Keywords

Introduction

Сentral Asia is a geographic region consisting of five countries—Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan—which emerged as independent nation-states following the dissolution of the former Soviet Union (FSU) in the early 1990s. This region spans from the Caspian Sea in the west to China in the east, and from Afghanistan in the south to the Russian Federation (or Russia) in the north. The Central Asian region is rich in natural resources, which play a vital role in the regional economy. Over seventy years of membership in the USSR, the Central Asian republics had been integrated into the centralised Communist economic system. Due to the Soviet policy of economic concentration, the regional economy assumed a primarily agrarian–industrial form, which spiralled with the breakup of the FSU, leading to early post-independence recession and a resulting financial crisis triggered by the paralysis of the Soviet era monetary and credit systems. A deficit of money coupled with very high inflation strongly disrupted domestic demand, which further escalated the decline of other sectors of the economies. In the period between 1990 and 1995, gross domestic product (GDP) declined on the order of 58% in Tajikistan, 49% in the Kyrgyz Republic, 39% in Turkmenistan and Kazakhstan, respectively, and 19% in Uzbekistan (Zhukov & Reznikova, 2001, pp. 47–48).

The major challenge lay in transforming the entirety of economic relations and management from a centrally planned system into an open-market economy. All regional countries generally adopted de jure trajectories towards an open-market economy, although de facto economic transformations took different shapes. More radical steps were taken by the Kyrgyz Republic and, to some extent, Kazakhstan in order to liberalise their economies and reduce the states’ roles, whilst Tajikistan, Turkmenistan and Uzbekistan chose more cautious and gradual approaches to economic reforms.

More generally, the Central Asian economic landscape has undergone significant structural changes in the years since independence. Economic reforms have focused on the restructuring of production and reorganising enterprises, expanding export potential and investment sources, as well as upgrading ​​institutional systems and improving market infrastructures amongst other reforms. At the same time, most Central Asian countries maintained a strong role of the state in economic affairs.

Since independence, the Central Asian countries have demonstrated a rather similar trajectory in terms of economic performance: a sharp downfall during the first half of the 1990s followed by steady economic growth from the mid-1990s onwards (Fig. 6.1). By the second half of the 1990s, regional countries recovered from a deep recession by suppressing inflation and expanding industrial and agricultural outputs.

Fig. 6.1
A screenshot of a window. It exhibits a line graph and a bidirectional bar graph. The former plots per 100 K population versus years from 1990 to 2000 with a fluctuating line that follow a declining trend. The latter indicates that the maximum annual percent change is approximately 6 in 1992.

(Source World Bank National Accounts Database)

Real gross domestic product growth in Central Asia (annual regional average %), 1991–2020

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The period between 2000 and 2010 was probably the most dynamic and sustained period of economic growth in the region. During this period, the regional economy grew on average by around 7%. The regional countries intensified their economic integration with the global economy and implemented trade and economic relationships with more than 190 countries worldwide (Sultanov, 2009, p. 108). Even during the global financial crisis of 2007–2009, the regional economy demonstrated stable economic growth of around 5–7% on average. Overall, between 1996 and 2020, the regional economy has shown an impressive growth rate of around 6%.

Economic growth has contributed to improving people’s living standards by increasing per capita incomes and improving social well-being across the region. Although significant gaps exist between individual countries in terms of gross incomes and the size of individual economies, they have increased per capita incomes multiple times during the post-independence period. For instance, GDP per capita has nearly quadrupled in Turkmenistan, almost tripled in Kazakhstan, Uzbekistan, and Tajikistan, and nearly doubled in the Kyrgyz Republic (Fig. 6.2). The economic status of countries in the region has also changed over time. Specifically, Kazakhstan and Turkmenistan joined the upper middle–income category, Uzbekistan and the Kyrgyz Republic shifted from low income to lower–middle income countries, whilst Tajikistan remains in the low-income category.

Fig. 6.2
A screenshot of a window. It has 5 menus namely, civil cases, economical classes, criminal cases, administrative cases, and administrative offenses. Economical classes are selected. Below, it has a panel in which by T I N number is selected.

Gross Domestic Product (GDP) per capita at Purchasing Power Parity (PPP), 1995–2020 (Note Gross domestic product converted to 2017 international dollars using purchasing power parity (PPP) rates. An international dollar has the same purchasing power over GDP as the US$ has in the USA. Source World Bank National Accounts Database)

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The macroeconomic indicators of regional growth, as seen above, are remarkable indeed. However, more often than not, the region’s economic revival resulted from rents obtained from natural resource extraction, and thus remains vulnerable to shocks and stagnation dictated by external commodity markets. In 2018, the Organisation for Economic Co-operation and Development’s (OECD) report stated that ‘a disquieting set of evidence suggests that the relationship between a country’s natural resource endowment and its long-term economic development is negative’ (Kakanov et al., 2018). Thus, sustainable economic growth can only be maintained through deep structural reforms, institutional upgrading, and changes to regulatory policymaking.

