy, mining, etc.). In 1996 Kyrgyzstan has achieved a 5.6% growth of its GDP which in 1997 was followed by a robust growth of 9.9%. The latter was one of the highest figures in the CIS. In 1996 manufacturing output increased by 10.8% and, again, by 30.0% in 1997. Preliminary data for 1998 suggests its further growth by 15.0%.
One of most remarkable reform achievements was in the mining sector, particularly in gold mining. According to official reports, gold output in Kyrgyzstan has grown from one tonne in 1991 to 17 tonnes in 1997 and to 21 tonnes in 1998. It is expected to be about 17.5 tonnes in 1999.
The agricultural sector also started to demonstrate growth. The latter was especially important since this sector of the economy provides employment to and is a source of income for the majority of the population. One of economically and politically important achievements was reaching of self-sufficiency in wheat: wheat production had increased from 0.51 million tonnes in 1990 to 1.3 million tonnes in 1997.
In March 1998 the long serving Prime Minister was forced to resign. The new young Prime Minister, K.Jumaliyev, has formed the government and promised continuation of radical changes, including a promise of GDP growth of 7.0% in 1998. However, the Russian financial crisis of August 1998 had a severe negative effect on the fragile Kyrgyzstan's economy. In late 1998 and the first half of 1999 the Kyrgyzstan's economy was contracting again, inflation pressures were on the rise while the national currency depreciated by 35 percent. In autumn of 1998 Prime Minister was dismissed following accusations of gross underestimating of effects of the Russian financial crisis on the Kyrgyz economy. The new Prime Minister lasted in office for just a few months before in April 1999 A.Muraliyev was appointed to head the new government.
1.4. Labour Market and Unemployment
Despite low discipline and production levels, the labour force in Kyrgyzstan during the Soviet era was well educated and well trained. This Soviet legacy has left a deep imprint on the labour market. According to experts of the World Bank, in 1991 the hidden unemployment (overstaffing) in the Kyrgyz economy was between 20 and 30 percent. This was the result of a deeply rooted Soviet policy of life employment, work sharing practices and over-regulation of the labour market.
Post-Soviet drastic restructuring of the economy led to several changes in labour practices. First, a significant number of people moved from state-owned enterprises (SOEs) to non-state sector or opened their own businesses. Second, there was a rise in mass unemployment (previously the socialist system guaranteed full employment of people). Numbers of unemployed increased dramatically from 1,792 in 1992 to 12,614 in 1994 and to a further 77,198 in 1996. However, some independent estimates suggested that in mid-1990s the unemployment rate was 4 to 6 times higher at the level of 18% to 21%. In addition to that there was a large group of people who were temporarily laid off or transferred to a reduced working week, particularly among employed in industry, transport and mining. It was reported that in 1996 a number of Kyrgyzstan's manufacturing plants were working at only half of their output capacity. Partially the rise of unemployment in Kyrgyzstan was in 1992-96 eased by a mass out-migration of Slavic and German people. Their emigration was estimated at around 77,400 in 1992, 120,600 in 1993 and 51,000 in 1994. Although, Kyrgyzstan still continues to maintain quite good educational and training systems, the local experts believe that this mass out-migration of predominantly high-qualified personnel may in the future lead to serious changes in the quality of local labour.
1.5. Standards of Living
Another phenomenon of transitional economies is a rapid decline in the standards of living caused by the spread of economic recession, cuts in social expenditures and increase in income inequality. The social cost of economic reforms was particularly high in countries that implemented 'shock therapy'; the people there were paying a very high social price for the changes.
This trend has had several serious consequences. On the one hand, there was a dramatic decline in the population's purchasing power, which led to a reduction in demand for domestically produced goods. The latter brought about a 'domino effect' into the industrial production circle causing increased recession pressures. On the other hand, a sharp increase in prices, hyperinflation, growth of unemployment, falls in real income and irregular payments of salaries have all contributed to a general rise in poverty. Kyrgyzstan, which in the 1980s was in a better position that China, Pakistan or India, in the 1990s found itself in a more difficult situation. In 1997 the country was listed among low-income countries with GNP per capita of US$ 440. According to the estimates of the National Statistical Committee of Kyrgyzstan, in the mid-1990s around 71% of its population lived below the officially accepted poverty level. Calculations based on the Human Development Index of the UNDP show that Kyrgyzstan moved from 31st place in the world in 1991 to 107th place in 1996.
