Research Article
BibTex RIS Cite

Central Asian Guarantee Fund as an institution to support and develop mutual trade between Central Asian countries

Year 2023, Issue: 97, 11 - 35, 09.06.2023

Almaz Baketaev Akylbek Arstanbek Uulu , Malik-aidar Abakirov , Abdil Tashirov

Abstract

This article examines factors affecting trade among Central Asian countries and assesses the trade potential of the region. Using open data, a gravity model is used to estimate Central Asian countries' trade over the past 2-3 years. The results obtained from the mathematical gravity model showed the presence of the trade potential between the Central Asian countries. According to the results, GDP of the exporting and importing country has a positive impact on trade, while distance has a negative impact. The trade potential shows the opportunities for economic growth and the development of entrepreneurship. Lower-middle-income countries, being less developed economies even by Central Asian standards, can only reduce poverty and become more developed by increasing their trade with neighboring Central Asian countries. At the same time, this article proposes a tool for realizing trade potential - the Central Asian Guarantee Fund. This institution will aim to increase the level of trade between countries by providing private sector access to finance, expand trade finance instruments, and support national guarantee funds. Thus, the article can help Central Asian governments formulate policies to expand regional trade in the face of geopolitical tensions. This article is the first experience of applying the gravity model to Central Asian countries in order to estimate trade potential, and to realize it with the help of the Central Asian Guarantee Fund.

Keywords

Trade gravity model Central Asia Central Asian Guarantee Fund Kyrgyzstan Kazakhstan Uzbekistan Tajikistan Turkmenistan

References

  • Anderson, J.E. (1979). “A theoretical foundation for the gravity equation”. American Economic Review, 69(1), p. 106-116. – URL: https://doi.org/10.1126/science.151.3712.867-a
  • Bergstrand, J.H. (1985). “The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence”. The Review of Economics and Statistics, 67(3), p. 474-481. – URL: https://doi.org/10.2307/1925976
  • Baier, S.L. and Bergstrand, J.H. (2007). “Do Free Trade Agreements Actually Increase Members’ International Trade?” Journal of International Economics, 71, p. 72-95. – URL: http://dx.doi.org/10.1016/j.jinteco.2006.02.005
  • Deardorff, A.V. (1998). “Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?” In Jeffrey A. Frankel (Ed.). The Regionalization of the World Economy. University of Chicago Press. – URL: http://www.nber.org/chapters/c7818
  • Elshehawy, M.A., Shen, H. & Ahmed, R.A. (2014). “The factors affecting Egypt’s exports: Evidence from the gravity model analysis”. Open Journal of Social Sciences, 2(11), p. 138-148.
  • Khan, S., Ul Haq, I. & Khan, D. (2013). “An Empirical Analysis of Pakistan’s Bilateral Trade: A Gravity Model Approach”. The Romanian Economic Journal, 48, p. 103-120. – URL: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.906.7050&rep=rep1&type=pdf
  • Kurmanalieva, E. (2008). “Empirical analysis of Kyrgyz trade patterns”. Eurasian Journal of Business and Economics, 1(1), p. 83-97.
  • Linnemann, H. (1967). “An Econometric Study of International Trade Flows”. The Economic Journal, 77(306), p. 366-368.
  • Paas, T. (2000). “Gravity approach for modeling trade flows between Estonia and the main trading partners”. The University of Tartu, Faculty of Economics and Business Administration Working Paper, No. 4. Tiigi, Tartu: Tartu University Press. URL: https://www.mtk.ut.ee/sites /default/files/mtk/toimetised/febawb4.pdf
  • Pöyhönen, P. (1963). “A tentative model for the volume of trade between countries”. Weltwirtschaftliches Archiv, 90, p. 93-100.
  • Allayarov, P., Mehmed, B., Arefin, S., Nurmatov, N. (2018). “The Factors Affecting Kyrgyzstan’s Bilateral Trade: A Gravity-model Approach”. Journal of Asian Finance, Economics, and Business, Vol 5, No 4, p. 95-100.
  • Rahman, M.M. & Dutta, D. (2012). “The Gravity Model Analysis of Bangladesh's Trade: A Panel Data Approach”. Journal of Asia-Pacific Business, 13(3), p. 263-286.
  • Sohn, C.-H. (2005). ”Does the gravity model explain South Korea’s trade flows?” The Japanese Economic Review, 56(4), p. 417-430.
  • Sohn, C.-H. (2001). “A Gravity Model Analysis of Korea's Trade Patterns and the Effects of a Regional Trading Arrangement”. Korea Institute for International Economic Policy, Working Paper Series, Vol. 09.
  • Thai, T. Do. (2006). “A gravity model for trade between Vietnam and twenty-three European countries”. URL: http://www.diva-portal.org/smash/get/diva2:518029/FULLTEXT01.pdf
  • Tinbergen, J. (1966). “Shaping the World Economy; Suggestions for an International Economic Policy”. The Economic Journal, 76(301), p. 92-95.
  • National Statistical Committee of the Kyrgyz Republic (2022). – URL: http://stat.kg/en/
  • Agency for Strategic Planning and Reforms of the Republic of Kazakhstan. Bureau of National Statistics (2022). – URL: https://stat.gov.kz/
  • The State Committee of the Republic of Uzbekistan on Statistics (2022). – URL: https://stat.uz/en/
  • International monetary fund DATA (IMF Data) (2022). – URL: https://www.imf.org/en/Data
  • World Bank. (2022). – URL: https://data.worldbank.org/
  • International Trade Centre. Trade statistics for international business development. – URL: https://www.trademap.org/Index.aspx
  • Final report. (2016). "Study of Trade Finance Mechanisms for Export Transactions in Kyrgyzstan", UNDP.
  • World Bank Business Pulse Enterprise Survey in Kyrgyzstan, Uzbekistan, and Tajikistan. – URL: https://blogs.worldbank.org/ru/europeandcentralasia/taking-pulse-business-central-asia-following-russian-invasion-ukraine
  • World Economic Outlook. IMF: https://www.imf.org/en/Publications/WEO/weo-database/2022/April FRP “Damu”: www.damu.kz;
  • National Bank of Kazakhstan: https://www.nationalbank.kz/ru/
  • Bulletin of the Central Bank of Uzbekistan: www.cbu.uz
  • OJSC “Guarantee Fund: https://gf.kg/
  • Bulletin of the National Bank of the Kyrgyz Republic: https://www.nbkr.kg/index1.jsp?item=1372@lang=RUS
  • Bulletin of the National Bank of Tajikistan: https://nbt.tj/ru/
  • World Bank (2019): https://www.enterprisesurveys.org/

