Expert group meeting on structural economic transformation in North and Central Asia and financial integration among SPECA countries

29 Apr 2019 to 30 Apr 2019
Almaty, Kazakhstan
By invitation only

This expert group meeting is a follow up to recommendations voiced by national partners at 2018 SPECA Economic Forum and Governing Council session. For two days discussions focused on two related topics – structural economic transformation and regional financial integration as means of implementing the 2030 Agenda for Sustainable Development.
Economic growth in North and Central Asia has slowed in recent years owing in part to falling commodity prices and their narrowly based and relatively small domestic economies. To reverse the trend and sustain growth countries will require broadening and diversifying of their economies through continued structural economic transformation, identified as Priority 5 of the Vienna Programme of Action for Landlocked Developing Countries for the Decade 2014-2024.
In 2018, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) facilitated discussion on structural economic transformation during the Economic Forum of the United Nations Special Programme for the Economies of Central Asia (SPECA). As a result, the Economic Forum recognized that “acceleration of structural economic transformation is a fundamental condition to implement the 2030 Agenda for Sustainable Development and increasing shared prosperity” and called upon ESCAP to provide support to the efforts of the SPECA participating countries in accelerating structural economic transformation. ESCAP, in response, is developing a holistic framework in line with Sustainable Development Goals to support further structural economic transformation so that countries of North and Central Asia are able to benefit from better access to consumer markets through improved connectivity, spurred by ongoing regional integration processes such as the Eurasian Economic Union.

During day 1 of discussions the experts are to review a draft publication on structural economic transformation. The publication will set the holistic framework on, assess the current state of, and propose policy recommendations for enhancing transformation through achieving the Sustainable Development Goals relating to (a) financing for development, (b) human capital accumulation and development and (c) infrastructure development and trade facilitation.

On day 2 the meeting participants are to review the draft publication on financial integration among SPECA countries. The regional financial integration among the SPECA participating countries can enhance financial development and bring benefits for home and host countries. Financial integration is the process through which the financial markets of two or more countries become more connected to each other. The process has the following forms and benefits: (a) cross-border capital flows and financial activity both follow and can be followed by cross-border trade, and thus can help foster wider regional economic integration; (b) foreign participation in domestic markets; (c) at the regional level, capital market integration creates scope for economies of scale, especially when individual markets are relatively small; (d) countries that face a need to improve their physical infrastructure, will require sizeable investments, consequently, deep and well-developed financial markets; (e) sharing of information and practices among financial institutions across countries, and (f) unification of market infrastructures and risk-sharing among participating countries in integration processes.

In 2018, the SPECA Governing Council adopted the recommendations of the 2018 Economic Forum, calling for the next Forum to review banking system and capital markets issues and weak regional financial interlinkages among SPECA member-countries.
The study will identify challenges and opportunities and explore best experiences and practices for deeper financial integration and financial liberalization in Central Asia and the South Caucasus.