Based on this understanding, this chapter examines sustainable economic development as observed in Central Asian states through the exploration of regulatory systems capable of withstanding both internal and external challenges. In doing so, I aim to contribute to resilience studies in economics by examining the robustness of the established regulatory systems of the region’s countries in responding and adjusting to disruptions caused by external and internal factors and ensuring sustainable economic growth. By examining the regulatory systems and their ability to cope with internal and external challenges, this analysis also engages with and offers new insights in scholarly debates regarding the role and rule of law in Central Asian societies.

Premise

The unprecedented economic perturbation caused by the collapse of the Soviet Union in the early ‘90s required immediate actions from the former republics to transform the entire structure of their economies and create new economic systems that would be resilient. Ideally, these new systems could withstand and effectively overcome future shocks and disruptions by ensuring long-term sustainable development. This is critically important to note in terms of institutional resilience since it comes with a drastic change and rewiring of the economic circuit to withstand external shocks. The Soviet era’s protected economic ecosystem required recasting in terms of an emergent complex adaptive system (Holling, 2001), ready to navigate decisions made by bodies and the international community where countries in the region had minimal negotiating capital or even a voice. Creating an economic system based on open-market principles and accelerating integration into the global economy were the foremost priorities of the reform agendas. These were accepted as an essential prerequisite of the open-market economy practically, placing the main emphasis on the promotion of private-sector development by reforming the system of economic regulation and management.

As I will show in the subsequent sections, in the case of five Central Asian economies, many regulatory initiatives, institutions, and tools have already been put into place. The regional governments have taken important steps to create market-oriented regulatory frameworks compatible with open-market principles and, in short, emphasising key elements of resilience thinking from the Western perspective. However, established regulatory frameworks have not proved effective in boosting the immunity of the economies due to ineffective regulatory compliance and enforcement regimes.

The Concept of Resilience in the Economics of Development

With its origins in ecology and psychology, the notion of ‘resilience’ recently gained popularity in many social science disciplines, including economics, with its relevance to economic thinking recognised by many scholars in the field (see Briguglio et al., 2006; Hill et al., 2012; Martin & Sunley, 2015; Pendall et al., 2010; Rose & Liao, 2005; Simmie & Martin, 2010). However, there is no universally agreed upon definition for this term. The literature on resilience offers two different interpretations: one focusing on the speed of return to equilibrium following some sort of shock or disruption (Pimm, 1984), the other looking at the size of a disruption needed to displace a system from its stable state (Holling, 1973). The first interpretation captures the ability of a system to absorb and accommodate disruptions without experiencing a major structural transformation or collapse with the aim of retaining the pre-shock equilibrium (McGlade et al., 2006). The second interpretation captures the ability of a system to make a rapid transition from one socio-economic structure to another following major shocks or shifts. This latter interpretation appears relevant to the study of economies in transition, where societies must adapt to a new socio-economic environment following an abrupt collapse of the old system.

Any economy is subject to various perturbations: slow or periodic economic recessions or fast unexpected shocks and turbulences, hard (material) or soft (nonmaterial) damages, and challenges arising from technological changes amongst others (Aligica & Tarko, 2014). However, creating a resilient economy capable of preventing and/or effectively addressing those perturbations is not an easy task for any state. Some scholars suggest that resilience analysis in economics should focus on the assessment of the state’s ability to respond and adjust to all sorts of disturbances and disruptions caused by both endogenous and exogenous factors (Levin et al., 1998). Another approach argues for the relevancy of the role of the state in creating good institutions to boost the immunity of the economic system (North 1990; Woolcock, 1998). Adger (2006) argued that the resilience of an economic system and its capacity for adaptive action, to a great extent, depends on the quality of political and economic institutions. One volume of literature documented the strong relationship between the quality of economic institutions and the sustainable economic performance of a state (Acemoglu & Robinson, 2012; Acemoglu et al., 2005; Dollar & Kraay, 2003).

Others suggest that the free-market economy is resilient in nature and that any state intervention would hinder a market’s ability to withstand economic shocks (Peltzman et al., 1989; Stigler, 1971). Due to the price system and competition, disruptions caused by external and internal shocks dissipate as people re-qualify and businesses attempt to innovate to reduce their costs and improve production and management (Williamson, 2011). The response to perturbations, thus, occurs within existing informal market settings rather than requiring a significant change to institutions, norms, and rules.

Resilience analysis has important implications for the ways in which we define and assess the design and performance of state economic institutions. Therefore, it is exceptionally critical for Central Asia and the wider post-Soviet space to determine if the various economies created a sound institutional base resilient to all sorts of economic challenges posed by internal and external perturbations, thereby ensuring long-term sustainable (resilient) economic development.

Economic Resilience Through Regulation

Economic regulation is generally referred to the application of laws or other instruments by the state or affiliated public bodies in an attempt to promote markets by facilitating fair and transparent competition and by managing externalities, shocks, and disturbances. Many believe that regulation is a vital state instrument used to correct inefficient or inequitable market practices that may cause economic imbalances (Djankov et al., 2002; Schleifer, 2010). This is because such externalities are driven and brought about by global or international events. However, it is also widely recognised that, in order for the regulatory policy to succeed in attaining its stated objectives, it should meet two essential criteria: a well-thought-out, comprehensive, and coherent regulatory framework, on the one hand, and regulatory institutions with clear and objective responsibilities, sufficient power, resources, and opportunities to properly perform duties and functions, on the other. Necessarily, the more these institutions are globally benchmarked, the more sophisticated the rebound and growth pathways.