Central Asian Guarantee Fund as an institution to support and develop mutual trade between Central Asian countries

Year 2023, Issue: 97, 11 - 35, 09.06.2023

Almaz Baketaev Akylbek Arstanbek Uulu , Malik-aidar Abakirov , Abdil Tashirov

Abstract

This article examines factors affecting trade among Central Asian countries and assesses the trade potential of the region. Using open data, a gravity model is used to estimate Central Asian countries' trade over the past 2-3 years. The results obtained from the mathematical gravity model showed the presence of the trade potential between the Central Asian countries. According to the results, GDP of the exporting and importing country has a positive impact on trade, while distance has a negative impact. The trade potential shows the opportunities for economic growth and the development of entrepreneurship. Lower-middle-income countries, being less developed economies even by Central Asian standards, can only reduce poverty and become more developed by increasing their trade with neighboring Central Asian countries. At the same time, this article proposes a tool for realizing trade potential - the Central Asian Guarantee Fund. This institution will aim to increase the level of trade between countries by providing private sector access to finance, expand trade finance instruments, and support national guarantee funds. Thus, the article can help Central Asian governments formulate policies to expand regional trade in the face of geopolitical tensions. This article is the first experience of applying the gravity model to Central Asian countries in order to estimate trade potential, and to realize it with the help of the Central Asian Guarantee Fund.

