Wef Baku13 Report

Regional Agenda
World Economic Forum Strategic Dialogue on the Future of the South Caucasus and Central Asia At the Conuence of Change
Baku, Azerbaijan 7-8 April 2013
World Economic Forum 2013 - All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum. REF 110413
Contents
Preface
Cooperation and Integration are Keys to Regional Prosperity and Sustainable Growth
The countries of the South Caucasus and Central Asia have made significant strides since they emerged from the disintegration of the Soviet Union in the early 1990s. Energy-rich Azerbaijan, Kazakhstan and Turkmenistan have registered double-digit growth rates and used the proceeds to invest in physical infrastructure. Others, like Tajikistan and the Kyrgyz Republic, have also made progress in developing market economies and state institutions. Twenty years into the transition, much has been achieved in a region rich in natural resources and human capital. But can even its wealthier countries proceed at the same pace without more regional cooperation? And could their less well-endowed neighbours make faster progress through greater integration? Finding answers to these questions is the subject of an intensive 18-month process of dialogue launched by the World Economic Forum Strategic Dialogue on the Future of the South Caucasus and Central Asia in Baku, Azerbaijan, on 7-8 April 2013. The European Union and, more recently, the Association of South-East Asian Nations (ASEAN) are among the best known examples of efforts to realize economic, social and political gains by uniting complementary strengths among neighbouring countries in a spirit of trust and longterm cooperation. There is, however, no blueprint for regional integration. If the South Caucasus and Central Asia are to make progress down the path of regional cooperation, thorough reflection and consensus building are required. The goal of the new Forum initiative Scenarios for the South Caucasus and Central Asia is to engage a broad range of regional and international stakeholders in a strategic reflection on the prospects for regional integration.
3 Preface 4 6 News from Baku Energy and Natural Resources Releasing the Regions Untapped Potential Entrepreneurship and Human CapitalNurturing the Regions Human Energy Finance and Long-term Investing Ensuring the Means for Diversified Growth Trade and Supply Chains Opening Borders and Minds
10
14
Brge Brende Managing Director and Member of the Managing Board
18
21 Acknowledgements 24 25 Further Information Upcoming Meetings
Anastassia Aubakirova Director Head of Russia and CIS
If geography is destiny, then the South Caucasus and Central Asia regions destiny is wide open. Located between East and West, North and South, the region is at a critical juncture. Beyond Russias historical presence and Chinas deepening its footprint in the area, South Asia increasingly looks to the region as its next frontier and Europe is showing signs of renewed interest. The regions nations are diverse. Some are energy-rich, others are endowed with valuable freshwater resources. Some struggle to provide basic necessities, others are growing at a rapid pace. Is there a case for their collaboration and, if so, in what form and towards what goal? With a view to the world of 2030, the Scenarios for the South Caucasus and Central Asia offer a framework for constructive and open discussions to explore the social, economic, political and institutional drivers underpinning the regional economy. The challenge is great. Countries in the region are proud of their accomplishments and, after only 20 years of independence, they are not inclined to cede their hard-won sovereignty. As yet unsolved territorial disputes in the region pose an additional level of complexity. But what did emerge from the Baku meeting is that the states do want to explore how their patchwork of disparate states lying at the crossroads of Europe and Asia can enhance their prospects by working together. To get started, the launch in Baku explored critical themes common to all the countries in the region and, as such, offer building blocks for greater cooperation and integration. They are: energy and natural resources, trade and supply chains, entrepreneurship and human capital, and finance and long-term investing. Moving from a shared sense that cooperation is intrinsically positive to some kind of consensus on what its architecture may look like is a complicated, necessarily drawn-out process. To get there, the initiative will focus on how different combinations of critical uncertainties will play out between now and 2030. It is a process designed to challenge assumptions and pinpoint blind spots.
World Economic Forum Strategic Dialogue on the Future of the South Caucasus and Central Asia
News from Baku
News from Baku
The Changing Nature of Education

