(MENAFN- Trend News Agency)
BAKU, Azerbaijan, July 11. Developing the
Trans-Caspian International transport Route (TITR, or Middle
Corridor) as a viable route will require both national and regional
reforms, Amélie Schurich Rey, Economist and Policy Analyst, Eurasia
Division, OECD Directorate for Global Relations and Cooperation,
told Trend in an
exclusive interview.
Ways to develop the Middle Corridor
"Given sufficient investment and smoother procedures to reduce
transport costs, the Trans-Caspian International Transport Route
(TITR), also known as the Middle Corridor, could become an
attractive complementary trade route linking Kazakhstan to Europe,
one of its main trading partners, as well as boosting regional
trade. However, if the TITR can bring about a substantial increase
in regional trade, it will remain an alternative trade route at the
international level," she said.
As economist noted, the TITR's geography requires more
multi-modal switches between road, rail, and maritime transport, as
well as more border crossings, than the Northern Corridor.
"Even if the route could, in the long run, be shortened, it
suffers from a lack of attractiveness for the private sector. In
addition, with its current capacity, the TITR can only absorb
around 5 percent of the 100 million tonnes that were carried
through the Northern Route, and this share is not expected to grow
beyond 11 percent by 2030. However, at the regional level, the
development of the route could better integrate economies of
Central Asia and the Caucasus, and contribute to the further
development of local growth poles," Amélie Schurich Rey said.
She pointed out that implementing the potential of the TITR as a
regional trade route will require substantial investment in
transport infrastructure and better“soft” trade facilitation
arrangements.
"If transit through the Caspian littoral countries has more than
doubled since February 2022, the lack of adequate road, rail, and
maritime infrastructure, as well as trade facilitation agreements
along the route, has led to severe port and border point
congestion. Developing the TITR as a viable route will require
national and regional reforms in relation to regional integration,
infrastructure, trade facilitation, and supranational
co-ordination," economist said.
Kazakhstan as a key transport hub
As she noted, Kazakhstan benefited from renewed interest, due to
its key location on an alternative trade route: the Trans-Caspian
International Transport Route, which offers the country an
opportunity to leverage its strategic regional position.
"Bordering China and Russia, Kazakhstan is located at the
crossroad of major trade routes, such as the Northern Corridor and
the North-South corridor to Iran, and it represents an entry point
to the Central Asia - Caucasus regional market. If, so far, more
than 80 percent of Eurasian rail freight transits through
Kazakhstan, developing the TITR could further develop freight
through Kazakhstan's access to the Caspian Sea. In 2022 alone,
Kazakhstan's Caspian Sea cargo transportation volumes increased
6.5-fold compared to 2021 to 891,000 tons, while overall container
shipments along the TITR increased by 33 percent, reaching 33,600
TEUs in 2022. During the first seven months of 2022, Kazakh exports
through the Caspian also increased ninefold year-on-year, although
businesses reported operational difficulties and congestion in
ports," Amélie Schurich Rey said.
An economist pointed out that participation in the TITR is
expected to produce positive spill-over effects on Kazakhstan's
economy.
"Improved logistics services could reduce Kazakhstan's overall
transit dependence on Russia and boost its trade capacity, with an
expected increase by 70 million tonnes (mt) of its exports by 2030
compared to 2021. In turn, a better capacity to export will bring
new opportunities to promote industries producing more
sophisticated processed goods and contribute to the diversification
of the country's trade basket. If Kazakhstan's distance penalty to
major markets, such as Europe, cannot be fully eliminated,
participation in the TITR can nonetheless improve regional
transport connectivity, reduce trade costs, and increase trade
volumes," she noted.
Kazakhstan's sustained economic growth
According to Amélie Schurich Rey, for over two decades,
Kazakhstan has enjoyed a period of sustained economic growth
supported by an ambitious reform agenda targeting increased
contribution of the private sector to economic development,
diversification of employment, output and exports, and integration
in regional and international value chains.
"However, growth remains highly dependent on primary commodity
exports, particularly hydrocarbons and metals. Among regional
peers, only Turkmenistan and Azerbaijan have more concentrated
export baskets than Kazakhstan, which also largely exceeds the
concentration of comparable resource-rich OECD countries such as
Australia and Canada. In 2023, hydrocarbon products still accounted
for over 53 percent of all exports and generated 15 percent of GDP.
Data from the Bureau of National Statistics suggest that the
primary sector as a whole (hydrocarbons, metals and agricultural
products) generated over 85 percent of total exports in 2023," she
said.
As economist noted, this continuing reliance on hydrocarbons and
minerals reflects low levels of competitiveness in processing
sectors, the underdevelopment of the private sector, especially
small and medium enterprises (SMEs), and connectivity barriers that
firms continue to face in international trade.
"In addition, the country's trend rate of growth has also been
gradually declining over the past two decades, which might be
indicative of the fact that the boom in the commodity sector has
not been matched by productivity growth in other sectors, notably
agriculture and services," she added.
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