Impact of Globalization on Socio-Economic and Political Development of the Central Asian Countries
This study of this economics assignment thesis aims to comprehend how the socio-economic development of two specific former Soviet Union nations—Kyrgyzstan and Kazakhstan—as well as all Central Asian nations—which are still figuring out how to fit into the highly interconnected and globalized world—is affected by global political, economic, and social processes. One of the reasons for selecting these particular nations is that, of all the Central Asian republics, only Kazakhstan and Kyrgyzstan were able to establish relatively favorable investment climates that, in theory, should hasten the development of their economic integration with the world market (Marat, 2009). However, Kazakhstan and Kyrgyzstan significantly differed from one another in starting economic conditions, including such an important factor as natural resources, abundant in Kazakhstan and absent in Kyrgyzstan. These two republics, with populations ranging from 5 to 16 million, were similar in that they shared a common socioeconomic space that was determined by a common Soviet legacy (Primbetov, 2006). It has affected the rate of their development and their capacity to respond to globalization's difficulties. To successfully participate in the contemporary political system, these nations made the decision to open their markets, liberate their economies, and adopt democratic structures. However, there have been several challenges that have delayed their changes along the path to modernization and the shift to an open market economic system. The primary objective of this thesis is to examine how Kazakhstan, Kyrgyzstan, and Central Asian republics in general have responded to current political and socioeconomic trends while operating within the socioeconomic constraints inherited from the Soviet legacy as well as from the geopolitical reality.
How these policies have affected their country's political and socioeconomic development. In my perspective, the best way to comprehend the dynamics of growth in the Central Asian region is to analysis this process through the prism of globalization.
To further explain my findings, I draw on a number of theoretical perspectives related to the overall issue of social development, such as dependency theory, functional approach, push-pull theory, liberal democratic theory, and liberal institutionalism. I have employed a number of ideas since neither the political nor the socio-economic effects of globalization can be explained by a single theory. Later in the chapter, these are further developed.
Globalization is a multifaceted phenomenon that affects not only the political, economic, social, and cultural aspects of any nation but also changes how "social world and human nature" are traditionally studied (Robinson, 2005). Global economic integration, deterritorialization, and time-space compression are all terms that are frequently used to describe globalisation (McGrew, 2008). It is necessary to examine each of these features separately in order to gauge its extent and effect on a specific community. In light of the phenomenon's complexity, I would want to focus solely on the political and socioeconomic impacts of globalisation on the socioeconomic growth of Central Asian nations, especially Kazakhstan and Kyrgyzstan. This study's objective is to examine the effects of globalisation rather than to speculate about its nature or demonstrate whether it is generally a beneficial or negative phenomenon.
Growing socioeconomic and political interdependence brought on by globalisation has an impact on the development of nations that are still figuring out where they fit into the global political system. My main goal is to investigate how Central Asian nations that are still in a transition process respond to and adapt to the rapidly escalating conditions of globalism, which are represented by inclusion in the global economy, the removal of trade barriers, extraordinary mobility of human capital, goods, and services, as well as by the interconnectedness of ideas and norms that reshape not only our understanding of current social and political institutions but also the way we live (Bhandari and Heshmati, 2005). By adopting and applying western political and economic models, such as democratising political regimes and liberalising economies in the former Soviet Union region, one might observe this shift.
I examine economic, social, and political elements of globalisation that deal with issues of free movement of capital and people as well as with concerns of global political and economic integration based on this understanding of globalism. I investigate how these elements impact the political and socioeconomic advancement of Kazakhstan, Kyrgyzstan, and other Central Asian nations.
Measures of globalization: migration; remittances; liberal democracy; cooperation and regional integration
I examine worker remittances and international migration movements, which have increased over the past few years, notably in the Central Asian region, to study the socioeconomic effects of globalisation. Components of modern globalisation. I want to find out how the rapid migration of people and the influx of remittances into the countries of origin of migrants affects their socioeconomic advancement. Foreign direct investment is a different indicator of the effects of globalisation (FDI). However, this measure mostly applies to nations with a wealth of natural resources or access to skilled labour at reasonable prices. Since the majority of Central Asian nations lack natural resources, their FDI per capita is low, and as a result, FDI is not indicative of any economic improvement in these nations. Additionally, political stability is a prerequisite for a consistent FDI influx, which is not the case throughout much of Central Asia. On the other hand, remittances are common in all of the countries examined. The political impact of globalisation is examined by looking at it from the standpoint of liberal democracy, which is based on the notions of imposing and expanding the principles of capitalism, neoliberalism, industrialism, and other ideologies throughout developing world (Scholte, 2005). I wish to focus on whether Central Asian countries' adoption of the liberal democracy model (open markets and democratic institutions), as is claimed to be the case by Smith, Baylis, Ownes (2008) as well as Huntington, Shin, and Diamond, results in effective economic development (Scholte, 2005). Additionally, I consider the political effects of globalisation from the angles of regional cooperation and integration. Globalization, which reinforced new regional and global issues, set off these processes. These challenges had a profound impact on the region's political processes and compelled Central Asian countries to reevaluate their foreign policy goals. I examine how the introduction of new political actors in the region affects the development of these countries' foreign policies (cooperation and integration) by examining regional organisations like the Eurasian Economic Community and the Shanghai Cooperation Organization (SCO) (ECC).