1.6. Corruption and Mismanagement
In realisation of their privatisation programme Kyrgyzstan's policy makers put main emphasis on speed and quantity, rather than on equitable privatisation, creation of a firm base for economic growth and a long-term perspective of economic development. This had several shortcomings. One was the rise in corruption. During the last decade this problem was never properly handled by the government or by the international assisting organisations. Business ethics were at a very low level, while a larger part of business activities were taking place in the so-called 'shadow economy'. A research by N.Lubin (1995) suggested that between 50 to 70 percent of all business deals in CARs involved one or other form of corruption. Corruption and 'red tape' practices brought an additional burden on private businesses. The spread of this problem might cause a serious negative impact on the future development in Central Asia.
Another result of a speedy privatisation was a concentration of wealth mainly in the hands of the former Soviet elite (nomenklatura). The latter ran state-owned enterprises for decades and in the post-Soviet period it simply appropriated SOEs with the use of their political connections, networks and inside knowledge. There is little doubt that elimination of consequences of this 'robber capitalism' would require a significant amount of time.
2. Foreign Activity
It would be not an exaggeration to state that, following the initial stage, the Kyrgyzstan's government had generally subordinated its foreign policy to the objective of achievement a breakthrough in economic reform. Kyrgyzstan does not have regional ambitions as does neighbouring Uzbekistan. Besides, the country cannot afford large military expenditures and its national security relies largely on the goodwill of its neighbours. Therefore, in its foreign policy Kyrgyzstan seeks to maintain balanced relations with all neighbouring countries.
However, independent Kyrgyzstan faces multiple internal and external challenges to its successful development, which largely frame its foreign policy objectives. First, Kyrgyzstan supports promotion of integration processes within the CIS and in the Central Asian region. It also takes a firm pro-integration approach in other multilateral regional organisations. This is seen as objective that plays a crucial role in ensuring a smooth economic development of the Republic and a better security in the region.
Second, Kyrgyzstan's foreign policy makers were making a number of steps towards establishing strong working relations with major Western countries, especially with the USA, China, Japan, countries of South and South East Asia. They saw promotion of a positive image of the Kyrgyz Republic as a vital policy goal, which could help to attract attention of major donor states and international organisations (the IMF, the World Bank and EBRD). Kyrgyzstan's leaders clearly understood that without a considerable external economic assistance it would be impossible for them to stabilise the economy and to promote market oriented reforms. Promotion of Republic's international trade and foreign economic activities has become an important area of foreign policy, as well as attracting foreign direct investment and achieving a full convertibility of Kyrgyzstan's currency.
2.1. Kyrgyzstan's Foreign Policy
During the early 1990s, in its foreign policy Kyrgyzstan put a major emphasis on the development of relations with developed Western countries which was often done at the expense of its relations with Asian and developing countries. In early stages of independence, in order to change its image of a country that was facing growing political disorder and ethnic discontent, Kyrgyzstan's leaders have declared their adherence to a secular 'Turkish model of development' and technocratic 'Korean model of development'.
Despite its status as a new actor on the international arena, Kyrgyzstan's diplomacy has managed to achieve a remarkable progress almost in every sphere of its activity. In its policy it managed to successfully combine two contradictory objectives: it benefited from being part of the CIS and at the same time it managed to expand its relations with countries outside the former Soviet bloc. One of the most important achievements of Kyrgyzstan's diplomacy was that the Republic was continuously strengthening its positive image on the international arena as a state that confidently implemented radical economic reforms and democratisation.
Despite these diplomatic achievements, recently the earlier 'stable' image of the country has been significantly weakened. The dissolution of Jogorku Kenesh by the 1994 presidential decree and legal prosecutions of local journalists have greatly damaged the image of the Republic as a truly democratic state and lead to cooling of its relations with the USA and some other Western countries. By 1997, however, Kyrgyz leaders have realised that, as an Asian country, in their foreign policy they will be much better off by keeping a balance between the West and the East. This became very clear after Roza Otunbayeva, the influential western oriented Foreign Minister, was replaced by the new minister, Muratbek Imanaliyev. The latter was an expert in Asian politics, especially in China's foreign policy. The important task of the newly appointed Foreign Minister was promotion of positive relations with neighbouring China (Kyrgyzstan shares 858 km of its border with PRC) and with developing countries of South and South East Asia and the Middle East. In fact, China has recently become one of the most important trade partners of Kyrgyzstan. Initial Kyrgyz fears of military and political pressure from Beijing were by now replaced by close trade relations. Kyrgyzstan also established broad economic and cultural relations with Turkey; however, initial hopes for a large-scale investment from Turkey are still to become materialised.
