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Coordinating Aid for Regional Cooperation Projects: The Experience of Central Asia

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  • Richard Pomfret

Abstract

For the Central Asian countries the dissolution of the Soviet Union led to economic disintegration as old coordination mechanisms disappeared and new national borders appeared. This paper analyses why it has been difficult to coordinate aid for regional cooperation projects (eg. on the Aral Sea or trade facilitation) whose economic benefits appear positive. Bilateral aid flows to Central Asia have been dominated by geopolitical rather than economic considerations, and have been at best narrowly national in focus and at worst regionally divisive. Regional organizations composed of Central Asian countries and various neighbours have also competed rather than cooperated, so that the most plausible source of coordinated aid for regional cooperation projects is the multilateral agencies. A key role for aid donors is to provide technical assistance in analysing and explaining benefits, and how these affect various interests. Initial advantages which multilateral agencies had as impartial providers of technical advice were undermined in 1992-3 when the IMF’s strong position in favour of retaining the ruble turned out to be mistaken advice. In the 1990s aid directed to the Aral Sea problem produced few benefits because, despite the magnitude of the gross benefits from reversing the desiccation, littoral countries see differential benefits and costs; pure win-win situations are more likely from regional cooperation in trade facilitation. Subsequently the multilateral agencies have had a better focus, sharing priorities in the destination of aid and agreeing on a functional division of labour, but this has not yet translated into effective assistance for regional cooperation.

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Paper provided by IIIS in its series The Institute for International Integration Studies Discussion Paper Series with number iiisdp163.

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Date of creation: 02 Aug 2006
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Handle: RePEc:iis:dispap:iiisdp163

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  1. Jeromin Zettelmeyer & Günther Taube, 1998. "Output Decline and Recovery in Uzbekistan," IMF Working Papers 98/132, International Monetary Fund.
  2. Williamson, John, 2000. "What Should the World Bank Think about the Washington Consensus?," World Bank Research Observer, World Bank Group, vol. 15(2), pages 251-64, August.
  3. Schiff, Maurice & Winters, L. Alan, 2002. "Regional cooperation, and the role of international organizations and regional integration," Policy Research Working Paper Series 2872, The World Bank.
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  5. Djankov, Simeon & Freund, Caroline, 2000. "Disintegration and trade flows : evidence from the Former Soviet Union," Policy Research Working Paper Series 2378, The World Bank.
  6. Richard Pomfret, 2002. "The IMF and the Ruble Zone," Comparative Economic Studies, Palgrave Macmillan, vol. 44(4), pages 37-47, December.
  7. Ashoka Mody & Ratna Sahay & Thomas Helbling, 2004. "Debt Accumulation in the CIS-7 Countries," IMF Working Papers 04/93, International Monetary Fund.
  8. J. Stiglitz, 1998. "More Instruments and Broader Goals: Moving toward the PostWashington Consensus," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 8.
  9. International Economics Department, 1992. "Measuring the incomes of economies of the former Soviet Union," Policy Research Working Paper Series 1057, The World Bank.
  10. Corden, W. Max, 1992. "Trade policy and exchange rate issues in the former Soviet Union," Policy Research Working Paper Series 915, The World Bank.
  11. Philip R. Lane, 2003. "The International Community and the CIS-7," Trinity Economics Papers 20033, Trinity College Dublin, Department of Economics.
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