Central Asia’s New Silk Road: Game Changers

“No need to listen for the fall. This is the World’s end.” — Rudyard Kipling, Kim

During a long, cold flight to Almaty in the late 1990s I sat sleepless reading Peter Hopkirk’s landmark history of the region, “The Great Game: The Struggle for Empire in Central Asia.”  My colleagues and I were about to spend the week meeting with Kazakhstan’s Ministry of Energy as well as its largest companies, all heavily armed by private security guards touting AK-47s while discussing their IPO plans in London. That alone was an eye-opener even Hopkirk would have missed. But what was unique about this trip was our informal mission, backed by the Chinese government, of introducing the idea of a vast pipeline in Kazakhstan that would reach from China’s far western Xinjiang region to the Caspian Sea. The Kazakhs at the time, fearing rather engaging China, were having none of it.

Fast forward to China’s “One Belt, One Road” initiative launched amidst much fanfare this year and not coincidentally in tandem with its sponsorship of the Asian Infrastructure Investment Bank (AIIB).   If successful, these two moves promise to have a geo-economic impact on par with China’s immensely ambitious development policy toward Africa. However unlike Africa, China’s focus on driving a renewed “New Silk Road” through Central Asia faces an already crowded field of post-colonial (and post-Soviet) military interests, natural resource competition, a resurgent and irredentist Russia, and a potential threat of IS terrorism in the region.

What is more, despite its natural wealth and historical location as a crossroads, Central Asia remains stunted by income inequality and lack of advanced educational attainment–two areas, I would argue, which hold the key to the Great Game.  This is because the success of any New Silk Road will likely require far more than the odd gas pipeline or wad of investment dollars but rather a level of development that enhances economic inclusion and can foster political and social stability, open borders, and diversified economic growth. In this sense, a single aspect of Central Asia which has been largely discounted must now be confronted: the education of its people.

Central Asia by the Numbers

To the uninitiated, the traditional concept of Central Asia is comprised of the five countries of Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan.  I’ve included Afghanistan in our analysis since it borders on three Central Asian republics and injects its own development challenges onto the region, whether they like it or not. As a failed education state, Afghanistan also serves as warning to the region about what an alternative path might look like.

Table 1 summarizes aggregate economic and education data for the Central Asian republics, centered on long-term indicators:

  • Total population of approximately 66 million people (and close to 100 million if we include Afghanistan)
  • A sizable 52.6 million people projected to be of working age (15-64 years) by 2030
  • FDI inflows of US$14.8 billion in 2013 or about half of India’s $35 billion FDI in 2014.
  • Relatively high per capita GDP (in PPP measures) of US$10,307 ($8,914 if we include Afghanistan)
  • Gini coefficients reflecting income inequality at moderate to high levels, ranging from a low of 29 for Kazakhstan to a high of  36.7 for Uzbekistan (but still lower than US levels of 40).
  • Wide variation of educational attainment and labor skills, ranging from OECD levels to rates far below India and China, but overall, lagging.

Figure 2: Comparative Economic and Education Data:  Central Asia and Afghanistan

OMore recently, and to add further urgency to what is a region in transition to emerging market status, Central Asia has fallen victim to collapsing oil prices, aborted resource investments, and economic weakness in Russia (which provides remittances and is the main export market for the region).  Under these conditions, it would be folly to believe that massive hydrocarbon projects alone will galvanize economic development without a level of education that acts as both an economic stabilizer and a key to social change, not least, to root out corruption based on resource extraction and control.

Where, then, is Central Asia heading in terms of educating its populations and what are the challenges ahead?

Early Success at Primary School Levels

Central Asia’s republics are relatively well educated at early ages. Universal primary school completion—a key indicator of future educational attainment—was reached or exceeded in most countries by 2012 and many were closing in on this goal in 2000 (see Figure 2). By comparison, Afghanistan is a failed education state with a paltry 34 and 38 per cent of children competing primary school in 2000 and 2012, respectively, not least due to the exclusion of girls.  According to one wide-ranging report on Afghanistan’s educational system in the 20th century, the number of students enrolled in 2000 barely exceeded levels achieved in 1978 and, even more distressing, remained far below the enrollments levels in the country during the more peaceful 1960s and 1970s.  Beyond Afghanistan, Pakistan and Bangladesh also face deep challenges, where only 72 and 75 per cent of children finished primary school in 2012.

In comparative terms, this illustrates that Central Asia is not the educational wasteland often thought of in popular imagination and should provide some solace to future policymakers and investors.

Figure 2: Primary Education Completion Rates by Country, 2000 v 2012

Declining Fertility Rates Put Less Pressure on Educational Systems

Supporting this early age education trend is a sharp decline in fertility rates. As I have noted in previous research, it is axiomatic that declining population pressures and less stress on educational systems can improve educational outcomes.  One study by the British Council has underscored the correlation between standardized test scores and falling birth rates in East Asia, a finding that can apply to other regions as well.

