Kyrgyzstan Introduction:-

Kyrgyzstan is a landlocked and mountainous country located in Central Asia and bordered by
China, Kazakhstan, Tajikistan, and Uzbekistan. The government system is a republic; the chief
of state is the president, and the head of government is the prime minister. Kyrgyzstan has an
emerging mixed economic system which includes a variety of private freedom, combined with
centralized economic planning and government regulation.

ABOUT INDURSTY OF KYRGYZSTAN:-

Industries: small machinery, textiles, food processing, cement,
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shoes, sawn logs, refrigerators, furniture, electric motors, gold, rare earth metals

Exports - commodities: cotton, wool, meat, tobacco; gold, mercury, uranium, natural gas,
hydropower; machinery; shoes

The industrialization of Kyrgyzstan began in the 1930’s with the production of heavy
agricultural machinery, electric motors, light manufacturing, and mining. Before that textiles and
leather goods constituted Kyrgyzstan's main industry. During World War Two, Kyrgyzstan
benefited from the Soviets’ movement of their heavy industry from the European theater to the
East. Some of this industry was placed in Kyrgyzstan and later formed the basis of the
industrialization of the republic. Soon after, Bishkek, Aksu, and Tokmak received more military-
related industrial plants and factories from the European part of the Union. Before long, the
republic became a major contributor to engineering, instrument-making, non-ferrous metal
manufacturing, and coal-mining. With the increase in expertise, the volume of Kyrgyz industry
increased, boosting industrial production manifold.

In the 1980’s, the Soviet Union was heavily involved in Afghanistan. Much of the funds that,
thus far, had been allotted to the agriculture and industry of the republics was funneled to the war
front. Consequently, the republics were no longer receiving the subsidies that helped them
manage their industries. Without the vital subsidies from Moscow, Kyrgyz industry began to
decline.

Economic Perspective of CPEC

It should be noted that at its height, the republic’s industry that was centered on mining,
processed uranium, antimony, mercury, and molybdenum contributed a great deal to the
economy of the Soviet Union. Kyrgyz light industry produced textiles, clothing, and footwear,
while the agricultural sector produced cotton, silk, fruits, and vegetables. Automobiles, tractors,
electrical equipment, furniture, timber, cement, and prefabricated cement walls were among the
major industrial products of the country. It should be noted that goods manufactured in
Kyrgyzstan are of poor quality. They are not fit for export. The country is poor, so it cannot
invest in technology to bring its industry up to par with the rest of the world or to create trade
relations at an international level.

One of the major contributors to Kyrgyz economy is hydroelectric power generated by the
Togtogul, Uchqurqan, and Qumqasoi hydroelectric stations on the Naryn River. They produce
not only most of the energy needs of the republic, but also much surplus energy for export to
neighboring countries.

The economy is heavily weighted toward gold export and a drop in output at the main Kumtor
gold mine sparked a 0.5% decline in GDP in 2002 and a 0.6% decline in 2005. GDP grew more
than 6% in 2007, partly due to higher gold prices internationally.

Agriculture, Kyrgyz Republic’s leading industry,

1 is the source of the over one-third of the
Kyrgyz gross domestic product. Major components of the Kyrgyz agricultural industry are
livestock breeding (meat, dairy and wool production) as well as tobacco, cotton and industrial
crops production, gardening, beekeeping and vegetable growing. Kyrgyzstan fully covers its
foodstuff needs and exports food to Kazakhstan and Russia.

The industry of the Kyrgyz Republic, which produces over 20% of GDP, consists of processing
industry, non-ferrous metallurgy and mineral resources industry.

The “Kumtor” gold-mining project (a joint venture with “Kameko” Canada) is one of the most
significant commercial ventures in the Kyrgyz Republic. This enterprise generates nearly 35% of
the country’s total exports and is responsible for generating approximately one-tenth of the
domestic production. Kyrgyz Republic is the third among other CIS countries for gold-mining
output.

Strong hydro-energy complex is possibly the nation’s greatest heritage from the Soviet Union.
The country’s hydro-energy infrastructure is the second largest source of Kyrgyz exports. To
underscore the importance of this industry, it should be noted that the cumulative hydro-
energetic reserves of the Kyrgyz rivers exceed those of the famous Russian Volga river by
several hundred percent. Kyrgyzstan exports electricity to Russia (over 1.5 billion kW annually)
as well as to neighboring Kazakhstan, Uzbekistan, Tajikistan and China. Hydro-energy complex
secures the excellent perspectives to replace the import of energy resources as the 75-100

Economic Perspective of CPEC

thousand tons of oil extracted in Kyrgyzstan annually cover only one third of the country’s need
in energy.

The country has developed a sufficient environment for successful development. Kyrgyzstan has
established a multi-structural economy and possess rich natural and highly competent human
resources. The country’s strategic development plan is proved by the consistently increasing
inflow of direct foreign investments, dynamically developing banking sector and the population
confidence in financial institutions.

Is Kyrgyzstan developed or underdeveloped?

Economic Perspective of CPEC

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The Kyrgyz Republic is a land-locked, lower-middle-income country of 6.3 million people. It
has rich endowments, including arable land (7 percent of the country), pastures (48 percent), and
substantial forests and minerals, and there is significant potential for the expansion of its
agriculture sector, hydroelectricity production, and tourism industry.

The country has experienced instability since independence in 1991. Corruption and nepotism
were major stress factors underlying political and social upheavals in 2005 and 2010. To prevent
the concentration of power, a parliamentary constitution with elaborate checks and balances was
adopted in late 2010, making the Kyrgyz Republic the only Central Asian country in which the
president is limited to a single term.

The president first elected under this constitution served a full six-year term. Following peaceful
elections, President Sooronbai Jeenbekov took office in November 2017. The coalition
government is accountable to the parliament.

The economy is vulnerable to external shocks owing to its reliance on one gold mine, Kumtor,
which accounts for about 10 percent of GDP, and on worker remittances, equivalent to about 27
percent of GDP in 2018.

To realize the country’s potential, economic activities need to be diversified through increased
private sector development and improved occupational skills and productivity in the young labor
force.

Economic Perspective of CPEC