DUSHANBE, April 18, 2013, Asia-Plus -- Tajikistan’s accession to the Customs Union (CU) and the Single Economic Space (SES) will have a positive economic impact on the country’s economy.  However, potential positive gains as a result of accession should not be expected immediately and automatically: accession will merely open a window of opportunity for Tajikistan.

The Eurasian Development Bank (EDB) Center for Integration Studies arrived at this conclusion in its comprehensive report, Economic Impact Tajikistan’s Accession to the Customs Union and Single Economic Space.

A quantitative analysis of the static (one-off) impact of Tajikistan’s accession to the CU indicated that macro-economic indicators would only experience a slight change.  During the initial stage of CU accession, Tajikistan would see a moderate positive impact.  The benefits would increase, however, should the RT successfully exploit the additional opportunities which would be accessible to the country following the accession.  The potential effects of accession consist of three main components: investment, increased productivity and labor migration.  These would promote an additional increase in Tajikistan’s potential GDP growth by 3.5% yearly in the medium term.  Investment would spur additional economic growth of 1.6% a year, an increase in productivity could bring 0.5%, the integration of new labor resources and reduced unemployment would lead to 0.4% gain, and cash remittances would bring GDP increase at 1%.

Over the past two decades, investment in Tajikistan’s economy has been significantly less than its potential level.  The country’s investment capacity currently stands at $ 2.5 billion a year.  CU accession would stimulate foreign and domestic investment into the country’s hydro-power sector, mining and light industries, the banking sector, and agriculture.

The researchers also examined Tajikistan’s foreign trade potential.  They found that Tajikistan’s customs tariffs were sufficiently close to the customs tariffs of the Common Economic Space that would simplify the pace of adjustment and result only in a minor diversion of trade.  

The researchers maintain that one of the main advantages will be Tajikistan’s accession to the SES single labor market.  It will result in a migration increase of 10—15%.  Growth estimates for migrant salaries currently stand at 9% to 28%, and the increase in cash remittances at 15 to 25%.

On the basis of the study, the researchers compiled recommendations for a series of measures, designed to ensure Tajikistan’s smooth and efficient integration into the future Eurasian Economic Union.  These recommendations cover foreign trade, investment, state budget support and labor migration regulation.

In addition, the researchers note that stepping up the pace of the negotiations depends on Kyrgyzstan’s accession to the CU, since Tajikistan will then share a common customs border with the CU.

Eurasian Development Bank (EDB) is an international financial organization founded by Russia and Kazakhstan in 2006. The members of the Bank are Russia, Kazakhstan, Armenia, Tajikistan and Belarus (2010). Other states or international organizations can become members by joining the Agreement Establishing the EDB. The Bank has authorized capital in exceeds US$1.5 billion, which was formed of contributions by its member states: Russia (US$1billion), Kazakhstan (US$500 million), Armenia (US$100,000), Tajikistan (US$500,000) and Belarus (US$15 million). The authorized capital may be increased by resolution of the Bank’s Council. The Bank has the status of an international organization, and is subject to international law.