In Central Asia, Kazakhstan has maintained a consistently low fertility rate (as measured by birthrates per woman) of 2.7 times since 1990 which contributes to the fact that its educational outcomes are the highest in the region. More important are its “high-birth” neighbors which have reduced average births dramatically:  Uzbekistan, showing a declining fertility rate from 4.1 in 1990 to 2.5 in 2012; Tajikistan falling from 5.2 to 3.8, and Turkmenistan from 4.3 to to 2.4 births per woman. Contrast this with Afghanistan, which had 7.7 births per woman in 1990, reducing to an improved but still high 5.1 by 2012 (see Figure 3).

Directionally, the five Central Asian republics are primed for positive education outcomes for the simple reason that fewer children to educate equates to more potential support per child–financial, pedagogic or otherwise–and higher potential attainment beyond primary levels.

Figure 3: Total Fertility Rates: Birthrates per Woman by Country, 1990 v. 2012

Gradual Moves to Higher Education Attainment, But Uneven Success

With higher numbers of primary school graduates and lower stress on the student pipeline through moderating population size, we can expect a trend toward longer student engagement cycles and higher educational attainment through University if both capacity and affordability are sufficient.

Thus far we can see gradual improvements in Central Asia together with other, more depressing trends in tertiary enrollment rates. As Figure 4 indicates, Kazakhstan grew enrollments rapidly from 2001 to 2006 (at peak close to 790,000 students), but declined through 2010.  The country’s tertiary gross enrollment rate (GER) of 48.5 per cent in 2013 is largely in line with OECD averages and far higher than China and India, although its population size is vastly different.  Kyrgyzstan and Tajikistan are two other countries that have registered some moderate growth in tertiary enrollments. Kyrgistan is a particularly high GER of 47.2 per cent, with Tajikistan with a much lower (tough still relatively impressive) 25.4 per cent.

Uzbekistan and Turkmenistan are more problematic, with low GERs (8.9 and an estimated 8.0 per cent, respectively) and declining tertiary enrollments in the case of Uzbekistan (note that Turkmenistan does not report tertiary enrollments–never a good sign).  Moreover, Uzbekistan reported high secondary enrollment completion suggesting that a lack of capacity may be severely limiting student attainment in the country.

Figure 4: Tertiary Enrollments by Country, 2001-2012

International Mobility and Engagement Is Plugging the Capacity Gap

As in many other parts of Asia, the lack of domestic higher education capacity coupled with higher attainment levels, greater affordability and increased savings has traditionally propelled the movement of students abroad to destinations such as the UK, Australia and the US, and this is happening for Central Asian students as well, although most end up in Russia or non-Western University systems.

As Figure 5 illustrates, several Central Asian countries have increased the size of their tertiary student cohorts overseas.  Three countries are worth mentioning: Kazakhstan, which almost doubled its student abroad cohort to reach almost 44,000 annually by 2012; Tajikistan, with international students rising from 1,337 in 2001 to 9,128 in 2012; and Turkmenistan, which since 2007 has rocketed to a level of 27,959 students by 2012.

In 2014, a combined 3,203 students from Central Asia were studying at US colleges and Universities, a level however which is comparatively low and far less than even Nepal, which sent 8,155 students. Kazakhstan sent 2,102 students to the US in 2014 out of an estimated total of 44,000 students (using its 2012 data), or a mere 4.8 per cent of total.

Clearly US higher education is only a bit player in Central Asia–compared with Russia and to an increasing extent China–with significant scope for growth and engagement. Consider that out of thirteen international branch campuses in the region, all but two are hosted by Russian Universities; in Kazakhstan, all international branch campuses are Russian.  The US is seeking to remedy this strategic deficit–most recently through the launch of the American University of Central Asia and other government-led initiatives–but far more educational engagement is needed to build the level of educational capacity, and quality, that can serves the region’s future interests.

Figure 5: International Mobile (Offshore) Enrollments by Country, 2001-2012

Education Spending to Accelerate with Regional Growth

Finally, there is no reason to believe that Central Asian households will act any differently from the rest of Asia as their wealth increases and opportunities for educating their children unfold. The propensity for emerging Asia, including its poorest regions of South Asia and Myanmar, to spend a significant proportion of household income on supplemental education is well established, and an area I previously analyzed in the case of both poor and rich students in emerging economies.  

At present, two countries–Kazakhstan and Turkmenistan–are posting significant increases in GDP per capita (as measured in PPP) and at levels far above averages within Developing Asia. However the remaining populations of Uzbekistan, Kyrgyzstan, and Tajikistan lie beneath the $4,000 to 5,000 PPP “middle class” threshold and are growing from a much lower base. Differing levels of affordability will demand a more nuanced approach to the region as a whole.

Figure 6 illustrates these changes in affordability through the relative strong economic cycle ending 2013.

                 Figure 6: GDP Per Capita at PPP (Current International Dollars), 2001-13

In sum, educational and economic progress within Central Asia will not be easy but the region has a decent foundation base from primary school levels.  Country profiles differ widely, with Kazakhstan leading across many statistical indicators, including access to higher education and affordability.  The region’s reliance on Russia is unstable, if not problematic, in terms of educational needs and priorities.  Chinese investment may help to galvanize a region in need but not if it relies solely on large scale infrastructure projects.

The clock is ticking on economic and social stability in a region propped up by resources rather than human capital. Investors and policymakers who plan to travel along this New Silk Road should take note.

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