No one questions the idea that people are a countrys most valuable asset. This kind of blanket endorsement of human capital may sound good but it does little to ensure that citizens are able to maximize their contribution to a 21st century economy. This requires greater, more determined efforts to match the skills that are needed in fast evolving labour markets with the type of education and training on offer. This theme was a leitmotiv at the Baku meeting where, for example, a participant from one of the big international oil companies said his success depends on hiring young people with good training in math and physics so his company can itself add the expertise its workforce needs to manage the industrys increasingly sophisticated equipment. Other participants called for a radical rethink of the whole approach to education in the region. The focus needs to shift from traditional curricula and rote learning to an education system that encourages freethinking and problem solving. As businesses become more knowledgeintensive, they need people who can apply what they know in creative, collegial and practical ways, and who understand that education is a life-long process. It is all about changing mentalities and providing role models. It is only by incorporating these approaches from the start of the educational process, and then burnishing them through career-long vocational and executive training, that our societies will be able to provide worthwhile and value-adding opportunities to people who will then truly be their countrys most valuable assets.
Small Steps Can Shaping the Bring Big Gains Regions Future
An enduring legacy of the Soviet Union is bignessdreaming, acting and thinking big. After all, it was a big country. In the oil-rich states of the South Caucasus and Central Asia a lot is still done on a grand scale: witness the extent of construction in Baku and Astana and the length of the regions pipelines, not to mention the size of its sovereign wealth funds. Big may still have its place, but the advantages of starting out at the modest end of the spectrum should not be overlooked. Change seems to be in the air and several participants at the Baku meeting proclaimed the economic and social virtues of the diminutive as in small and medium-sized enterprises, microfinance and one-on-one learning. These diverse approaches to commercial organization, finance and training have one big thing in common: they recognize the potential of small initiatives to produce significant gains. The same trend seems to apply to planning. It is time, some participants said, to shelve multi-year plans and universal agreements in favour of light-touch approaches that can lead to fundamental transformation. Participants urged open dialogue, empowerment of individuals, nimble processes and just getting on with things, even if they turn out to be less scalable than intended. The message seems to be that a grassroots perspective is central to todays Big Sky thinking in the region.
The Global Shapers Community is a network of city-based hubs developed and led by leaders between between 20 and 30 years of age who want to develop their leadership potential in serving society. Members of the hubs undertake grassroots projects to improve their communities. On 6-7 April, SHAPE CIS, Central Asia and Caucasus: Vision 2020 brought together over 80 Global Shapers from 16 hubs in 10 countries in the region. This first meeting of Shapers in the region explored what they can contribute to the Strategic Dialogue as young leaders of their local communities.Through interactive sessions with the Forums Strategic Foresight Team and invited young experts from the region, the Shapers discussed their vision for and the potential benefits of future regional integration. They also shared 15 local projects in which they are making a significant difference and learned effective PR and media tools for their projects with help from external experts. Twenty-five Shapers also participated in the Strategic Dialogue on the Future of South Caucasus and the Central Asia, actively contributing to discussions on issues such as entrepreneurship and human capital, a principal focus of development and investment in the region.
Energy and Natural Resources
Releasing the Regions Untapped Potential

While there are promising reserves of many different natural resources all across the region, the focus of the discussion in Baku was on how supplies of oil and gas can meet growing demand in the context of untapped production potential and incomplete distribution networks within the region.
We need predictability and stability in the region to expand our economic and political ties. This requires strengthened regional cooperation, in which each country must determine its own level of engagement.
Ilham Aliyev President of Azerbaijan

