Tajikistan, like other Central Asian countries, continues to face the problem of insufficient foreign direct investment, which could significantly accelerate the country’s economic development, states the new World Bank (WB)’s report titled TIDES of Change: Igniting Productivity Growth in Europe and Central Asia.  

Causes of investment shortage

World Bank analysts argue that the main factors holding back investment in Tajikistan are barriers related to the business environment, logistics, and political restrictions. These obstacles significantly reduce opportunities for expanding foreign trade and complicate Tajikistan’s integration into global economic processes.

According to the authors of the report, improving the investment climate could increase foreign investments in the country by 80%, which is equivalent to $1.5-2 billion.

Untapped trade potential

The report also emphasizes that Tajikistan has significant potential to increase its trade volume, but these opportunities are not yet fully utilized. Experts believe the country is losing a substantial part of its trade potential by not efficiently utilizing available resources.

Need for labor market and educational system optimization

An important aspect highlighted in the report is the need to optimize the labor market and increase flexibility in labor processes. It also stresses the importance of improving links between educational institutions and the labor market, which would allow the country to better leverage the skills of its workforce. This, in turn, can improve productivity and create additional jobs.

Measures to boost productivity and economic growth

World Bank specialists believe that comprehensive measures, including reforms aimed at improving the investment climate, could significantly enhance productivity and stimulate Tajikistan's economic growth. These steps would bring long-term economic benefits and help create a sustainable economic model.

Unique data for productivity analysis

The report uses new, unique enterprise-level data, which allows for a fresh perspective on productivity trends, the causes and scale of issues hindering its growth, as well as the existing opportunities for countries in the ECA region. This data is based on over 40 million observations conducted between 2008 and 2023 in 16 countries across Europe and Central Asia, obtained from national statistical agencies, tax authorities, and additional sources.

Conclusions and prospects

The World Bank report shows that Tajikistan, like other countries in the region, has great opportunities for boosting economic growth and strengthening its position on the international stage. To achieve this, it is necessary to create more favorable conditions for foreign investors, optimize the labor market, and improve the interaction between the educational system and the needs of the economy.