2.2. Attempt of Integration
From the first days of the disintegration of the Soviet Union in late 1991 Kyrgyzstan has been one of the most active supporters of the pro-integration processes within the CIS. Kyrgyz Republic has strong interest in keeping close economic relations with other countries of the former USSR, because of the important security guarantees provided to Kyrgyzstan under the collective security agreement. Russian troops guard Kyrgyzstan's borders. Warm personal relations between Akayev and Yeltsin also played an important role in establishing closer relations between the Republic and the Russian Federation. In addition, Kyrgyzstan has greatly benefited from the assistance it received from Russia in establishing of its own army, security service and border-control guards.
However, the failure of the CIS to develop any meaningful economic co-operation between its member-states prompted Kyrgyzstan to enthusiastically react to any attempt towards integration within the Central Asian region. It strongly supported the establishment of the Central Asian Union (CAU). When in 1994 President Nazarbayev of Kazakhstan and President Karimov of Uzbekistan transformed the CAU from a political organisation into the Central Asian Economic Union (CAEU), Kyrgyzstan was fast to join the new organisation. It also joined the Customs Union with Russia, Belorussia and Kazakhstan.
However, membership in the CAEU did not prevent an escalation of a series of trade wars between Kazakhstan, Kyrgyzstan and Uzbekistan. These wars culminated in the early 1999 when Kazakhstan temporary imposed 100-200 percent tariffs for goods imported from the CIS countries, including Kyrgyzstan and Uzbekistan.
In December 1998 Kyrgyzstan's efforts in liberalising and in opening of its economy were rewarded when the Republic became the first country in the CIS to be admitted to the World Trade Organisation. However, although the government celebrated it as an important achievement, some observers believe that this step, in fact, undermines the very existence of the Customs Union and the CAEU, as well as the prospects for future co-operation between Kyrgyzstan and the CIS.
2.3. International assistance
In the post-Soviet period Kyrgyzstan has managed to achieve certain progress in developing of its co-operation with various international organisations. In fact, international assistance and expertise have played a crucial role during the first, most difficult period of transformation of the centralised economy in Kyrgyzstan. Loans and aid that the Republic received (around US$ 358 million) were mainly spent on introduction of the national currency, implementation of the privatisation programme, restructuring of agriculture and some other programmes. International organisations, such as the World Bank, EBRD and the IMF, have also provided considerable technical assistance in restructuring of management, banking and financial systems in Kyrgyzstan. They also funded a Programme of training and re-training of state employees within the framework of the World Bank-sponsored campaign 'For Good Aid Management'.
Additionally, Kyrgyzstan received humanitarian, technical and financial assistance from such countries as the USA, Japan, Germany, Switzerland and some other OECD countries. A current US$ 400 million foreign aid programme (managed by the IMF and the World Bank) aims at increasing Republic's industrial and agricultural output and its export capabilities.
2.4. International Trade
A regression model by Iwasaki Ichiro (1999) suggests that there is a strong multiple correlation between industrial production in Russia and rouble exchange rate and the industrial production in CARs. In this regard, Kyrgyzstan is not an exception. It continues to sell 47.2 percent of its goods to Kazakhstan, Russia and Uzbekistan, and receives 44.8 percent of its imports from these three key economic partners. Technological interdependency and geographic proximity still strongly tie Kyrgyzstan to the CIS market. For example, as a result of the Russian financial crisis in August 1998, the total value of exports from Kyrgyzstan had sharply declined (by almost 30 percent in the second half of 1998 compared to a similar period in 1997).
During the larger part of the 1990s Kyrgyzstan maintained slow but steady growth of its exports from US$ 288.6 million in 1992 to US$ 631 million in 1997, although in 1998 exports declined to US$ 540 million. One of the most significant achievements in international arena was development of Kyrgyzstan's trade and economic relations with countries outside the former Soviet Union. The share of countries outside the CIS has grown from a virtual zero to almost 35% in the total trade turnover of the Republic. Unlike Kazakhstan with its large oil resources and Turkmenistan with its gas resources, Kyrgyzstan has limited natural resources and their development needs large volumes of capital investment. In 1992-97 Kyrgyzstan managed to attract an estimated US$ 450 million of FDI with largest shares held by Canada (45% of total investment), Turkey (20%), the USA (12%) and China (10%).