Keywords

Trade gravity model Central Asia Central Asian Guarantee Fund Kyrgyzstan Kazakhstan Uzbekistan Tajikistan Turkmenistan

References

  • Anderson, J.E. (1979). “A theoretical foundation for the gravity equation”. American Economic Review, 69(1), p. 106-116. – URL: https://doi.org/10.1126/science.151.3712.867-a
  • Bergstrand, J.H. (1985). “The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence”. The Review of Economics and Statistics, 67(3), p. 474-481. – URL: https://doi.org/10.2307/1925976
  • Baier, S.L. and Bergstrand, J.H. (2007). “Do Free Trade Agreements Actually Increase Members’ International Trade?” Journal of International Economics, 71, p. 72-95. – URL: http://dx.doi.org/10.1016/j.jinteco.2006.02.005
  • Deardorff, A.V. (1998). “Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?” In Jeffrey A. Frankel (Ed.). The Regionalization of the World Economy. University of Chicago Press. – URL: http://www.nber.org/chapters/c7818
  • Elshehawy, M.A., Shen, H. & Ahmed, R.A. (2014). “The factors affecting Egypt’s exports: Evidence from the gravity model analysis”. Open Journal of Social Sciences, 2(11), p. 138-148.
  • Khan, S., Ul Haq, I. & Khan, D. (2013). “An Empirical Analysis of Pakistan’s Bilateral Trade: A Gravity Model Approach”. The Romanian Economic Journal, 48, p. 103-120. – URL: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.906.7050&rep=rep1&type=pdf
  • Kurmanalieva, E. (2008). “Empirical analysis of Kyrgyz trade patterns”. Eurasian Journal of Business and Economics, 1(1), p. 83-97.
  • Linnemann, H. (1967). “An Econometric Study of International Trade Flows”. The Economic Journal, 77(306), p. 366-368.
  • Paas, T. (2000). “Gravity approach for modeling trade flows between Estonia and the main trading partners”. The University of Tartu, Faculty of Economics and Business Administration Working Paper, No. 4. Tiigi, Tartu: Tartu University Press. URL: https://www.mtk.ut.ee/sites /default/files/mtk/toimetised/febawb4.pdf
  • Pöyhönen, P. (1963). “A tentative model for the volume of trade between countries”. Weltwirtschaftliches Archiv, 90, p. 93-100.
  • Allayarov, P., Mehmed, B., Arefin, S., Nurmatov, N. (2018). “The Factors Affecting Kyrgyzstan’s Bilateral Trade: A Gravity-model Approach”. Journal of Asian Finance, Economics, and Business, Vol 5, No 4, p. 95-100.
  • Rahman, M.M. & Dutta, D. (2012). “The Gravity Model Analysis of Bangladesh's Trade: A Panel Data Approach”. Journal of Asia-Pacific Business, 13(3), p. 263-286.
  • Sohn, C.-H. (2005). ”Does the gravity model explain South Korea’s trade flows?” The Japanese Economic Review, 56(4), p. 417-430.
  • Sohn, C.-H. (2001). “A Gravity Model Analysis of Korea's Trade Patterns and the Effects of a Regional Trading Arrangement”. Korea Institute for International Economic Policy, Working Paper Series, Vol. 09.
  • Thai, T. Do. (2006). “A gravity model for trade between Vietnam and twenty-three European countries”. URL: http://www.diva-portal.org/smash/get/diva2:518029/FULLTEXT01.pdf
  • Tinbergen, J. (1966). “Shaping the World Economy; Suggestions for an International Economic Policy”. The Economic Journal, 76(301), p. 92-95.
  • National Statistical Committee of the Kyrgyz Republic (2022). – URL: http://stat.kg/en/
  • Agency for Strategic Planning and Reforms of the Republic of Kazakhstan. Bureau of National Statistics (2022). – URL: https://stat.gov.kz/
  • The State Committee of the Republic of Uzbekistan on Statistics (2022). – URL: https://stat.uz/en/
  • International monetary fund DATA (IMF Data) (2022). – URL: https://www.imf.org/en/Data
  • World Bank. (2022). – URL: https://data.worldbank.org/
  • International Trade Centre. Trade statistics for international business development. – URL: https://www.trademap.org/Index.aspx
  • Final report. (2016). "Study of Trade Finance Mechanisms for Export Transactions in Kyrgyzstan", UNDP.
  • World Bank Business Pulse Enterprise Survey in Kyrgyzstan, Uzbekistan, and Tajikistan. – URL: https://blogs.worldbank.org/ru/europeandcentralasia/taking-pulse-business-central-asia-following-russian-invasion-ukraine
  • World Economic Outlook. IMF: https://www.imf.org/en/Publications/WEO/weo-database/2022/April FRP “Damu”: www.damu.kz;
  • National Bank of Kazakhstan: https://www.nationalbank.kz/ru/
  • Bulletin of the Central Bank of Uzbekistan: www.cbu.uz
  • OJSC “Guarantee Fund: https://gf.kg/
  • Bulletin of the National Bank of the Kyrgyz Republic: https://www.nbkr.kg/index1.jsp?item=1372@lang=RUS
  • Bulletin of the National Bank of Tajikistan: https://nbt.tj/ru/
  • World Bank (2019): https://www.enterprisesurveys.org/