6 World Economic Forum Strategic Dialogue on the Future of the South Caucasus and Central Asia
The region abounds in energy, minerals and valuable freshwater resources. These are spread unevenly across the arc of countries from the Black Sea, through the Caspian region to the steppes of Central Asia and the mountainous states of the Kyrgyz Republic and Tajikistan. But it is the regions vast reserves of hydrocarbons that have propelled growth rates in the energyrich states of Azerbaijan, Kazakhstan, Turkmenistan and, to a lesser degree, Uzbekistan. The scale of the regions energy reserves is vast. The Caspian region alone accounts for 3.5% of global oil reserves and 7.5% of gas reserves, recently boosted by Turkmenistans discovery of the worlds largest gas field. Production has recovered from the decade-long decline that followed independence. Azerbaijan, for example, has quintupled oil production while its gas production has increased fourfold since 2000. Other producers in the region
have followed a similar pattern of production growth. As production has increased, so has the construction of pipelines to export burgeoning supplies of hydrocarbons from what is a landlocked region that, until recently, was dependent on Russias pipeline network to reach export markets. Azerbaijan was the first to try and break Gazproms stranglehold on its exports. In doing so, the country faced tough choices: whether to export through the Persian Gulf, which already accounts for twothirds of world reserves, or to strike out across the Caucasus along the Azerbaijan-Georgia-Turkey corridor. They chose the latter and today, with the focus still very much on supply security for Europe, Azerbaijan now has three oil pipelines and four gas pipelines linking it to markets to the West. Several more projects are in advanced planning stages.
No country in the region can achieve its full potential alone. Our goal is to think creatively about the prospects for regional integration.
Klaus Schwab Founder and Executive Chairman, World Economic Forum
01
02
01
06 01: Natiq Aliyev, Minister of Industry and Energy of Azerbaijan 02: Matthew J. Bryza, Senior Fellow, Dinu Patriciu Eurasia Center, Atlantic Council of the United States, USA 04 live in the most vibrant We region of the world, with three BRIC countries that will be locomotives of development.
02
Djoomart Otorbaev First Deputy Prime Minister of the Kyrgyz Republic
While there was positive comment at the meeting on Azerbaijans determination to open new export routes to Europe, concerns were raised about slow progress on the proposed pipeline across the Caspian to transport Turkmenistans gas to European markets. Participants speculated on Turkmenistans reticence that they ascribed to concerns that Russia (and perhaps China?) might take retaliatory action for fear that a transCaspian pipeline, by diversifying market opportunities, might affect their interests. There was consensus, however, that once a southern corridor is finally decided on by the Europeans and transit states, Turkmenistan is likely to agree to the trans-Caspian pipeline. Energy is likely to be the biggest regional driver of growth for the foreseeable future, but participants warned that the regions energy resources are unlikely to last forever.
This begs the question as to how to maximize the value of resources while they last and how to prepare the ground for the time when they are used up. One area for possible diversification in Azerbaijan is petrochemicals. This was a strong sector in the past but collapsed along with the Soviet Union. Now there are plans to revive it with the state energy company SOCAR investing heavily in the country as well as in Georgia and Turkey. Other participants encouraged the energy-producing states to think beyond hydrocarbons in the same way that some of the more progressive oil majors are focusing increasing attention on renewable energies as part of their long-term product planning. In the meantime, energy producers should focus on the impact of their current activities on climate change. This means using the best available technologies to reduce their global environmental
How much sovereignty is a nation willing to transfer for its economic and political future?
Victor Halberstadt Professor of Economics, Leiden University, Netherlands; Global Agenda Council on Fiscal Sustainability
01
footprint that could launch a virtuous cycle taking them down the road towards sustainability. One ambitious idea suggested by participants is that the Caspian region becomes a hub for renewable energies with the authorities playing a leadership role in encouraging the adoption of new energy technologies by the private sector as well as public enterprises. Others said that by pioneering regional environmental standards, the region could gain first-mover advantages and establish a role for itself at the global level. Sovereign wealth funds, like Azerbaijans State Oil Fund, can provide a financial buffer to drive short-term thinking and practice towards a longer-term perspective.
02 01: Elshad Nasirov, Vice-President, SOCAR (State Oil Company of the Azerbaijan Republic), Azerbaijan
02
Participants emphasized that key to the success of the energy industry in the region are political and commercial stability. With an increase of 1% in global oil production requiring US$ 200 billion in investments, it is essential to ensure a business environment in which investors feel their contracts will not be changed in mid-course. Leaders of some of the major global oil companies operating in the Caspian paid tribute to Azerbaijans steadfast respect for the terms of the production sharing agreements (PSA) it has signed over the past 18 years. Not a single PSA has been changed or questioned. This points to a broader question of governance. Energy investors do not necessarily want to own 51% of their operations. What they do need, however, is governance arrangements that match their financial contribution, participants said. Problems arise not when regional governments insist on a majority stake but when they
01
effectively want to be carried by outside investors, wielding influence that goes beyond their contribution. Working through these kinds of issues requires an open and honest dialogue so that business understands governments thinking and governments know where business is coming from. In addition to trustworthy relations with governments, business wants to see public investment in social services so their staff can enjoy good health and get a decent education. One speaker underlined the importance of ensuring young people have good basic skills in math and physics. Energy companies can then train them to the next level, enabling them to manage some of the most sophisticated equipment in the industry. Several speakers from Azerbaijan underlined the human and economic cost of their countrys continued stand-off with Armenia over Nagorno-Karabakh that accounts for
20% of their national territory. Others pointed to the security implications of the breakaway republics of Abhazia and South Ossetia in Georgia. There were also fears voiced relating to possible cyberattacks on the oil industry and unspecified terrorist activity. However, business representatives felt that there was little likelihood of the region stumbling into war or of security becoming a limiting factor for their business activities.
02
01: Natiq Aliyev, Minister of Industry and Energy of Azerbaijan 02: Edward Chow, Senior Fellow, Energy and National Security Program, Center for Strategic and International Studies (CSIS), USA; Global Agenda Council on Ukraine (crop on righthand side the participant who is sleeping)
Entrepreneurship and Human Capital
Nurturing the Regions Human Energy