I have a number of research questions since I examine the effects of globalisation from both an economic and political standpoint. The economic ramifications of globalisation are the subject of my first two research questions. I start by looking at how globalisation has affected the socioeconomic advancement of the Central Asian republics as measured by remittances. In this work, I quantify socio-economic development by analysing whether remittances have positive or negative effects on it using the Human Development Index, a broad indicator of circumstances for education, health, and income. Although there is evidence that worker remittances have favourable short-term effects on the growth rate of GDP, my hypothesis contends that their rise may have a negative long-term effect on economic growth. The likelihood that remittances don't bring about any structural changes to the nation's economic and political systems can help to explain this argument. Remittances instead breed reliance, which cripples a nation's ability to produce. The Dutch sickness is the name given to this phenomenon.
I attempt to examine how migration influences social and economic development in my second research question. I examine the "socio-economic structural changes" (Economic Development, 2009) in the migrant-sending nations and the potential effects they may have on their laws and public policies. According to my theory, sending countries are negatively impacted by labour migration. One justification for this assumption is that labour migration causes a decline in the supply of labour and intellectual capital.
"Brain drain" capital, which has negative consequences on social metrics like life expectancy and human development, is one type of capital.
The political ramifications of globalisation are the topic of my third research question. In order to assess the effects of globalisation, I consider both the Economic Freedom Index and the Democracy Index. This is because, in some definitions, globalisation and the process of democracy are mutually exclusive or frequently go hand in hand (Scholte, 2005). (Huntignton, 1991; Shin, 1994; Diamond and Plattner, 1996). By comparing the levels of socioeconomic growth in democratic and nondemocratic nations, I look for a relationship between the degree of democratic regimes and development. My premise is that effective socioeconomic development does not necessitate democracy. By examining a number of non-democratic nations that exhibit efficient economic growth, this statement can be examined.
The descriptive examination of the political effects of globalisation is the subject of my final research topic. I work to comprehend how the political roles of the Central Asian nations both within and outside the area are impacted by the current processes of globalisation related to the political, economic, and social interdependence among adjacent countries, including such titans as China and Russia. My hypothesis is that the Central Asian republics' leaders have chosen political collaboration, which will lead to stability in the region. Countries in Central Asia actively participate in organisations for regional cooperation like the Shanghai Cooperation Organization or the Eurasian Economic Community. Up until now, it has been a successful tool for addressing local and international issues that have the potential to undermine the region's political and security stability.
In order to continue with the chapter, I must first accept that there are the outcomes of my study are liable to change and have certain limitations in both the procedures and each of the measurements that I used. The following chapters will go over those restrictions.
Significance of the study
The importance of this research is that I attempt to examine the macroeconomic and sociopolitical effects of globalisation in a specific geographic area. By offering practical methods for forming public policies that can foster favourable conditions for economic development or mitigate short-term negative effects of globalisation, this technique can considerably contribute to improving our understanding of the true scope and impact of globalisation (Ratha, 2004).
Additionally, I combine qualitative and quantitative analysis to identify causal relationships or correlation effects between migration, remittances (which result from labour migration), economic and political liberalism, and socio-economic factors in Central Asian countries. This work has already been done by a number of political scientists.
Another crucial aspect of my research is its attempt to reframe the mainstream liberal theories that have dominated contemporary political science. For instance, a lot of liberal researchers think that having democracy automatically results in good socioeconomic development. The foreign policies of hegemonic powers toward developing countries have been greatly affected by this strategy.
Understanding that democracy does not always equate to steady socioeconomic development, however, can help to explain why emerging nations prefer alternate forms of government to the western ones. These choices consider the political, social, and cultural diversity that exists between nations, which can help avoid potential cultural confrontations.
