In his 2013 opus 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 remote countryside to ascending city, surrounding himself with ever-greater comfort as he grows more affluent. This story has been told many times; as individuals feel they have outgrown their neighbours, 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 neighbourly relations; relations that make the most of, rather than seek to avoid, the externalities of 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 as the result of an 18-month consultation engaging over 500 stakeholders across and beyond the region.
The report finds that while certain nations acting individually have in recent years shown impressive economic results for the South Caucasus and Central Asia to boast, the region’s chance of playing a sizeable role in the 21st century economy hinges on its ability to tap into its collective, rather than fragmented, potential. The region’s (increasingly warm) “frozen political conflicts” are well known, but the “frozen economic resources” these tensions have led to over the past decades are often underestimated.
Bypassing neighbours will simply not be a viable economic strategy for any country thinking it can become a unique 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 surroundings 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 successes can be undone faster than they were built.
Are levels of trust in the South Caucasus and Central Asia so low, however, as to prevent countries in the region from acting upon these words of caution? While scepticism is easy, reasons for optimism exist. Over the course of many conversations whilst 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 forging recognized links among the region’s economies, hopefully helping to cement better political relations in the long run.
Bringing down “economic borders” in the region – which are among the highest in the world – could help its 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, affecting the region for better or for worse depending on its ability to reap tomorrow’s benefits and sidestep its threats. One scenario, for instance, warns of the perils of a world increasingly characterized by regional economic blocs for a region undecided on the future of its own regional identity. Another narrative serves as an invitation to prepare early on for the possibility of a world economy turned markedly environmentally-conscious as a consequence of the severe effects of climate change on its financial underpinnings.
Most importantly, the report also invites decision-makers in the region to consider some of the 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.
Authors: 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. Scenarios for the South Caucasus and Central Asia, which was recently published following an 18-month strategic dialogue process on the region, is available here.
Image: The moon is seen framed between skyscrapers in Astana March 24, 2013. REUTERS/Shamil Zhumatov