Making the transition from central planning to a market economy is one thing. Completing the process by shifting the focus from ownership of formerly state-owned assets to creating the kind of self-starting drive that defines the entrepreneurial spirit presents a whole new order of challenges.
Entrepreneurship is the energy of the future for this region.
H.R.H. The Duke of York
10
01
02
01: (Left to right) Rice Leland, Managing Editor, The Business Year, United Kingdom; Petar Ivanovic, Minister of Agriculture and Rural Development of Montenegro; Sivinj Hasanova, Deputy Minister of Economic Development of Azerbaijan; Ali Abbasov, Minister of Communication and Information Technologies of Azerbaijan; Elmir Valizada, Deputy Minister of Communication and Information Technologies of Azerbaijan (last person on the right no name) 02: Esther Dyson, Chairman, EDventure Holdings, USA; Global Agenda Council on Fostering Entrepreneurship
01
In the South Caucasus and Central Asia region developing entrepreneurial skills is considered as important in the four countries endowed with energy resources as it is in the four that are not. The former want the skills to diversify their economies away from dependence on oil and gas before production or demand peak. The latter see the promotion of 21st century entrepreneurial reflexes as a way to jumpstart their economic fortunes. Life for many people in the South Caucasus and Central Asia is unfair and unequal. These inequalities are accentuated by the capricious distribution of natural resources across the region. In these circumstances, creating a cadre of entrepreneurs is a cut-through way for people who have what it takes to take charge of their own destiny.
But what does it take and how can the necessary skills be instilled and promoted? Just as the privatization of stateowned industries and property had to contend with the complex legacy of the Soviet Union, cutting an entrepreneurial culture from the same educational and institutional cloth is a demanding process that places the onus on governments, educators, businesses and, of course, on the would-be entrepreneurs themselves. The premise is that vibrant small and innovative businesses will not only provide people with jobs but also a jolt to a system in which the majority of people in work are still employed by large enterprises, many of them privatized versions of Soviet era enterprises. The goal is to begin to narrow the gap in a country like
Smart government is about facilitating and supporting business, and not interfering.
Sevinj Hasanova Deputy Minister of Economic Development of Azerbaijan

11
Azerbaijan, where it was reported that only 30% of people work in SMEs compared to the OECD average of 60%. The prevailing myth is that you can make this happen top down, with innovation spawning entrepreneurship from which the necessary human capital then emerges. In fact, it is exactly the reverse. Without the right human capital, trained and comfortable to think analytically and take risks, the entrepreneurial transition just wont happen. Another necessary condition is a functioning market without which newly minted entrepreneurs will find it hard to practice their new skills. Learning by doing is a great way to fast forward the process. Role models of small, proven and successful companies are also vital in providing examples that budding entrepreneurs can follow. Like the right kind of education, which instils the relevant skills and ways of
thinking, model companies play an important role in changing peoples mentality and convincing them that an entrepreneur plays a valuable role in society. Participants identified four main priorities: The first is access to telecommunication and broadband Internet services that can speed up the pace of bureaucracy and ensure greater transparency in the market place. As shown in the Forums Global Information Technology Report 2012 (GITR), universal access to mobile phones will allow people to participate in real time in economies that move more quickly than in the past. Success on telecommunications requires a multistakeholder effort between public and private partners, with governments creating favourable market conditions and providing investment and infrastructure while
Capital input should be an investment, not a gift. Whats needed are experienced professionals willing to invest not only their money but also their time and expertise.
Esther Dyson Chairman, EDventure Holdings, USA; Chair, Global Agenda Council on Fostering Entrepreneurship
02 01: Fadi Farra, Adviser to the Prime Minister of Kazakhstan; Global Agenda Council on Advanced Manufacturing 02: Tatyana Mikayilova, General Director, Red Communications PR & BTL Agency, Azerbaijan
01
02
12
leaving the private sector to provide local services, including inbusiness training. The second priority is education and on-the-job experience. It is a priority because human capital is the biggest, most important element in business success. It means upgrading the education system, starting with digitizing learning in kindergartens, and generally growing peoples entrepreneurial potential as early as possible. University is way too late. A good place to start is teaching teachers new technologies and languages, and introducing more vocational training. Government has investment heft that must be deployed and the private sector can itself contribute to developing the skills they will need in the future. NGOs can move things along by facilitating dialogue between government and business.
A good start would be pilot projects with structured learning from successful cases. It is fine to start small and scale up if things work out well. Crucial to success is dialogue, sharing best practices and organized exchanges for both students and teachers. And, of course, schoolbooks need to be adapted or, better still, rewritten. The third priority is access to smart money. Without sufficient capital entrepreneurs cannot even begin the process. This means more microfinance, private equity and perhaps the use of sovereign wealth funds to underwrite entrepreneurial start-ups. But smart money also requires deregulation, more stringent anti-corruption measures and encouraging governments to buy smart from small enterprises, giving the latter a chance to prove themselves in the field of government procurement.
The fourth priority is to create consumer-driven, bottom-up markets. This implies creating competition at every level of the value chain, ensuring a favourable business environment and minimizing government interference. It also requires construction of the physical infrastructure that allows entrepreneurs to build their businesses as well as favourable tax treatment, appropriate business standards and the necessary training, finance and education. These building blocks are especially important in markets that are relatively small.
01
02
06 01: H.R.H. The Duke of York, Fadi Farra, Adviser to the Prime Minister of Kazakhstan; Global Agenda; Council on Advanced Manufacturing; Evgeni Utkin, Chairman and Chief Executive Officer, KM Core, Ukraine; Global Agenda Council on Ukraine 02: Ali Abbasov, Minister of Communication and Information Technologies of Azerbaijan 03: Hongbo Chen, Adviser, Tsinghua University, Peoples Republic of China; Global Agenda Council on Fostering Entrepreneurship 04: Petar Ivanovic, Minister of Agriculture and Rural Development of Montenegro
03
04
13
Finance and Long-term Investing
Ensuring the Means for Diversified Growth