Regulatory interventions do not always bring about desirable outcomes, and the adverse effects of particular interventions are well documented (Becker, 1983; Peltzman et al., 1989; Stigler, 1971). For example, Stigler (1971) views regulation as a biased instrument of the state, often exercised in a way that serves the interests of some industries whilst harming others. According to him, the net effects of regulations upon certain regulated industries could be unquestionably burdensome, whilst remaining much lighter and more beneficial to others. Regulation always creates this bias. For Becker (1983), regulation is economically inefficient because it serves the interests of specific interest groups. Interest groups tend to shape regulatory initiatives in a way that maximises their personal or institutional welfare. For instance, politicians and bureaucrats tend to shape regulations based on their personal interests or the interests of those who support them.

Thus, the traditional notion of economic resilience is enshrined in a Eurocentric model of the so-called ‘natural order of things’ (or ‘invisible hand’ as defined by Adam Smith), which lies at the heart of free-market principles, representing the main driver of the market and capable of handling economic interactions without external assistance. For free marketers, the price stands as the key regulator of market interactions, capable of efficiently distributing goods and resources throughout an economy. Price serves as a means of communication between sellers and buyers, representing an incentive for producers and a signal for economic interactions. Regulation is said to bring more harm than good since it discourages private initiatives, which eventually lead to a reduced total economic and social surplus. In this case, we have a complicated, inflexible system in contrast to a complex adaptive system, advocated by resilience thinking (Holling, 2001).

Numerous studies have demonstrated a positive relationship between solid regulations and economic growth. For example, Gørgens et al. (2004) found that economies with more cumbersome regulations grow on average 2–3% less than those with moderate yet effective regulations. Similarly, using quantitative empirical analysis, Loayza et al. (2005) concluded that burdensome regulations negatively impact economic growth and often lead to increased macroeconomic volatility. Drawing from the aggregate index of business regulations based on the seven components of the doing business index developed by the World Bank (i.e., starting a business, hiring and firing, registering property, getting credit, protecting investors, enforcing contracts, and closing a business) for 135 countries between 1993 and 2002, Djankov et al. (2006) determined that moving from a ‘bad’ regulatory regime to a ‘good’ one carries a 2.3-point increase in average GDP. Furthermore, estimating the composite regulatory policy variable borrowed from the World Governance Indicators of the World Bank Group, Jalilian et al. (2007) demonstrated that a unit change in the quality of regulation, on average, associates with about an 0.6–0.9% increase in economic growth.

In fact, the drivers of economic growth are fairly diverse, and singling out a particular determinant as an ultimate cause would be overly simplistic. In the case of Central Asia, regional growth is often linked to the rents obtained from natural resources. The region is indeed exceptionally rich in natural resources. It supplies the world market with oil, gas, uranium, gold, and other precious metals, as well as high-value agricultural products such as wheat, cotton, and vegetables amongst others (Yuldashev, 2011). Along with the commodity factor, however, some scholars have emphasised the role of policy reforms and institutional improvements in regional economic progress (Pomfret, 2010, 2012; Stark & Ahrens, 2012). Yet the link between regulatory changes and economic growth in the region has not yet been thoroughly explored. Thus, this study aims to investigate to what extent the state regulatory policies, ceteris paribus, have contributed to the economic development of Central Asian countries. In doing so, I primarily attempt to provide evidence for alternative resilience thinking that takes into account the region’s local strategies, which have helped it absorb shocks and continue to enjoy economic growth even in the face of significant external challenges.

Methodology

This study is based on qualitative research conducted largely through semi-structured and unstructured interviews and an analysis of relevant policy documents related to regulatory policymaking in Central Asian countries. Semi-structured interviews were conducted amongst current and former policymakers, business leaders, experts, and scholars in the respective countries, which took place primarily in the capital cities. Unstructured informal conversations were conducted with random, qualified individuals on various occasions in cafes and government as well as at receptions and dinners amongst others.

The selection of interviewees primarily relied on their overall understanding of regulatory policymaking regionally and in their respective jurisdictions. Preference was given to individuals with extensive experience in regulatory policymaking and advocacy as well as in academia. Special attention was paid to the balanced use of former and current public officials in order to avoid possible biases and subjectivity in evaluating the situation. Additionally, a number of people from the private sector were interviewed in order to assess the situation from the perspective of the so-called consumers of regulations. All interviewees, irrespective of their background and profession, were asked similar questions.

I assigned pseudonyms to formal respondents using the country abbreviation and a number to identify individuals (e.g., ‘KAZ’ for Kazakhstan, ‘KGZ’ for Kyrgyzstan, ‘TJK’ for Tajikistan, ‘TKM’ for Turkmenistan, and ‘UZB’ for Uzbekistan). Informal respondents are not cited nor were they given pseudonyms, but their viewpoints have been incorporated into the analyses captured here. Not all interviewees directly addressed the questions posed nor did they cover the same categories of people included in the semi-structured interviews. However, all interviewees helped to inform the underlying understanding along with secondary considerations in this research, crucial to the regulatory policymaking in their respective countries and in the broader region.