On the other hand, this study makes the case using liberal doctrine (Liberal Institutionalism) that although embracing liberalism does not always have a positive impact on the socioeconomic development of the Central Asian countries; it can still be used to explain regional patterns of political and economic cooperation.
The primary theoretical underpinning of this study is based on dependence theory, which contends that significant modifications to the social and political systems of emerging nations brought about by globalisation have a detrimental effect on socioeconomic development.
This approach contends that the emergence of previously unheard-of levels of labour migration and the adoption of neo-liberal principles are responsible for the "development of the underdevelopment" because they lead to the outsourcing of human capital and labour resources from the developing world's periphery to the developed world's core, which has a detrimental impact on the economic development of developing nations (Haas, 2007).
There are two basic theoretical perspectives on migration that emerged from the dependency and social development themes (Mahmud and Sabur, 2009).one of them represents a structural or dependence approach that contends that the growth of the periphery is unachievable because of a "unique insertion in the world economy" where the developed countries (the core) entirely extract the capital accumulation of the periphery (Mahmud and Sabur, 2009; Vernengo, 2008). According to this perspective, migration is seen as a "capitalist phenomena that not only harms the economies of undeveloped or emerging countries, but actively contributes to their underdevelopment" (De Haas, 2007).
"Migration and remittances simply support the capitalist system that is based on inequality," claims Hass (2007). According to academics who belong to this perspective, migration alters the social structures of the countries that send their migrants, changing the traditional types of households (Hayes, 1991). Additionally, they contend that remittances—a byproduct of labour migration—cannot be regarded as a reliable source of income (Hass, 2007). The most recent economic crises, which nearly cut in half the amount of remittances flowing into nations like Kyrgyzstan and Tajikistan, provided some support for this assertion (Marat, 2009). Given that remittances account for 27% and up to 30% of each country's GDP, respectively, it is a sizeable sum (Marat, 2009).
The functional approach is another theoretical perspective (Mahmud and Sabur, 2009; Vernengo, 2008). According to Cardoso and Faletto (1967), "progress in the developing world is achievable" because foreign capital can be "re-invested in the host country," which could result in economic growth (Vernengo, 2008). The underlying assumptions of this theory are drawn from "neo-classical development economics," which sees migration and remittances as factors in economic progress. The "process of shifting excess labour from poor countries to the global industrial sector" is how it describes migration. It establishing a balance between host nations, where wages decline, and sending migrants countries, which begin to receive remittances that reduce existing economic inequities, should promote economic growth in sending migrants countries.
I discuss the beneficial and detrimental effects of migration and remittances on the development of the Central Asian countries using both theoretical perspectives.
However, I examine and analyse numerous aspects of globalisation in this study that call for incorporating a number of scholarly perspectives into the overarching issue of globalisation and development, including push-pull theory, structuralism, and rational choice.
When evaluating the issue of migration, I draw on some of the "livelihood methods" that arose in the fields of geography, anthropology, and sociology in the 1970s (Hass, 2007). It draws attention to the significance of human agency in examining the causes of migration (rational choice, push-pull theory), as well as potential effects on the general social, economic, and institutional development of the nations from which migrants are being sent (Haas, 2007). I use the push-pull theory of migration in particular to comprehend the migratory trends in the Central Asian region. The British thinker Ernest Ravenstain, who published "Laws of Migration" in 1885, is credited with developing this strategy. According to his research, migration is a process that is influenced by push-pull factors (Ravenstain, 1985). He defined push factors as particular political or economic circumstances, such as famine or military and civil conflicts, that compel people to relocate to areas with better socioeconomic conditions, which operate as "pull" causes (Theories of Migration). I include some socioeconomic concepts to demonstrate how remittances have an economic impact.
Economic development theory that give me access to several analysis methods, including societal, international, and individual. For the sake of my research, I focus on the global analysis and calculate the effects of remittances, which may be thought of as financial flows (Jaffe 1998), on the socioeconomic advancement of recipient nations in the Central Asian region.
I look at democratic theory, which is not monolithic and covers all facets of a society's socio-political existence, to comprehend the political ramifications of globalisation. I focus especially on the liberal democratic theory's economic parts that deal with economic freedom, which includes private property and business ownership, free markets, and a limited role for the government. The fundamental tenet of this strategy is that developing nations' adoption of democratic political and economic systems creates the conditions for successful economic development.
I employ the Liberal Institutionalism approach in conjunction with liberal democratic theory to comprehend how globalisation has affected the political evolution of the Central Asian republics, notably the formulation of their foreign policies. According to this view, international institutions might encourage governments to forego short-term gains in favour of long-term rewards from collaboration (Walt, 1998). Due to the diversity of interests and economic development levels among the member nations, organisations like the SCO or ECC in this scenario may not be effective in the short term, but they may have positive long-term benefits on the growth and stability of Central Asian nations (Guger, 2008).