Countries across the region share a sense of urgency about the need to attract the right kind of funding from the right mix of investors to underwrite the diversification and development of their economies as they anticipate an inevitable slowing of their energy-driven growth rates. But how to ensure this kind of diversified economic growth, where will the money come from, and what are the respective roles of government and the private sector in making it happen?
Azerbaijan has never changed so much as a comma in our production supply agreements thats the kind of stability investors need.
Gordon Birrell Regional President, Azerbaijan, Georgia and Turkey, BP, Azerbaijan
14
Finance and Long-term Investing
These challenges are not unique to the South Caucasus and Central Asia region. Countries as diverse as China, Singapore and the Gulf states are also focused on how to promote new vectors of growth and harness investments that promote balanced, sustainable growth into the future. Participants from the region agreed on the imperative of channeling investments into non-resource sectors and generally balancing their economic profiles that are heavily skewed toward the energy sector. The trick will be to ensure they maximize continuing opportunities in the energy sector while stimulating activity in other areas of the economy. Getting this right means finding a better balance between public and private finance. So far governments have played a disproportionate role in the economy. They need to step to one side and encourage private investors to get more involved. This has met with only limited success,
01
with private flows still modest in comparison with public investments. One reason - the lack of competition in the regions banking sectors means that they have a lacklustre record in seeking out investment opportunities. Their weakly capitalized banks have not been effective in channeling savings into private investment opportunities. Private capital and equity markets, meanwhile, remain poorly developed and under-regulated. The lack of private domestic capital is a problem because economic diversification is one of the principal challenges and goals in the region. Although governments could channel state resources top-down into new economic activities, they are not good at investing money based on rates of return and creating value for shareholders. Smarter money is needed and this must come from venture capital, private equity and businesses themselves.
International capital has not filled the gap left by lack of private domestic finance. This is part of a broader slowdown in international investment but it is exacerbated by concerns about corruption and the rule of law that undermine the business climate in several parts of the region. As capital from both traditional and non-traditional investors is increasingly drawn to promising opportunities elsewhere, slow progress on political and institutional reform in the region is a disincentive to foreign investors. This matters because the kind of long-term commitment the countries need is hard to nurture when people are nervous about what they see as relatively fragile institutions matched by social tensions that risk flaring up and undermining their investments. Short-term, the answer seems to be more emphasis on the kind of public private partnerships (PPPs) that have worked elsewhere. This is
01: Amer Zafar Durrani, Senior Partnership Specialist, World Bank, Almaty and S. Frederick Starr, Chairman, Central Asia-Caucasus Institute, Johns Hopkins University, USA 02: Samir Sharifov, Minister of Finance of Azerbaijan 03: Shahmar Movsumov, Executive Director, State Oil Fund of the Republic of Azerbaijan, Azerbaijan and Kevin Lu, Regional Director, Asia-Pacific MIGA, World Bank Group, Singapore; Young Global Leader; Global Agenda Council on China
02
03
15
a stopgap measure and longer-term, governments must give the private sector the space it needs to play its role effectively in the context of an investment climate enhanced by clearer rules and more transparent practices. Some participants suggested that sovereign wealth funds might play a bigger role in financing economic diversification. This would mean including long-term domestic investments in their portfolios in addition to funding emergencies and the safe rainy day investments they make in foreign assets. But other participants feared that this extension of their mandates might become the thin end of the wedge, with their independence and stature compromised by government interference. They did not exclude, however, that wealth funds might eventually fund cross-border infrastructure projects as a spur to regional cooperation.
Another lesson from experience in other parts of the world is that size of market is one of the main drivers of foreign direct investment. Chinas business climate, for example, is ranked poorly by several surveys but the size of its market is such that foreign investors stay put. This finding has implications for greater integration of markets in the South Caucasus and Central Asia region that is made up of eight states with a combined population of just 60 million. Going forward, governments in the region must focus greater attention on creating an environment that attracts capital and leaves the private sector to play its role, either with governments or alone. This means providing good infrastructure, a regulatory framework that is seen as fair, and greater levels of investment in education, including executive and vocational training. In turn, the private sector, including the small-