The Nexus Between Regulatory Framework and Regulatory Implementation

As mentioned above, a sound regulatory system is an important precondition for enhancing the competitiveness of an economy, meeting a society’s goals, protecting the environment, and ensuring a sustainable future. These are all relevant to creating resilience thinking and appear in the economic literature referencing resilience. The quality of the regulatory system is determined by a state's commitment to and promotion of reforms toward developing and implementing high-quality regulations. Regulatory reforms are particularly vital for resource-rich economies, which have the potential to channel revenues received from natural resource rents towards productive investments and pave the way for a sustainable future. Since acquiring independence, the Central Asian countries have carried out wide-scale reforms to enhance their resilience through the quality of regulatory designs and practices. Although formal legal frameworks and institutional arrangements of regulatory policymaking are relatively well-established across the region, given problems with regulatory compliance and enforcement, regulatory changes have not always produced desirable outcomes on the ground.

Research across the region has demonstrated that already many regulatory management initiatives, institutions, and tools have been put into place in the Central Asian countries. Governments have taken important steps towards improving public access to regulations and legal information, known as essential first steps in regulatory implementation. The introduction of digital solutions to regulatory governance—that is, e-government platforms—has also been actively promoted. Moreover, the region’s rather high literacy rate and educated population serve as an important human resource base for the public sector. However, a formal regulatory framework and institutional arrangements cannot create an ecosystem that would enhance resilience and bring about the desirable policy outcomes unless an effective system of implementation and compliance regimes are also in place. Bridging the gap between making good laws and regulations (‘law-in-books’) and their effective realisation (‘law-in-action’) is a major challenge to any regulatory (legal) system. This is especially true for transition economies, such as those in Central Asia, with immature public sector institutions.

The success of regulatory implementation depends upon the ability of the government to deliver policies effectively to attain the stated objectives (O'Toole, 1995; Pressman & Aaron, 1973). Given the socio-cultural, political, and economic variations across countries’ contexts, policy implementation can take different shapes and forms in specific countries (Paudel, 2009). Similarly, challenges and obstacles that countries face in terms of policy implementation also vary significantly. Research revealed that, in the case of Central Asia, regulatory implementation linked to various problems. Whilst recognising certain variations in individual countries in the region, this research focuses on some of the major issues highlighted by most respondents thought to have seriously hindered economies’ abilities to remain resilient. These issues include the following: excessive concentrations of power and a ‘top-down’ decision-making approach; poor interagency communication and coordination of regulatory implementation; a shortage of financial and technical resources allocated for implementation purposes; poor adherence to the regulations; and a biased justice system. In the subsequent sections, I elaborate each of these issues more fully.

Concentration of Power and a ‘Top-Down’ Decision-Making Approach

The centrality of decision-making in public policy and administration remains a long-standing argument and is well-documented in the literature (Bozeman & Pandey, 2004; Sabatier & Mazmanian, 1979; Simon, 1997). Making the right decisions is particularly essential to the success of implementing any policy (Sabatier, 1986). The public administration literature employs ‘top–down’ and ‘bottom–up’ approaches to describe how decisions are made and how policy changes are implemented.

Despite some claims regarding the positive effect of a ‘top–down’ decision-making approach in specific contexts (Mazmanian & Sabatier, 1981; Sabatier & Mazmanian, 1979), a ‘bottom–up’ approach is generally recognised as better for developing good and informed policies and for effectively implementing them (Bresser-Pereira & Przeworski, 1993; Hjern, 1982; Hjern & Porter, 1983; Stewart et al., 2015). A bottom-up approach is ‘an incremental change approach that represents an emergent process cultivated and upheld primarily by frontline workers’ (Stewart et al., 2015, p. 241). Specifically, this approach allows for more experimentation and a better sense of what is actually needed at the grassroots level (ibid.). When policies are accepted by the majority of people at lower levels, their implementation tends to be much more effective and efficient. Yet, if policy proposals are perceived as being imposed ‘from above’—that is, via a ‘top–down’ approach—it can be difficult for lower-level professionals to accept them, possibly further hindering the realisation of those changes (Bresser-Pereira & Przeworski, 1993).

The majority, if not all, of the respondents are convinced that the ‘top–down’ decision-making approach is one of the main causes of poor regulatory implementation in the Central Asian countries. Decision-making is heavily concentrated in the hands of those officials at the very top. Whilst national constitutions clearly institute the principle of checks and balances between branches of power, the executive branch tends to exert unprecedented authority over the legislative and judicial branches. The vast majority of important policy decisions come from the heads of state—that is, presidents. Such decisions either stem from annual presidential addresses or from other direct instructions given to executive and legislative bodies. According to some local experts, around 95–97% of all important political and economic reforms have been initiated by presidents and implemented under their direct supervision and guidance. These concerns were voiced by many of my respondents. For instance, UZB6 noted the following:

Positive changes in Central Asia haven’t been possible due to a ‘top–down’ decision-making approach. Once these policies are adopted and enacted, it is barely possible to make further modifications or changes should something go wrong during the implementation process. A feedback mechanism is almost non-existent. Executive authorities are expected to implement policies without questioning their plausibility. And, more often than not, policy failures fall on middle management.