These methods can be useful in explaining why migration and remittances affect a country's socioeconomic development in diverse ways. I likewise think that combining these theoretical frameworks can greatly increase our understanding of the true breadth and impact of globalisation.
Methods and research design
This study's methodological framework combines qualitative and quantitative techniques. I combine the case-study method with panel data regression analysis and simple regression. By measuring socioeconomic development indicators like GDP, the Human Development Index (HDI), life expectancy, and the Index of Economic Freedom at the same moments several times, I can use empirical methods to track cumulative changes in a particular phenomenon, like the socioeconomic development of Central Asian countries over time, and determine how they are impacted by globalisation. It also enables the generation of more accurate findings and judgements (Johnson and Reynolds 2008). I can better comprehend the effects of specific socioeconomic indicators of globalisation for one country with the aid of a thorough case study. That might help me comprehend the true effects of globalisation on development.
For calculating the economic effects of globalisation as assessed by remittances and migration, I employ panel data regression analysis. In particular, a fixed effect model with country-specific fixed effects is employed. These observations are not independent since many observations are associated with a single nation. The use of fixed effects enables the correlation of observations from the same nation. However, because the slope coefficients are what I am most interested in, I do not mention the estimated fixed effects. The Hausman test revealed that the fixed effects model is the preferred specification in spite of my attempts to estimate the random effects model. In each circumstance, I use databases given by the World Bank, IMF, International Labor Organization (ILO), Eurostat, UNESCO, UNDP, and MPI annual reports to compile my raw data on migration and remittances. These databases are accessible on the websites of these organisations. The United Nations Statistical Division's Population Census Questionaries’ is used to derive official data for migration from the Demographic Yearbook data collection system. To reduce the burden on governments, different organisations pool their resources to collect data on international migration (UNDP). After testing numerous model specifications, the final panel data analysis results are shown for the three model specifications that I believe to be the most suitable. The major finding is that only one economic development measure, GDP, is significantly positively impacted by labour migration and remittances. Their effects, however, are statistically marginally less significant than the impact of inward FDI flows. The findings also indicate that migration and remittances have little influence on social development metrics.
By applying the data I utilised for my empirical analysis to Kyrgyzstan, I undertake a case study for one nation as a complement to the empirical research of the effects of remittances and migration on the development of Central Asian countries. It enables me to gain a better knowledge of how remittances and migration impact several socioeconomic development indices, including GDP, FDI, export as a share of GDP, unemployment, private consumption, and life expectancy. Eight graphs that show the connection between migration/remittances and socioeconomic progress provide the final results. I observe that the remittances have two consequences on Kyrgyzstan. On the one hand, they do raise the GDP per person. But they do have an adverse impact on the industrial sector, which could, in the long run, have a very substantial negative impact on the Kyrgyz economy.
I investigate the political effects of globalisation using a case study methodology. The degree and scope of democracy are used in my study to gauge the level of globalisation. My information on democracy includes measures like the Economist Intelligence Unit's Democracy Index, the Wall Street Journal's Economic Freedom Score, the Heritage Foundation's Economic Freedom Score, and the Human Development Index, which can be found on the HDR's official website.
In this thesis, political growth is represented by patterns of collaboration and integration in the Central Asian region. I also utilise a case study to analyse the effects of globalisation on these patterns of cooperation and integration. I use regional organisations like the Eurasian Economic Community (EEC) and the Shanghai Cooperation Organization (SCO) to assess the foreign policies of the Central Asian nations.
I analyse the degrees of development of democratic and authoritarian nations using these metrics, focusing my study on Ukraine and Kazakhstan while using India and China as a benchmark for comparison.
To discover a haphazard association between socioeconomic progress and democracy, I also employ simple regression analysis. By calculating the effects of democracy on GDP growth rates and levels as well as the effects of democracy on the Human Development Index, I develop two models that examine data from 154 different nations. The study discovers a statistical relationship between democratic participation and economic growth, but further empirical data is presented to indicate that this relationship is simply statistical. As I contend, it is challenging to assert that there are causal linkages between these two variables, and graphs that support this assertion are shown.