and medium-sized businesses that are now lacking, must be given the chance to prove its capacity to deliver not just high quality goods and services but to model entrepreneurial behaviours.
01
02
01: Israfil Mammadov, Managing Director, State Oil Fund of the Republic of Azerbaijan (SOFAZ) 02: (left to right) Yan E. Yanovskiy, Founder and Managing Partner, First Nation Socit Bancaire, Russian Federation; Igor I. Yakovenko, Chairman, Azerbaijan Electronics (AZEL), Azerbaijan; Zhanna Zenina, Managing Director, Optima Advisory, United Kingdom 03: Rufat Aslanli, Chairman, State Securities Commission of Azerbaijan
03
16
17
Trade and Supply Chains
Opening Borders and Minds
Opening up commerce within and across the region through better trade and transport systems offers the promise not just of broader-based prosperity in a region where the energy industry dwarfs other sectors but the opening of minds as people and their goods criss-cross the region.
This region is a kind of land Suez.
S. Frederick Starr Chairman, Central AsiaCaucasus Institute, Johns Hopkins University, USA
18
Trade and Supply Chains
After decades of isolation on the southern periphery of the Soviet Union, the South Caucasus and Central Asia region is once again on the international map as both destination and crossroads. Better transport and trade will bring local benefits as people build on their comparative advantages and increase the return on their labour. It will also help grow transcontinental trade as goods are sent along the land routes that are gateways to other regions. Such is the geographic centrality of the region that it could become the transit corridor of choice for manufacturers in Hanoi trading with buyers in Hamburg, or people in Macheng, China, selling their goods to retailers in Madras, India, or Madrid, Spain. The region played this kind of role in the global trade and transport system for centuries. A thousand years ago, the silver dirham minted in Azerbaijan was in demand from Sweden to
Sri Lanka as a means of exchange and store of value. The Soviet Union ended the regions role as a way station between East and West. It is only since independence in the early 1990s that the countries in the region have begun to emerge from their isolation. Over the last 20 years, more than US$ 40 billion has been spent on new railway lines, pipelines and ports within the region and in neighbouring countries from India to Turkey. Security remains an obstacle in some places but is not considered a major hindrance. Nonetheless, progress has been mixed. Some countries have made strides in both improving roads and railways and in the telecommunications systems that are so essential to commerce. Others are not spending enough to create a seamless logistical chain across the region. The result is that the transport and telecommunications infrastructure is uneven.
01
02
02
06 01: Jay Cziraky, Member of the Board, Move One Inc., United Arad Emirates 02: Davit Narmania, Minister of Regional Development and Infrastructure of Georgia 03: Alan McKinnon, Professor and Head of Logistics, Khne Logistics University, Germany; Global Agenda Council on Logistics & Supply Chain Systems
03
Soft barriers hold back development in trade and supply chains. Removing these has greater impact on GDP than removing all of the 04 tariffs.
Christopher Logan Co-Founder and Chief Executive Officer, Silk Road Mining and Development, Canada; Young Global Leaders; Global Agenda Council on Global Trade and FDI
19
Consistent levels of investment in infrastructure are necessary. So is more harmonization of regulations and dispute settlement arrangements. Progress on this is as important for people trading in the region as those accessing markets as far afield as the EU and China. It would also help to change some of the negative perceptions that continue to dog the regions image; perceptions that no amount of advertising international television can allay on its own. Put the right incentives in place and the private sector will respond, many participants suggested. But a market response is only possible, they said, if issues are addressed like excessive bureaucracy, corruption among customs officers and many other hassle factors that undermine the free flow of goods across national borders. So much time is currently wasted at borders that many
potential traders simply give up and abandon their role as trans-border wealth creators. Yet addressing these so-called soft issues is much simpler than removing tariff barriers. As highlighted in this years World Economic Forum report Building Resilience in Supply Chains, addressing the softer side of trade facilitation is about building the capacity of border administrators and sharing intelligence among the regions customs services to make customs procedures less obstructive. More contact between customs services and business people would also help them to understand each other better. There are some easy wins that should be acted on right away. They include cutting back on red tape and opportunities for rent seeking through digitization, harmonization of procedures within and across countries to speed processing and greater cooperation between government and business