Conclusion
In the post-Soviet period Kyrgyzstan has underwent a number of radical economic changes, however by the end of the 1990s results of this transition failed to bring any major positive social changes or to produce stable rates of economic growth. On the one hand, Kyrgyz Republic achieved some of economic goals that were initially targeted by radical economists and experts of the World Bank and the IMF. The government succeeded in dismantling the central planning system, introduced institutions of private property and business, deregulated its economy and liberalised all prices. It also denationalised most of state-owned enterprises and implemented a programme of mass privatisation (within a period of 5-6 years more than 6,300 SOEs were privatised leading to a creation of a large private sector in the economy). One of the important results of this transformation was restructuring of the agricultural sector through transforming of notorious state-run farms into smaller private farms. Kyrgyzstan's government also succeeded in introduction of the national currency and maintaining its relative stability, although the national financial and banking systems still remain quite vulnerable to outside influences. The government also managed to avoid major financial crises and defaults on debt repayments similar to the ones in Russia.
On the other hand, these changes did not bring sustainable economic growth to Kyrgyzstan and did not result in a significant improvement of the living standards of its population. Purely monetary instruments of market regulation turned to be inadequate in stimulating a sustainable economic recovery. Withdrawal of the state from playing an active role in economic development and maintaining law and order led to the growth of the so-called 'robber-capitalism' and created a chaotic business environment. The emphasis on development of trade and economic ties in Kyrgyzstan's foreign policy, accompanied by moves towards opening of its economy, did not bring the expected economic benefits. In fact, the situation was quite opposite. As a small country, Kyrgyzstan became extremely vulnerable to challenges of globalisation. The negative effect of the Russian financial crisis of 1998 on its economic development was just one of example of that.
After a decade of transition experiences in various countries, it can be stated that the policy of 'shock therapy' has some major weaknesses even in a situation when the macroeconomic policy is right. First, a major problem is that although 'shock therapy' tends to address macroeconomic issues, implementation of this policy often leads to ignoring of the need of microeconomic changes and peculiarities of development in various regions. A comparison of Kyrgyzstan with Uzbekistan gives an excellent example. By the late 1990s the Uzbekistan's government that earlier rejected a 'shock therapy' approach, was able to retain 85.8 percent of its 1991 production level. Although there are significant macroeconomic changes that still await implementation in Uzbekistan, its policy of placing priority on microeconomic reform gives some clear positive results.
Second, experts of the World Bank and the IMF in their recommendations have often ignored the importance of the CIS market for Kyrgyzstan and consequent necessity of developing its economic co-operation within the region. Instead they emphasised the importance of the Western market. But the truth is that it will take a long time before Kyrgyzstan or any other Central Asian state will manage to establish themselves on this market. In the meantime, Kyrgyzstan was steadily weakening its positions on the Russian and the CIS markets.
Third, as recent success of Malaysia in tackling its financial and economic crisis demonstrates, in any transformation there is always an option of taking a more individual approach that will take into consideration specific conditions of a country. This can be done through tweaking or instead of applying a universal structural adjustment programme devised by modern neo-classical economists. Indeed, it will be hard to expect that a programme, which performed well in a particular environment of Poland, will also be successful in a case of Russia or Kyrgyzstan. Fourth, it should be noted that corruption, incompetence and economic selfishness of the state bureaucracy became quite real obstacles for a successful future economic development of Kyrgyzstan and have greatly undermined its reform progress.
In 1999 there were clear signs that the Kyrgyzstan's government and its international consultants have gradually started to understand that the 'shock therapy' policy on its own might not be enough for a successful transformation of transitional economies into viable market economies. World Bank Senior Economist Joseph Stiglitz has recently stressed that '...the lesson we've learned is that market economies are far more complicated than text book models often describe them'. He also admitted that '...issue of governance, issue of legal infrastructures, issues of institutions are absolutely central'. However, it still remains to be seen whether this new understanding will eventually be transformed into a real change in policy recommendations that are provided by the World Bank and IMF as well as in policy implementation by governments themselves.
Mr Rafis Abazov
La Trobe University
Email: r.abasov@latrobe.edu.au