Commodity Economy of Central Asia and Eastern Europe will grow more slowly than the "limited resources" of the regional economy - EBRD

/IRBIS, November 2, 09/ - Economy of commodity-rich countries with economies in transition (Eastern Europe and Central Asia) will grow more slowly than the limited resources of the region's economy, reflected in the report of European Bank for Reconstruction and Development on the impact of the crisis and transition countries in the region Central Europe to Central Asia. "In the long run, rich in raw materials countries with economies in transition - such as Azerbaijan, Kazakhstan, Russia and Turkmenistan, as a rule, grow more slowly than resource-constrained countries in the region because they have a higher macroeconomic instability and, therefore, that commodity" rent "undermine incentives to improve economic institutions", - stated in the report. To avoid this trap of resources, resource-rich countries could make efforts: the diversification of (mainly by improving the business environment); construction buffers stabilization and deepening the financial sector to reduce the impact of fluctuations in the prices of goods and reduce inequalities in the distribution as a way to benefit from sale of raw materials. Resource-rich countries with economies in transition embraced these strategies to varying degrees. In some respects - particularly in the financial development and the creation and management of stabilization funds - they were quite successful. Partly for this reason, the impact of the crisis on these countries was not worse than in other places. However, increasing the proportion of non-oil tradable sectors in GDP and exports has not been realized yet, perhaps because the success of diversification, as shown by empirical analysis itself depends on institutional quality. One approach to address is to deepen reforms in areas such as macroeconomics, financial sector and promoting competition. [2009-11-02]