Along a similar line, TJK5 stated:

Over many years of working with high-level decision-makers across Central Asia, I have understood that everything is based on the top–down approach. Everybody in public administration is afraid of taking the initiative; everything must come from the top. It has become an administrative norm. They always wait for instructions from the hierarchy. Middle management never sabotages the orders of top management. They seek clearance for every course of action they take.

In addition, KAZ3 contended:

The notion that ‘the leader is always right’ is deeply embedded in the mindset of the people in the region. All constitutional provisions regarding the balance of power and that the people are the main source of power are effectively ‘dead principles’. Reality is entirely different—the leader decides everything. Many democratic institutions and norms stipulated in the basic laws have been openly disrespected.

Interagency Communications and the Coordination of Regulatory Implementation

Collaborative policymaking and establishing common ground for public problem-solving through the constructive management of differences are crucial to the successful implementation of policies (Gazley, 2017). Regulatory implementation should be an integrated process rather than simply a series of discrete and distinct stages. Effective implementation requires continuous vertical and horizontal collaboration with a range of stakeholders at multiple political, policymaking, managerial, and administrative levels as well as the engagement of local implementation actors such as end users, frontline staff, and a range of local service agencies (Ansell et al., 2017).

Despite growing interest in developing ideas and tools for promoting effective inter-agency collaborations in public sectors of Central Asian states, respondents suggested that improvements have been rather patchy and limited. The lack of effective inter-agency collaborations has remained one of the key impediments to effective regulatory implementation. As Kazakh respondent KAZ4 observed:

…[P]oor regulatory implementation can be partly explained by the constant failures in policy coordination. Unless it is strictly monitored or guided by the top authority, line ministries and public agencies tend to be less keen on collaborating with each other in order to reach desirable policy outcomes. Occasionally, one can even observe an explicit adversarial relationship between state bodies.

Similarly, an expert from Uzbekistan, UZB2, argued as follows:

Existing unhealthy relationships between public institutions obviously prevent many important regulatory changes from happening. In the public sector, competition prevails over cooperation. Because of miscommunication and poor collaboration between agencies, the implementation of regulatory changes often misses the deadline or simply fails. Successful regulatory policymaking surely requires sound inter-agency collaboration.

Elaborating on the state of policy coordination in the Kyrgyz government, KGZ3 stated:

Coordination failure begins at the level of the highest government bodies. For instance, a regulatory proposal initiated by the executive branch of government following thorough studies and research and submitted to the parliament for consideration, sometimes gets entirely changed by parliamentarians and submitted to the president for promulgation. And, the president, in turn, signs the regulation without consulting with the executive branch. As a final product, you have a legal document that does not correspond with the initial draft prepared by the executive branch. At the end of the day, the government finds itself in a complete deadlock when it comes to the implementation of that regulation because it has been entirely altered and already lost its initial intent. This problem is a clear consequence of miscommunication and miscoordination between state agencies.

Unlike other countries in the region, policy implementation in the Kyrgyz Republic also suffers further from instabilities in the central government, where constant political changes exacerbate policymaking processes. The Kyrgyz political system has also witnessed multiple revolutions and endless changes to the top of the hierarchy, which often result in the suspension of policy initiatives put forward by previous administrations. KGZ2 noted:

Since its independence, the country has had thirty different governments with thirty prime ministers and thirty different policy agendas and development strategies. These frequent changes to the political system made it impossible to adopt long-term development strategies and deliver positive and sustainable changes. As a result, a totally ineffective public administration system has emerged.

Similarly, KGZ1 pointed out that:

[N]one of the governments in Kyrgyzstan’s post-independence history has been able to deliver its development agenda to its logical end. This is primarily due to the constant changes and chaos in the political system and the lack of a clear political commitment. We failed to create an effective public management system.

Resource Constraints in the Public Sector

From the literature, it appears that the financial resource capacity of a government has a significant impact on successful policy implementation (Edwards, 1980; McLaughlin, 1998). Policymakers are also acutely aware of the impact financial allocations have on implementation efforts. However, many developing countries struggle to support state policies and programmes with adequate financial resources, often leading to implementation failures. Similarly, a scarcity of financial resources in some Central Asian economies tends to cause delays or sometimes even the termination of programmes and policies. The insufficiency of budgetary resources is particularly evident in lower-income countries such as the Kyrgyz Republic and Tajikistan, where governments heavily rely on financial aid and assistance from donor countries and international institutions.

The persistent shortage of financial resources allocated for policy provision was mentioned by many officials and experts in the region. According to one Kyrgyz respondent, KGZ2:

Around 50–60% of the failures of reform programmes and initiatives are caused by a lack of the financial resources needed for their full-fledged implementation.

