Page 12 - BNE_magazine_05_2019

12 I Companies & Markets bne May 2019
from poor transport infrastructure, to bureaucracy to very high levels of corruption.
And there is a chance for the more developed countries of Central Europe in particular to maintain their economic lead, by investing into technology. “By closing the digital gap with Northern and Western Europe, CEE could earn up to 200bn in additional GDP by 2025 – a gain almost the size of Portugal’s entire economy in 2017,” projected a 2018 report from consultancy McKinsey. Companies active in the region are already investing into new technologies, including digitisation and robotisation in response to growing labour shortages.
In a sign of the scale of the problem, respondents to a European Council on Foreign Relations (ECFR) survey from Poland, Romania and even Hungary were among those saying they were more worried about emigration than immigration – a perhaps surprising revelation given the right wing Hungarian government’s obsessive anti-immigration stance. Meanwhile governments from the region are looking to stem the demographic decline either by encouraging their citizens to have more babies, by encouraging migration (in some countries at least with a clear preference for migrants from fellow Christian countries) and trying with various degrees
of success to persuade their emigres to come home.
Yet such steps are unlikely to reverse the demographic catastrophe unfolding in the region, or to prevent East European states being overtaken by the growing populations
“The drain of skilled labour has lowered productivity growth and pushed up wages, undermining competitiveness”
of Central Asia, as the latest revision of the UN World Population Prospects shows.
bne IntelliNews has long speculated that Uzbekistan’s large population will fuel consumer led growth and could even lead to the arrival of large investors in search of a low cost
Uzbekistan to overtake Ukraine in 2039
Young Uzbek women at the spices and silk festival in the historic city of Bukhara. Source: http://veton.picq.fr
workforce. Yet so far incomes have remained too low for consumption led growth on any significant scale, and under former president Islam Karimov foreign investment was stymied by laws such as that banning repatriation of profits, not to mention investors being at the mercy of a rapacious local elite with the late president’s eldest daughter Gulnara Karimova – dubbed the “robber baron” in a leaked US embassy cable – being a prime example. As a result it was oil and mineral rich Kazakhstan, rather than more populous Uzbekistan, that shot ahead of its neighbours during the transition period.
Where human capital was concerned, Tashkent was doing the opposite of investing into its people, interrupting their education and sending schoolchildren, students and teachers off to the cotton fields as effective slave labour for up to a couple of months every autumn. By the end of the Karimov era, it had become evident that Tashkent’s social welfare and education systems were unable to keep up with the rapid population growth in the country, said a 2016 comment from the Carnegie Endowment for International Peace. Analysts from Stratfor more recently pointed to the “poor socio- economic conditions caused by low global energy prices and rapid population growth”, which have become a contributor to growing militancy.
Since Karimov’s death, things have slowly been beginning to change. His replacement Shavkat Mirziyoyev has embarked on a gradual reopening of the one-time hermit state, with the launch of its successful debut eurobond, and plans for a new wave of privatisations. Recognising this, in little more than a year since Karimov’s death the World Bank had Uzbekistan as one of the world’s top 10 most active reformers. Still, it’s early days to say how deep the reforms will go and to what extent they will lead to greater opportunities for the Uzbek people.
Population growth in the Central Asian country is expected to continue for the coming decades, eventually peaking at around 41.5mn in 2061, before dropping back to 38.1mn by the end of the century.
Ukraine’s still relatively large population compared to its western neighbours should in theory mean it could follow
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