Центрально-Азиатский гарантийный фонд как институт поддержки и развития взаимной торговли между странами Центральной Азии

Year 2023, Issue: 97, 11 - 35, 09.06.2023

Almaz Baketaev Akylbek Arstanbek Uulu , Malik-aidar Abakirov , Abdil Tashirov

Abstract

В данной статье исследуются факторы, влияющие на торговлю между странами Центральной Азии, и проведена оценка торгового потенциала региона. Используя открытые данные, применяется гравитационная модель для оценки торговли стран Центральной Азии за последние 2-3 года. Результаты, полученные на основе математической гравитационной модели, показали наличие торгового потенциала между странами Центральной Азии. Согласно результатам, ВВП страны экспортера и страны импортера оказывают положительное влияние на торговлю, в то время как расстояние между ними оказывают отрицательное влияние. Торговый потенциал показывает возможности для обеспечения роста экономики, развития предпринимательства. Страны с доходом ниже среднего, будучи менее развитыми экономиками даже по стандартам Центральной Азии, могут снизить уровень бедности и стать более развитыми только за счет увеличения своей торговли с соседними странами Центральной Азии. Вместе с этим в данной статье предлагается инструмент для реализации торгового потенциала – Центрально-Азиатский гарантийный фонд. Данное учреждение способствует повышению уровня торговли между странами путем обеспечения доступа частного сектора к финансированию, расширению инструментов торгового финансирования, поддержки национальных гарантийных фондов. Таким образом, статья может помочь государственным органам стран Центральной Азии сформулировать политику расширения региональной торговли в условиях геополитической напряженности. Данная статья является первым опытом применения гравитационной модели торговли к странам Центральной Азии с целью оценить торговый потенциал, а также реализовать его с помощью Центрально-Азиатского гарантийного фонда.

Keywords

Торговля гравитационная модель Центральная Азия Центрально-азиатский гарантийный фонд Кыргызстан Казахстан Узбекистан Таджикистан Туркменистан

