Published
10/29/2026, 16:11Despite government support and the availability of funding for joint projects, the countries of Central Asia have not yet managed to create conditions under which it would be profitable for businesses to develop joint production within the region. Sergey Ulatov, chief economist of the Eurasian Fund for Stabilization and Development, spoke about this on the sidelines of the “Akchabaru” International Economic Conference in Astana.
According to him, EFSD research shows that production linkages between Kyrgyzstan, Kazakhstan, Uzbekistan, and Tajikistan remain extremely weak.
At the same time, existing value chains are predominantly focused on raw material sectors, and a significant portion of the final value of products is generated outside the region.
When asked by “Akchabara” why, despite the availability of financial instruments and political interest, industrial cooperation within the Eurasian Economic Union has not seen significant development, Ulatov replied that the problem lies primarily in economic incentives.
“I don’t think you can simply tell businesses exactly where they should develop industrial cooperation. Businesses themselves determine where it is profitable for them to operate and where it is not,” the economist emphasized.
In his view, the limited nature of production ties indicates that entrepreneurs do not yet see sufficient advantages in expanding their operations within the Eurasian economic space.
“So far, we have not been able to convince entrepreneurs that developing business within our economic space is truly profitable,” Ulatov acknowledged.
He noted that integration institutions are already working to harmonize legislation, and decisions aimed at developing cooperation are being made. However, in his view, a significant portion of the efforts remains focused at the political level, whereas entrepreneurs need practical solutions.
“We simply need to ask businesses what specifically is preventing them from developing cooperation,” stated the chief economist of the EFSD.
Ulatov cited the small size of the region’s markets as one of the main constraints. When deciding to expand production, companies assess potential demand and opportunities for further growth.
“We’re still running up against the fact that the markets are small. If a company is planning to grow, it thinks, ‘Well, this is my limit, isn’t it?’” the economist explained.
At the same time, the EFSD study revealed differences between countries. In most of the region’s economies, production chains remain short, whereas in Uzbekistan, they are gradually lengthening.
Ulatov attributed this feature, in part, to Uzbekistan’s relatively large domestic market.
Despite existing restrictions, the EFSD’s chief economist believes the potential for regional industrial cooperation is enormous.
According to him, the geographical proximity of the countries, relatively open borders, and opportunities for free trade create natural conditions for the development of production ties.
However, the existing structure of economic relations has led to the countries in the region building value chains primarily in other directions.
Ulatov is convinced that the situation will change in the long run, as the development of trade and joint production between neighboring states makes economic sense.
“I think this issue will be resolved anyway. Cooperation will develop; I am confident of that,” he emphasized.
According to the economist, the development of regional production ties will allow Central Asian countries to create more value added within their own economies, develop new industries, and create more productive jobs.
“If a country does not trade with its neighbors, that in itself indicates the existence of a problem,” Ulatov concluded.
