ABSTRACT
Chapters 3-6 have demonstrated how differences in the natural resource endowment combined with other initial conditions (principally the length of exposure to central planning, proximity to the EU and the scale of GDP compression) to vary the pace of reform among the CCA countries. All eight CCA countries eventually achieved macroeconomic stabilization and seven of them subsequently experienced fairly rapid GDP growth, the exception being the ‘gradual reformer’ Uzbekistan. However, as is the case with many developing market economies that were distorted by maladroit policies during the 1960s and 1970s, reform in the CCA countries met with more success in stabilizing the economy than in competitively restructuring it. This outcome suggests that the current strong rates of economic growth in most CCA countries may not be sustainable. Rather, rapid growth has been driven either by FDI and/or high energy prices (Azerbaijan, Kazakhstan and Turkmenistan); geopolitical rent that flowed mainly into consumption rather than investment (Tajikistan and Kyrgyzstan) or external remittances (Armenia and Georgia). Investment has, at best, arrested the continued deterioration in infrastructure, as in Armenia but not yet elsewhere, whereas growth in nonhydrocarbon tradaeables like manufacturing and agriculture is driven more by the re-activation of existing ageing capacity rather than by investment in new facilities.