References

  • Anderson, J.E. (1979). “A theoretical foundation for the gravity equation”. American Economic Review, 69(1), p. 106-116. – URL: https://doi.org/10.1126/science.151.3712.867-a
  • Bergstrand, J.H. (1985). “The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence”. The Review of Economics and Statistics, 67(3), p. 474-481. – URL: https://doi.org/10.2307/1925976
  • Baier, S.L. and Bergstrand, J.H. (2007). “Do Free Trade Agreements Actually Increase Members’ International Trade?” Journal of International Economics, 71, p. 72-95. – URL: http://dx.doi.org/10.1016/j.jinteco.2006.02.005
  • Deardorff, A.V. (1998). “Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?” In Jeffrey A. Frankel (Ed.). The Regionalization of the World Economy. University of Chicago Press. – URL: http://www.nber.org/chapters/c7818
  • Elshehawy, M.A., Shen, H. & Ahmed, R.A. (2014). “The factors affecting Egypt’s exports: Evidence from the gravity model analysis”. Open Journal of Social Sciences, 2(11), p. 138-148.
  • Khan, S., Ul Haq, I. & Khan, D. (2013). “An Empirical Analysis of Pakistan’s Bilateral Trade: A Gravity Model Approach”. The Romanian Economic Journal, 48, p. 103-120. – URL: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.906.7050&rep=rep1&type=pdf
  • Kurmanalieva, E. (2008). “Empirical analysis of Kyrgyz trade patterns”. Eurasian Journal of Business and Economics, 1(1), p. 83-97.
  • Linnemann, H. (1967). “An Econometric Study of International Trade Flows”. The Economic Journal, 77(306), p. 366-368.
  • Paas, T. (2000). “Gravity approach for modeling trade flows between Estonia and the main trading partners”. The University of Tartu, Faculty of Economics and Business Administration Working Paper, No. 4. Tiigi, Tartu: Tartu University Press. URL: https://www.mtk.ut.ee/sites /default/files/mtk/toimetised/febawb4.pdf
  • Pöyhönen, P. (1963). “A tentative model for the volume of trade between countries”. Weltwirtschaftliches Archiv, 90, p. 93-100.
  • Allayarov, P., Mehmed, B., Arefin, S., Nurmatov, N. (2018). “The Factors Affecting Kyrgyzstan’s Bilateral Trade: A Gravity-model Approach”. Journal of Asian Finance, Economics, and Business, Vol 5, No 4, p. 95-100.
  • Rahman, M.M. & Dutta, D. (2012). “The Gravity Model Analysis of Bangladesh's Trade: A Panel Data Approach”. Journal of Asia-Pacific Business, 13(3), p. 263-286.
  • Sohn, C.-H. (2005). ”Does the gravity model explain South Korea’s trade flows?” The Japanese Economic Review, 56(4), p. 417-430.
  • Sohn, C.-H. (2001). “A Gravity Model Analysis of Korea's Trade Patterns and the Effects of a Regional Trading Arrangement”. Korea Institute for International Economic Policy, Working Paper Series, Vol. 09.
  • Thai, T. Do. (2006). “A gravity model for trade between Vietnam and twenty-three European countries”. URL: http://www.diva-portal.org/smash/get/diva2:518029/FULLTEXT01.pdf
  • Tinbergen, J. (1966). “Shaping the World Economy; Suggestions for an International Economic Policy”. The Economic Journal, 76(301), p. 92-95.
  • National Statistical Committee of the Kyrgyz Republic (2022). – URL: http://stat.kg/en/
  • Agency for Strategic Planning and Reforms of the Republic of Kazakhstan. Bureau of National Statistics (2022). – URL: https://stat.gov.kz/
  • The State Committee of the Republic of Uzbekistan on Statistics (2022). – URL: https://stat.uz/en/
  • International monetary fund DATA (IMF Data) (2022). – URL: https://www.imf.org/en/Data
  • World Bank. (2022). – URL: https://data.worldbank.org/
  • International Trade Centre. Trade statistics for international business development. – URL: https://www.trademap.org/Index.aspx
  • Final report. (2016). "Study of Trade Finance Mechanisms for Export Transactions in Kyrgyzstan", UNDP.
  • World Bank Business Pulse Enterprise Survey in Kyrgyzstan, Uzbekistan, and Tajikistan. – URL: https://blogs.worldbank.org/ru/europeandcentralasia/taking-pulse-business-central-asia-following-russian-invasion-ukraine
  • World Economic Outlook. IMF: https://www.imf.org/en/Publications/WEO/weo-database/2022/April FRP “Damu”: www.damu.kz;
  • National Bank of Kazakhstan: https://www.nationalbank.kz/ru/
  • Bulletin of the Central Bank of Uzbekistan: www.cbu.uz
  • OJSC “Guarantee Fund: https://gf.kg/
  • Bulletin of the National Bank of the Kyrgyz Republic: https://www.nbkr.kg/index1.jsp?item=1372@lang=RUS
  • Bulletin of the National Bank of Tajikistan: https://nbt.tj/ru/
  • World Bank (2019): https://www.enterprisesurveys.org/
There are 31 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Research Article
Authors

Almaz Baketaev This is me

Akylbek Arstanbek Uulu 0000-0002-9531-5974

Malik-aidar Abakirov 0000-0002-6140-2834

Abdil Tashirov 0000-0002-2677-8609

Publication Date June 9, 2023
Submission Date February 15, 2023
Published in Issue Year 2023 Issue: 97

Cite

APA Baketaev, A., Arstanbek Uulu, A., Abakirov, M.-a., Tashirov, A. (2023). Central Asian Guarantee Fund as an institution to support and develop mutual trade between Central Asian countries. Reforma(97), 11-35.