ADB to help Azerbaijan reduce susceptibility to exogenous shocks

The Asian Development Bank (ADB) is considering providing technical assistance for the regional project "Economic Knowledge Support and Capacity Development for Central and West Asia," Report informs referring to the bank.

The project covers Azerbaijan, Armenia, Georgia, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan. Financing of $750,000 is planned to be provided through the Technical Assistance Special Fund.

The objective of the regional technical assistance (TA) is to strengthen the economic work of the Asian Development Bank (ADB) and ensure that knowledge work systematically informs country operations, thereby improving evidence-based economic policymaking by developing member countries (DMCs) in Central and West Asia.

Most DMCs in Central and West Asia do not have a high degree of economic complexity, and their growth trajectories are tied closely to commodity exports and/or a narrow production base. This dependence on international demand and prices for their respective specific commodities, combined with weak linkage to the global value chain, increases their susceptibility to periodic exogenous shocks.

Within this context, key priorities for these DMCs include sound macroeconomic management, trade and investment policies, and other structural reforms promoting private sector participation, private sector investments, and job creation while combating environment-related challenges. Another crucial priority is to deploy optimal digitalization approaches. While these challenges are complex and multidimensional, considerable fragmentation of knowledge hinders the formulation of effective public policy responses.

In some countries, the transition to a market economy is still ongoing. Private sector-led export growth involves varying degrees of uncertainty and complexity, and public institutions often lack adequate capacity to pursue evidence-based policymaking. It is crucial to inform stakeholders of the essential components for knowledge-based policy formulation. Quantitative and qualitative analyses are vital for informed decision-making. By effectively applying evidence from real-world situations, efficient and effective policy solutions can be created to accelerate private sector growth.

Even as ADB has been supporting the country knowledge plan, led by the respective ADB resident mission, a holistic, region-wide approach to economic work is needed to mobilize the region's talents and enhance public institutions' capabilities in economic analysis. This can be achieved through prioritized knowledge products, improved data availability and utilization, and targeted capacity development.

To facilitate favorable outcomes of the economic work commissioned in ADB's Central and West Asia Department (CWRD), a convening platform for selected staff working on DMCs in Central and West Asia is needed. This platform would enable outreach to related research institutions and policymakers of nodal government ministries and/or agencies that is currently absent.