Trade policy in a ‘double-landlocked’ transition economy: Kyrgyzstan

This paper examines trade and commercial policy in Kyrgyzstan in the context of that country's distinctive historical and geographical characteristics, drawing on the World Trade Organisation's latest Trade Policy Review. A former Soviet republic, it is a geographically isolated, effectively a ‘double-landlocked’, transition economy. The country was an early liberalizer, both economically and politically, among the former Soviet republics, and it is now a broadly open economy. After a catastrophic economic decline in the immediate transition era it also achieved macroeconomic stabilisation relatively quickly. However the growth dividend from these major policy reforms has been modest, and the country has become one of the most remittance-dependent economies in the world. While its geographical handicaps are immutable, we argue that key explanations for the slow economic growth are the limited ‘behind-the-border’ reforms, the dualistic economic structure, and misdirected fiscal allocations. We also draw out some of the broader implications for trade policy reform in other transition economies.