to enhance the overall business environment and reduce corruption. These things hold back trade. Removing such obstacles will have a greater and more immediate impact than focusing on tariffs. The necessary levers are in the hands of individual governments. It would be better if they coordinated changes with their neighbours, but acting alone would itself make a big difference. The Caucasus, the Caspian and the Black Sea regions are all intertwined. The greater the connectedness between them, the greater will be their prosperity. Several participants urged the countries of the region to take action now by exchanging ideas, piloting new ideas and taking risks. Business leaders have an important role in encouraging governments to move the trade and transport agenda forward. If Marco Polo were alive today, he would encounter more obstacles in crossing the region than he did in the 13th century, said one participant. It is time to move the hands of the clock forward.
01: Jake Frazer, Chief Operating Officer, Theodor Wille Intertrade, Switzerland and Andrew C. Kuchins, Director and Senior Fellow, Russia and Eurasia Programme, Center for Strategic and International Studies (CSIS), USA 02: Amer Zafar Durrani, Senior Partnership Specialist, World Bank, Almaty and S. Frederick Starr, Chairman, Central Asia-Caucasus Institute, Johns Hopkins University, USA
01
02
02
20
Acknowledgements
The World Economic Forum wishes to thank SOCAR for its support of the Strategic Dialogue on the Future of the South Caucasus and Central Asia.
SOCAR (State Oil Company of the Azerbaijan Republic) is a government-owned entity responsible for all aspects of exploration and development related to oil and gas fields, both onshore and offshore, for the Republic of Azerbaijan. One of the largest companies in the world, it employs more than 70,000 people.
21
01: Edward Chow, Senior Fellow, Energy and National Security Program, Center for Strategic and International Studies (CSIS), USA; Global Agenda Council on Ukraine 02: Samir Sharifov, Minister of Finance of Azerbaijan, and Hannes Shariputra Chopra, Managing Partner, CKW-Consult, Russian Federation 03: Ilham Aliyev, President of Azerbaijan and Klaus Schwab, Founder and Executive Chairman, World Economic Forum 04: Fadi Farra, Adviser to the Prime Minister of Kazakhstan; Global Agenda Council on Advanced Manufacturing and Anar V. Aligulov, Executive Director, R.I.S.K. Scientific-Industrial Company, Azerbaijan
01
02
03
04
22
01
01
01: (left to right) Djoomart Otorbaev, First Deputy Prime Minister of the Kyrgyz Republic; Bakytzhan Sagintayev, First Deputy Prime Minister of Kazakhstan; Ilham Aliyev, President of Azerbaijan; Klaus Schwab, Founder and Executive Chairman, World Economic Forum; Andrey L. Kostin, Chairman and Chief Executive Officer, VTB Bank, Russian Federation; Taner Yildiz, Minister of Energy of Turkey 02: Richard Morningstar, US Ambassador to Azerbaijan 03: Lunch session 04: Alan Rousso, Managing Director, European Bank for Reconstruction and Development (EBRD), London 05: Taner Yildiz, Minister of Energy of Turkey 06: Bakytzhan Sagintayev, First Deputy Prime Minister of Kazakhstan
02
03
04
05
06
23
Further Information
More information on the World Economic Forum Strategic Dialogue on the Future of the South Caucasus and Central Asia can be found using the following links:
Contributors
Anastassia Aubakirova, Director, Head of Russia and CIS The report was written by Nicholas van Praag. Editing and Production Kamal Kimaoui, Director, Head of Production and Design Nina Vugman, Editor Photographers Elmar Mustafarov Magid Aliyev
Programme http://www.weforum.org/ South Caucasus and Central Asia2013/programme Webcasts http://www.weforum.org/ South Caucasus and Central Asia2013/webcasts Photographs http://www.weforum.org/Latin America2013/photos Blog http://www.forumblog.org
The event page of the World Economic Forum Strategic Dialogue on the Future of the South Caucasus and Central Asia provides access to a richer level of content from the meeting, including videos, photographs, session summaries and webcasts of selected sessions. http://www.weforum.org/
This report is also available to download in PDF or HTML format: http://www.weforum.org/South Caucasus and Central Asia2013/report/ pdf http://www.weforum.org/South Caucasus and Central Asia2013/report/ html
24
Upcoming Meetings
World Economic Forum on Latin America
Lima, Peru 23-25 April 2013
Under the theme Delivering Growth, Strengthening Societies, regional and global leaders participating in the World Economic Forum on Latin America will discuss the opportunities and challenges that lie ahead to achieve the regions full potential. With support of President Ollanta Moiss Humala Tasso, the Government of Peru and the Forums Strategic and Regional Partners, the meeting will provide an ideal platform to discuss the critical factors behind the regions resilience and dynamic development models. For more information, please e-mail: LatinAmerica@weforum.org
World Economic Forum on Africa

