Shifting Comparative Advantages : Implications for Growth Strategy

Shifting Comparative Advantages : Implications for Growth Strategy

The future development of the Tajik economy will be shaped by its comparative advantage on world markets. Exploiting comparative advantage enables an economy to reap gains from trade. Tajikistan's most important comparative advantage is its hy...

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Bibliographic Details
Main Author:	Coulibaly, Souleymane
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2012
Subjects:	ACCESS TO MARKET ACCESS TO MARKETS ACCESSIBILITY ADVERSE IMPACT AFFILIATE AGGLOMERATION ECONOMIES AGRICULTURAL OUTPUT AGRICULTURAL PRODUCTION AGRICULTURE AIR AIR TRANSPORT AIR TRANSPORT SECTOR ARABLE LAND BORDER CROSSING BORDER MANAGEMENT BOTTLENECKS CARRIERS COAL COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGES COMPETITIVENESS CONSOLIDATION CONSUMERS DEBT DECREASING PRODUCTIVITY DEMAND FOR TRANSPORT DEMAND FOR TRANSPORT SERVICES DEMAND GROWTH DEVELOPMENT AGENCY DEVELOPMENT POLICY DIVISION OF LABOR DOMESTIC FLIGHTS DOMESTIC MARKET DOMESTIC TRAFFIC DRIVERS DRIVING ECONOMIC CONCENTRATION ECONOMIC GEOGRAPHY ECONOMIC GROWTH ECONOMIC STRUCTURE ECONOMIES OF SCALE EMPLOYMENT ENVIRONMENTS EXPENDITURE EXPORT GROWTH EXPORT MARKET EXPORT MARKETS EXPORTS EXTERNAL TRANSPORT EXTERNALITIES FINANCIAL SECTOR FREIGHT GDP GOVERNMENT REGULATION GOVERNMENT REGULATIONS GROWTH RATE HIGHWAY HIGHWAYS INCOME LEVELS INCREASING RETURNS INCREASING RETURNS TO SCALE INDUSTRIAL EXPANSION INDUSTRIALIZATION INEFFICIENCY INFRASTRUCTURES INSPECTION INTERMEDIATE GOODS INTERNATIONAL AIRPORTS INTERNATIONAL FLIGHTS INTERNATIONAL TRANSIT ITC JOURNEY LABOR FORCE LABOR MARKET LABOR PRODUCTIVITY LEVEL PLAYING FIELD LOCAL GOVERNMENT MARKET FORCES MARKET INFORMATION METALS MIGRATION MINISTRY OF TRANSPORT MODAL SPLIT MODE OF TRANSPORT MOTOR VEHICLES PASTURES PATENTS POLICE POTENTIAL INVESTORS PRODUCERS PRODUCTION FUNCTION PRODUCTIVE RESOURCES PROPERTY RIGHTS PUBLIC FINANCE RAIL RAIL CONNECTIONS RAIL LINES RAIL NETWORK RAIL NETWORKS REAL PRICES RESOURCE ALLOCATION RETAIL RETAIL TRADE RETURNS TO SCALE RISK MANAGEMENT ROAD ROAD CROSSING ROAD PROJECTS ROADS SAFETY SPREAD SUPPLY CHAINS SURPLUSES SUSTAINABLE GROWTH TAX TAX ADMINISTRATION TAX RATES TAXATION TECHNICAL ASSISTANCE TRADE LIBERALIZATION TRADE POLICY TRAFFIC TRAFFIC FLOW TRANSIT TRANSIT OPERATORS TRANSIT SERVICE TRANSIT SERVICES TRANSIT SYSTEM TRANSIT SYSTEMS TRANSIT VEHICLES TRANSPORT TRANSPORT COSTS TRANSPORT FACILITATION TRANSPORT INFRASTRUCTURE TRANSPORT MODES TRANSPORT OPERATIONS TRANSPORT SYSTEM TRANSPORTATION TRANSPORTATION COSTS TRANSPORTATION SERVICES TRAVEL TIME TRIP TRUCKS TUNNELS URBAN ROADS URBAN SERVICES URBAN TRANSPORT VALUATION WHOLESALE TRADE WORLD MARKETS
Online Access:	http://documents.worldbank.org/curated/en/2012/07/16490839/shifting-comparative-advantages-tajikistan-implications-growth-strategy http://hdl.handle.net/10986/11941

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Summary:	The future development of the Tajik economy will be shaped by its comparative advantage on world markets. Exploiting comparative advantage enables an economy to reap gains from trade. Tajikistan's most important comparative advantage is its hydropower potential, which is far larger than the economy's domestic requirements. Yet, high capital costs of building hydropower plants and the unstable geopolitical situation in the transit region to reach South Asian export markets are constraining the realization of this potential. In the short term, the sector, which provides the greatest opportunity for Tajikistan to diversify its exports, appears to be agro-industry and, to a lesser extent, clothing. For both sectors, the main export market is likely to be the regional market. Tajikistan also has a comparative advantage in labor exports, which it has successfully exploited since the mid-2000s. To harness the full potential for labor exports will require improving the skills base of migrant workers and, in particular, their command of the Russian language. In the medium term, the paper argues that an export diversification strategy should tap the agglomeration economies generated by cities. More specifically, establishing Tajikistan's two leading cities, Dushanbe and Khujand, and their surroundings as enclave economies, linked to each other and to major regional markets through improved transport infrastructure so as to minimize production and transportation costs. The two enclave economies should provide the supporting services (finance, logistics, transport and storage) for private sector businesses. In the long term, regional cooperation on trade and transport facilitation could be pursued to reduce transport costs to attractive regional markets such as China, India, Russia and Turkey.