Research Institution, economic study of a Central Asian country
Situation
A research institution requested a report about the Regional policy options in this Central Asian country.
Approach
We described the main policy instruments (e.g. Fiscal, subsidies, investment grants etc), compared the regional policies, and the national policies with a business sector emphasis (e.g. support for mineral mining/ processing), and provided an idea of their scale and effectiveness. We also identified the current national & regional problems, the factors inhibiting entrepreneurial activity, the special economic zones (SEZ) and associated regional policies, as well as the regional projects by industry (e.g. innovation parks). Finally, we also identified some potential opportunities in the future (e.g. clean technology).
Our work fed into an Input-Output Analysis of the regional growth opportunities in this Central Asian country. Input-Output tables were flexed with new economic scenarios (with a 5-year horizon) to see what might happen in the future. A regional module was added to main tables in order to understand regional impacts.
This analysis provided a coherent, top-down view on entrepreneurial activity levels in the country, that linked back to macroeconomic forecasts. Three national economic scenarios were produced [Consensus (IMF), Austerity (negative variant), Return to normal (negative variant)], and showed how activity levels would vary by sector (e.g. Telecoms) and by region over the following few years. Faster growing region/sector combinations were identified.
Results
The results were presented in a comprehensive way to national Prime Minister’s office, providing guidance to policy makers. The main policy conclusions were that the current resource-based economic strategy was unsustainable and that, under austerity scenario conditions, more balanced regions would perform better. The recommendations were to:
Encourage greater economic resilience through regional diversification
Initiate programme of targeted import substitution of some manufactured and intermediate goods
Improve regional infrastructure
Encourage more intraregional trade and communications links