A Tajik expert, TJK3, went even further, stating:

Financial resource scarcity not only hinders the government’s ability to effectively implement policies, but also to develop sound policy proposals in the first place. Good proposals require in-depth research and analyses by way of inviting leading experts, scholars, and research institutions, organising various workshops, conferences, and training programmes, etc. These all inevitably require sufficient financial provisions that the government of Tajikistan often lacks.

In addition, foreign businesses operating in the Kyrgyz Republic and Tajikistan also associated the problem of policy implementation with the shortage of financial resources. As one foreign expatriate working in Tajikistan, TJK6, observed:

We regularly witness policy initiatives being delayed, postponed, or suspended entirely. This is partly due to the shortage of necessary financial resources for the realisation of government projects. More often than not, a local decision-maker fails to forecast potential expenditures related to project realisation simply due to miscalculations and incoherent project proposals.

Poor Compliance and Adherence to Regulations

A well-functioning regulatory regime, to a significant degree, rests on the ability of law-enforcement and judicial bodies to ensure the universal application and observance of adopted regulations. However, in Central Asia, compliance with and adherence to adopted rules is largely distorted due largely to the exceedingly biased justice system and unrestrained law enforcement system. The lack of an independent judiciary, a strong accusatorial bias and procedural unfairness, and the prohibitively powerful role of prosecutors represent the key defining features of the justice systems of Central Asia inherited from the Soviet system.

Often, discourse on the rule of law and justice tends to devote scant attention to the role of prosecutors in comparison to judges, defence attorneys, and court administrators (Schäfer, 2005). This stems from the fact that the prosecutor's role in Western societies is confined solely to the decision to prosecute and represent the prosecution in courts. However, in some societies, prosecutors play an instrumental role in ensuring the principle of equality before the law and before the court. The rule of law cannot be upheld, nor can human rights be protected, without effective prosecution services acting independently, with integrity and impartiality in the administration of justice (UNODC, 2014). This is especially true in the case of Central Asia, where prosecutors’ offices enjoy unprecedented power to exercise the highest supervision over observing and applying laws at a national level by all institutions, irrespective of their form of ownership.

Prosecutorial dominance in the regional justice system is one of the adverse legacies that remain from the Soviet Union. The position of prosecutors within law enforcement agencies rather than the judiciary has been more ominous given the diminished status of judges and their dependent relationship on prosecutors (Solomon, 1987). Soviet prosecutors’ key purpose was to secure the conviction of the accused, whilst judges, in turn, were expected to help prosecutors fight against crime on behalf of the state. Courts did not have sufficient legal authority to acquit individuals accused by prosecutors. The dominance of prosecutors was also determined by their supervisory power over the judiciary (Foglesong, 2017). Thus, judges were constrained from holding prosecutors to account by rejecting their accusations. The role of defence attorneys, however, was relegated even further than those of judges (Solomon, 2015). The only thing expected from defence attorneys was to cooperate with the prosecutor without challenging the charges and, instead, focus only on mitigating a plea (Huskey, 1986).

No fundamental shift has occurred regarding what is understood as the proper role of a prosecutor in the Central Asian countries following independence from the Soviet Union. Basic laws in all regional countries stipulate that the prosecutor’s office, on behalf of the state, supervises the strict and uniform observance and application of laws on a national level by both persons and entities irrespective of the form of ownership, including private enterprises. The prosecutor’s office represents the interest of the state in court and protects the rights and freedoms of citizens and the legitimate interests of the private sector. In addition, the prosecutor’s office coordinates the activities of all law enforcement and other state agencies in ensuring the rule of law and order in society.

Despite some legal reforms to enhance the status of judges and defence attorneys in specific countries in the region, the prosecutor’s office still enjoys a dominant position, a position unknown anywhere else in the world (Solomon, 2015). Given the strong role of the state and that the prosecutor's office is a central state apparatus which ensures the rule of law and order, it has been key to deciding what is just and what is unjust in society (Galushko, 2018). According to the majority of my respondents, judges often take the prosecutor’s side and find the accused guilty without a thorough examination of the evidence or facts. Thus, evidence provided by prosecutors is often deemed true and consistent, whilst testimony from defence attorneys is dismissed as untrustworthy.

Prosecutorial intervention in private business has been quite systematic in the region. Prosecutors routinely unlawfully inspect businesses and chase after successful entrepreneurs. Only Kazakhstan and the Kyrgyz Republic have recently formally discharged the prosecutor’s office from the right to intervene in the affairs of private entities, to authorise and appoint inspections, and request information or documents on grounds not provided for by law. However, according to KAZ1:

Despite legislative changes, the prosecutor’s power to inspect private sector entities has not been entirely eliminated. In fact, it was just renamed. It can still initiate inspections of businesses, but now it does so under different pretexts. The prosecutor’s office still retains the power to sanction inspections of businesses by other regulatory agencies.

Similarly, KAZ4 admitted:

In Kazakhstan, prosecutors exert a considerable amount of influence on the judiciary’s work. Although some judges try to ensure a balance between fulfilling the state’s interests and protecting the rights of private entities, prosecutors still always have the final say. However, judges are still limited in their capacity to act entirely independently.