Cape Town, South Africa 8-10 May 2013
Under the theme Delivering on Africas Promise, the 23rd World Economic Forum on Africa will provide an important platform for regional and global leaders from business, government and civil society to deepen the continents integration agenda and renew commitment to a sustainable path of growth and development. For more information, please e-mail: Africa@weforum.org
World Economic Forum on the Middle East and North Africa

Dead Sea, Jordan 24-26 May 2013
Under the theme Shaping the New Regional Context, the World Economic Forum on the Middle East and North Africa will examine what policies and business strategies can support the aspirations of the regions economies while catalysing the dialogue necessary to overcome long-standing fault lines and facilitate a truly multistakeholder partnership for the future. For more information, please e-mail: MiddleEast@weforum.org
World Economic Forum on East Asia

Nay Pyi Taw, Myanmar 5-7 June 2013
Under the theme Courageous Transformation for Inclusion and Integration, the 22nd World Economic Forum on East Asia will be the first leading international gathering of senior decision-makers from industry, government, academia and civil society to be held in Myanmar after a series of bold economic and political reforms. Through its unique multistakeholder platform, the meeting will be an unrivalled opportunity to understand and shape Myanmars ongoing reforms and reconciliation process. For more information, please e-mail: EastAsia@weforum.org
For a full list of upcoming meetings, please consult the World Economic Forums website: www.weforum.org.
26
27
The World Economic Forum is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas. Incorporated as a not-for-profit foundation in 1971 and headquartered in Geneva, Switzerland, the Forum is tied to no political, partisan or national interests.
World Economic Forum 9193 route de la Capite CH-1223 Cologny/Geneva Switzerland Tel.: +41 (0) 22 869 1212 Fax: +41 (0) 22 786 2744 contact@weforum.org www.weforum.org

Wef Baku13 Report

Enviado por

Dados do documento

Descrição original:

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Wef Baku13 Report

Enviado por

Direitos autorais:

Formatos disponíveis

Regional Agenda

Brge Brende Managing Director and Member of the Managing Board

21 Acknowledgements 24 25 Further Information Upcoming Meetings

Anastassia Aubakirova Director Head of Russia and CIS

News from Baku

News from Baku

The Changing Nature of Education

Energy and Natural Resources

Releasing the Regions Untapped Potential

Ilham Aliyev President of Azerbaijan

Energy and Natural Resources

Klaus Schwab Founder and Executive Chairman, World Economic Forum

Djoomart Otorbaev First Deputy Prime Minister of the Kyrgyz Republic

Energy and Natural Resources

Entrepreneurship and Human Capital

Nurturing the Regions Human Energy

H.R.H. The Duke of York

Entrepreneurship and Human Capital

Sevinj Hasanova Deputy Minister of Economic Development of Azerbaijan

Entrepreneurship and Human Capital

Finance and Long-term Investing

Ensuring the Means for Diversified Growth

Finance and Long-term Investing

Trade and Supply Chains

Opening Borders and Minds

Trade and Supply Chains

World Economic Forum on Africa

World Economic Forum on the Middle East and North Africa

World Economic Forum on East Asia

Você também pode gostar