Central Asia: Spatial disparities in poverty

The economies of the Central Asian republics were centrally planned during the Soviet era and followed development strategies determined in Moscow. Their economic structures were broadly similar, although natural resource endowments varied from country to country. Significant transfers from the central budget reduced differences across the region, so that Gini coefficients (measures of inequality) for all the Central Asian republics were close to the average value for the whole USSR (Table 1). Poverty rates, however, were much higher than in other Soviet republics.

After the dissolution of the Soviet Union, the newly independent Central Asian countries became more distinct from one another as their governments followed different national development paths. All five suffered sharp drops in real output during the first half of the 1990s, the impact of which was exacerbated by the cessation of transfers from Moscow. Inequalities rose in most of the Central Asian states; today, poverty rates in these countries are among the highest in the Commonwealth of Independent States (Table 1).

Increases in poverty did not affect all the countries and their constituent regions uniformly, however. The 15 years of economic transition show that the most successful economic regions are those with or in the vicinity of large urban agglomerations, and especially capital cities. In fact, residence in a capital city is the most important positive determinant of high living standards in all Central Asian countries (Table 2), while poverty rates in rural regions are significantly higher.

The root causes of high rural poverty lie in the large-scale collective and state farms that dominated socio-economic life in rural Central Asia during the Soviet period. In addition to agriculture and food products, these farms provided such social services as schools, health services and housing. Following independence, many of these farms collapsed or underwent dramatic restructuring. Their social responsibilities were often transferred to local governments that did not have the financial or human resources to discharge them. The rural poor often lack formal property rights (in terms of housing, land and other assets), without which they cannot easily borrow money or engage in entrepreneurial activities. Access to piped and running water, heat, healthcare and kindergartens in rural areas has therefore declined and the quality deteriorated (see Table 2). All of this reduced living standards in rural areas.

More than 60 per cent of Central Asia’s poor live in rural areas. (In Kyrgyzstan, Tajikistan and Uzbekistan, the share is between 72 and 76 per cent). The highest poverty rates are observed in mountainous areas — which are also prone to flooding, landslides and other natural disasters. In Kyrgyzstan, differences in poverty rates between the richest Chuy region (the province surrounding the capital, Bishkek) and the poorest region (mountainous Naryn) exceed 50 percentage points (Figure 1). In Uzbekistan, the regional disparity in poverty rates between Tashkent city and the Syrdarya region exceeds 65 percentage points.

The spatial variation of poverty rates in Central Asia (Figure 2) shows lower levels of poverty in capital cities and central regions and much higher poverty levels in remote border areas. This, together with regional clustering of ethnic minorities in Central Asia, suggests a strong link between spatial distribution of poverty and ethnicity. Capitals and large urban agglomerations are typically populated by large Russian (and other European) communities, as well as by the wealthier members of these countries’ titular nationalities-groups with relatively high levels of human capital. The poor rural and border areas, by contrast, are more likely to be home to non-Russian (or European) ethnic minorities. These patterns of ethnicity and poverty, combined with the presence of extra-territorial enclaves in most Central Asian republics, leave much scope for disruption and conflict.
Reductions in regional disparities in Central Asia could improve regional stability, human security and overall development prospects in Central Asia. Although responsibilities for equalizing regional disparities and ensuring balanced development within these countries must rest with their governments, reducing high poverty levels in border areas requires cooperation between neighbouring states. As indicated in UNDP’s Central Asia Human Development Report,1 regional cooperation, open borders, and the free movement of goods and people are essential for poverty reduction and development in Central Asia.