In the Kyrgyz Republic, according to KGZ8:

The prosecutor’s office can interfere in business affairs through multiple channels and under various pretexts. This is particularly obvious in the process of dispute resolution between the state and private sector entities, where persecutors quite often resolve the case in favour of the state, and judges, in turn, often collaborate with prosecutors.

Moreover, KGZ3 pointed out:

The prosecutor’s office remains one of the most influential state bodies. It can submit a protest against the decisions of courts, appeal to the Supreme Court on any inconsistency with the Constitution in laws and regulatory acts, submit proposals to the legislative bodies to amend, cancel, or adopt specific laws, initiate criminal cases against parliamentarians and judges, and issue statements on the wrongdoings of the president and charge them with a crime.

In Tajikistan, according to TJK4:

Although prosecutors do not openly and directly intervene in judicial affairs, no one can deny judges’ dependent relationship with prosecutors.

TJK1 also stressed that the following:

There is a huge disparity between the accusing and the defending sides in court trials. Throughout my professional experience, I have never encountered a single case when the prosecutor issued a decision in defence of the person or legal entity against the state. Defence attorneys have never enjoyed the same level of authority as prosecutors.

Similarly, TJK3 argued as follows:

The prosecutor's office does not react to obvious violations of the constitutional rights and interests of citizens and private enterprises. Instead of putting the fraudster behind bars, they harbour crimes. Investigations against corrupt officials are carried out formally, selectively, and again to the detriment of the interests of citizens.

Prosecutorial power is probably nowhere as omnipotent as it is in Uzbekistan. According to UZB2:

Limiting the power of the prosecutor in Uzbekistan has been an impossible task. The prosecutor's office not only enjoys constitutional power as a central watchdog of law and order in the country, but also possesses the right of the legislative initiative in terms equal to the main power branches. Many lawyers, including me, opposed giving so much power to the prosecutor’s office at the beginning of the ‘90s, believing that this would jeopardise the rule of law in society. However, the lack of political will from the highest authority to limit the power of such an important state apparatus that serves the interests of the central government rendered it possible for the prosecutor’s office to continue its Soviet legacy of deciding the fate of justice in society.

Non-independent and Biased Judiciary

An independent and impartial judiciary is vital to the success of any rule-of-law endeavour. Since the collapse of the Soviet Union, the Central Asian countries have undertaken reforms in the justice system in an effort to transition from a state-controlled biased system into a democratic and impartial system. For instance, new constitutional frameworks, revised civil and criminal procedure codes, local versions of habeas corpus (judicial review of arrests), consolidated laws on the status and work of the judiciary and advocacy, and the ratification of the most important justice-related international conventions, treaties, and protocols amongst others—this list is by no means complete—all reflect progress thus far (Golovko, 2011). Some global measurements of the quality of the justice system also indicate that judicial work in the region has noticeably improved. According to the ‘quality of judicial processes’ index of the World Bank Group (2020), the countries in the region have enacted a series of reforms, implementing some good practices to promote an effective and efficient court system to deal with business disputes. According to the World Justice Project’s ‘quality of the civil justice’ indicator for 2020, which measures whether the judiciary is free from discrimination, corruption, unreasonable interruptions, and improper outside influences, the region has made some level of progress.

However, based on observations from field research, existing studies appear to have overlooked many fundamental deficiencies of and obstacles to achieving justice on the ground. Specifically, countries in the region have not yet established a completely independent, impartial, and effective judiciary, and the majority of judicial reforms and initiatives remain on paper alone. Thus, citizens and businesses in the region face persistent problems in resolving their grievances in courts. Discrimination, biases, corruption, and frequent interference from senior public officials and other law enforcement structures undermine the judiciary’s work and often impede justice. Judicial reforms and global-standard institutional arrangements could be characterised as either a way to respond to pressures from the international community or merely local political leaders showing off to legitimise their remaining in power rather than a product of real internal institutional normalisation (Golovko, 2011).

Many local experts in the region considered the judiciary the weakest branch of the power triangle, and completely dependent on the executive branch of government. Indeed, when the system of checks and balances is ruined, and the executive branch exerts unconstrained power over judicial authority, no prospect exists for justice and the rule of law (Lemke, 2018). In addition, in all Central Asian countries, the new generation of judges is still committed to the old rules, placing state interests’ first and collaborating with prosecutors. As Trochev (2017, p. 50) rightly observed, ‘even as a new generation of judges and prosecutors that never worked in the Soviet-era enter the scene, old habits of mutual agreements and cover-ups among them persist.’

According to KAZ2, courts simply function as an extension of the executive branch. Unfortunately, he said:

The Soviet-era corrupt practice of ‘a telephone law’ is still deeply embedded in the mentality of our judges.

Here, he defined ‘telephone law’ as an unlawful abuse of power, whereby senior government officials give subordinates informal orders on how to decide cases. A ‘telephone law’ is, indeed, a widespread mechanism via which many hierarchical communications are sorted out in Central Asia.

