Long-Term Development Challenges
Central Asia is a region that is dynamically growing, both economically and demographically, but the following long-term challenges are characteristic for the countries of the region.
1. Demographic growth. There is a positive population growth in the region as a whole. According to UNDESA estimates, the population of the region will reach 71.4 million by 2025, and 82 million by 2050. The urban population will increase by an average of 1.51% annually until 2050, which exceeds the growth rate of the total population, and its share is projected to reach 55.2% by 2050. The growth rate of the rural population is expected to fall from the current level of 1.1% to 0.46% in 2025 and to 0.77% in 2050.
The highest population growth rates will be observed in Uzbekistan, Tajikistan, and Kyrgyzstan, with relatively minute demographic changes in Kazakhstan.
The population of the countries of the region will remain relatively young - the average age of residents will be about 26 years, and the proportion of the working-age population (15-64 years) will average 65-67%, which means that the pressure on the labour market will persist in the long term.
2. Prospects for spatial development. In the medium and long term, industrialisation and urbanisation will determine the dynamics and depth of development processes in the countries of Central Asia. At the same time, the on-going socio-economic and political-administrative reforms in the Central Asian countries are based on different models. As a result, various political, economic and institutional systems have been formed. The implementation of region-wide approaches to spatial development with an emphasis on urban sustainability and the complexity of rural settlement development will necessitate accountability among the countries of the region, as well as the overcoming of the disintegrating factors associated with uncontrolled migration. Labour migration presents a serious obstacle to the enhancement of economic cooperation in the region, as well as the creation of joint ventures, the reduction of unemployment, and the improvement of the living standards of the population.
It is necessary to look for new, integrated approaches to the implementation of industrial, transport, and logistics projects in the region, the formation of cross-border cooperation zones, etc. In this context, the countries of Central Asia face a large-scale task - to find areas, initiatives and specific projects that will gradually ensure the coherence of national development strategies. At the same time, an important place should be given to the development of cities and metropolitan areas, such as development centres, as well as the provision of political, economic, infrastructural and other conditions for expanding interaction between urban territories.
3. Natural and geographical restrictions. The limited and uneven distribution of water and land resources makes it impossible to develop agriculture in an extensive way. Moreover, the intensification of agriculture leads to reduced employment opportunities in rural areas.
The main problem regarding the region’s natural resources is the use of regional water resources. This requires a carefully balanced approach to irrigation, human water consumption, electricity generation and fragile environment protection. Given the vulnerability of the regional water and energy infrastructure, it is obvious that the lack of cooperation in this respect entails serious risks and costs.
Advancements in solving water and energy problems can be an important factor in intensifying intraregional trade and investment.
At the same time, Central Asia is facing the global problem of climate change as rising temperatures, melting glaciers, increasing variability of water resources, as well as frequent and devastating hazardous weather events, which necessitate the development of sustainable mechanisms for cooperation in the direction of resource conservation and adaptation to climate change.
4. Vulnerability to growth. Most of the economic activity in the region is connected with oil exporting countries. If the region is divided into groups, then domestic demand will be the engine of economic growth in the oil and gas exporting countries. The balance of payments of countries-exporters of labour resources will be dependent on money transfers from abroad.
On the one hand the desire to maintain a relatively high rates of economic growth means that the pressure on nature will increase (if the current development model is preserved). On the other hand, efforts to find key growth drivers will increase, including reliance on the long-term potential of regional economic cooperation.