UZB4 also contended:

The judiciary has always been under the influence of the executive branch and other law enforcement agencies. For instance, any middle-ranking officer in the prosecutor’s office could simply ask judges to come to his office and provide an explanation on a particular court decision if that decision does not comply with the prosecutor’s investigative results and accusations.

Similarly, TJK9 noted:

A vast majority of court decisions are predetermined—made by government officials or prosecutors in their offices rather than by judges in court hearings. Judges rarely care about the rights, freedoms, and interests of the citizens or private entities. They are primarily concerned with what their ‘bosses’ in the state hierarchy expect them to do.

Furthermore, KGZ6 argued:

The private sector of the Kyrgyz Republic has not benefited from any judicial sector reforms. We have not established fully independent and impartial courts—they still remain dependent on the government. Unfortunately, without exaggeration, over 90% of disputes between government bodies and private sector entities end up in favour of the former. If the judiciary were truly independent and transparent, we would not lose so many court cases against government agencies. For the success of entrepreneurship and businesses, we must abolish the system of ‘puppet courts’. Most of the clashes between businesses and law enforcement and regulatory agencies occur due to discriminatory and biased court decisions.

Thus, judges continue to follow the Soviet justice legacy of nearly universal approval of the pre-trial detention of the accused and avoiding acquittals, often due to pressure from state prosecutors. Notably, acquittals remain extremely rare in the Central Asian region. According to a rough estimate based on conversations with local experts, I surmise that only about 3–4% of all court cases in the region result in acquittals. Only in Kazakhstan, following the introduction of trials by mixed juries (ten lay judges and one professional judge), has the proportion of acquittals in the past decade gradually increased.

Another reason for the low rate of acquittals relates to career promotions amongst judges, which to a large extent depend on the number of reversals. Similar to the Soviet era, judges are still expected to achieve low rates of decision reversals and attempt to avoid acquittals. This structure of incentives based on quantitative indicators remains the key tool for assessing the performance of judges in the majority of the post-Soviet republics, including in Central Asia (Foglesong, 2017). Whilst measuring the performance of judges, judicial disciplinary committees primarily focus on the rate of acquittals; the highest scores are given to judges with the lowest number of acquittals. Some local judges argued that this Soviet method of assessing performance is, in fact, counterproductive. According to KGZ5:

It is not acceptable when the disciplinary committee sanctions or dispels judges from their positions based on the rate of acquittals. The committee implicitly relates acquittals to corruption. For instance, if a judge has a high acquittal rate, they are suspected of being involved in corrupt activities. This is simply not true!

Almost all of the individuals I interviewed mentioned corruption as the primary impediment to justice. For example, TJK3 argued:

Corruption in the judicial sector is endemic. The majority of the court decisions are predetermined; court hearings are held for the sake of mere formality. While the fate of disputes between state agencies and private entities is obvious, cases between private sector entities are often resolved in favour of the party that offers a bribe or has a connection to senior management in the government.

According to KGZ1, corruption in the judicial sector begins during the nomination and appointment stage of judges, which is often opaque, arbitrary, and corrupt. He argued:

It is utter nonsense to expect fair decisions from judges who have acquired their posts through corrupt means.

Commenting on corruption within the judiciary, KGZ4 also admitted that the judiciary is not free from corruption. However, as she stressed:

I can confidently say that the scale of corruption within the judicial system is by no means more than that in the executive and legislative branches.

Nothing is more important than the judiciary in maintaining the rule of law and order within society. The courts are the last, highest instance of justice. Unfortunately, the courts in Central Asia have not been able to deliver true justice on the ground. This is likely the primary cause of deficiencies in the entire legal system in the region. As UZB4 stated:

If the courts had been free and impartial, we would have resolved many issues: police officers would never initiate unlawful cases, mayors would never issue discriminatory and arbitrary decisions, tax offices would not conduct illegal inspections, customs would refrain from breaching fundamental principles of trade, and so forth.

Conclusions

This research has assessed if the regulatory policy in post-Soviet Central Asian countries has thus far been able to create an ecosystem capable of enhancing resilience through effective regulatory implementation. In doing so, I suggest that, although regional governments have already put in place many regulatory initiatives, institutions, and tools and taken important steps towards improving economic regulations, there are various underlying factors that have impeded resiliency via effective regulatory systems.

The importance of institutional variables for economic development is well-established in the literature. A voluminous literature has documented the significance of institutional resilience in cross-country differences in regulatory policymaking, with a strong correlation between the quality of regulations and economic performance. This study investigated this nexus in the transition economies of Central Asia since their independence from the Soviet Union in the early 1990s.

Contrary to expectations from mainstream economics and largely ignoring the recommendations of international development organisations, Central Asia has achieved remarkable economic growth rates since the dissolution of the USSR. Such economic achievements have been possible under non-democratic political and quasi-liberal economic settings. Stark and Ahrens (2012) described the unique feature of the regional political economy as ‘market-developing autocracies’. Whilst regional economies have greatly benefitted from the export of natural resources, many believe that the Central Asian governments have pursued distinct country-specific reform policies and built-up necessary institutional structures that have contributed to bringing about not only political stability, but also economic and social progress (Pomfret, 2010, 2012; Stark & Ahrens, 2012).