Structure of the thesis
The structure of the thesis is as follows. The second chapter examines academic literature that aids in my comprehension of current scholarly tendencies, their developments, and their drawbacks. Additionally, it gives me theoretical tools that I can utilise to develop hypotheses and find solutions to my research concerns. By conducting an empirical analysis of remittances and their effect on the growth of the Former Soviet Union and Eastern European countries, I examine the socio-economic effects of globalisation in my third chapter. The fourth chapter conducts yet another empirical analysis to investigate the socio-economic effects of migration on the nations of the former Soviet Union. I undertake a case study to complement my qualitative research in which I examine the socioeconomic effects of migration and remittances on Kyrgyzstan. In the fifth chapter, it is finished. The sixth chapter looks at how globalisation has impacted Kazakhstan and Ukraine's political development. It is done by contrasting nations like China with India, which picked its own particular course for political and economic development whereas India adopted a liberal democratic model. I compare democratic Kazakhstan and powerful Ukraine using both nations as my main benchmarks in order to assess the effects of democratisation on the socioeconomic progress of each nation. In the end, I evaluate my research and talk about how globalisation has affected the successful growth of the Central Asian nations, especially Kazakhstan and Kyrgyzstan. The sixth chapter provides a detailed analysis of how global difficulties brought on by globalisation have an impact on Central Asian foreign policy republics. It studies the nature of regional cooperation institutions like the SCO and EEC and looks at regional cooperation as a tool to build foreign policies.
The topic of globalisation, which leads to unprecedented levels of migrant movements, prompts the emergence of new types of migrant-related financial institutions (remittances), leads to a wide spread of democratic regimes, and hastens the process of regional cooperation and integration, is covered in a substantial body of scholarly literature. This body of scholarship aims to examine the effects of these circumstances on socioeconomic development globally, with a focus on the former Soviet Union. The academic literature on this topic can be divided into several categories, and each one focuses on a different issue, such as the effects of migration, democracy, or worker remittances on socioeconomic development. It also examines the effects of globalisation on the integration and regional cooperation of the Central Asian countries.
The issue of migration and remittances, which are frequently experienced together but may or may not have the same impact on the process of development, has received substantial attention in academic literature since the Central Asian governments gained independence at the beginning of the 1990s. Three intellectual factions have emerged from the scholarly research in this field, each with significant contrasts and similarities.
The first group of academics is in the camp of political scientists and economists who contend that remittances harm developing nations. Several thorough research can serve as representations for this academic group (Agunias Mechthil (2006), Shelburn and Jose Palacin (2007), Cohen (2005), Haas de Hain (2007), and Stuart (2006). These studies are based on claims that worker remittances may have a short-term positive impact on development but are unrelated to or have a long-term detrimental impact. Remittances, according to these experts, are such a complicated phenomenon that it is important to consider both their economic and other related socio-political components. To find the effects of remittance on development, they also try to apply other qualitative methodologies, such as partial and temporal scales of study, in addition to economic analysis of this phenomena. For instance, Haas de Hain (2007), who employs this specific technique, claims that the remittances have the ability to stimulate the economy, improve well-being, and reduce poverty. Their impacts on social development are unclear, nevertheless. Furthermore, despite the fact that remittances and immigration are advantageous for certain households or small towns, regional and temporal examination of this topic shows that they cannot significantly contribute to social or economic development, especially in unfavourable investment climates. Governments must therefore enact certain social, political, and economic policies that will enable remittances and immigration to reach their full potential if they are to be effective.
Other academics, including Stuart (2006) and Palacin (2007), who contend that specific macroeconomic circumstances must be met for remittances to be advantageous to an economy, support this viewpoint. Additionally, rather than at the level of the entire country, where the macroeconomic implications of remittances are less obvious due to a lack of complete and adequate statistical data, a positive effect of remittances can be seen in micro-household studies that involve specific individuals or local communities.
I believe that the tendency of the adherents of this academic camp to see worker remittances from broader socio-political settings as well as from economic viewpoints sets them apart. For instance, Cohen (2005) examines how migration perspectives might be used to study how remittances affect socioeconomic growth. He examines the results (positive or negative) of remittances on developing nations using micro and macroeconomic techniques. The author contends that migration and remittances may be detrimental to developing nations based on the use of these methods. They can first exert more downward pressure on the countries where migrants are going (in the Commonwealth of Independent States, migration is known as "south to south" movement because it occurs between developing nations). Second, migration causes home countries to lose talented employees. Thirdly, according to some data, returning immigrants (especially in metropolitan regions) have greater unemployment rates than non-immigrants since their skills don't match those of the region. And finally, as migrants' levels of education rise, remittances fall. Other authors who adopt the same strategy, such as Leon-Ledesma and Piracha (2004), contend that international migration and remittances immobilise nations and make them remittance-dependent. Dependence on remittances stunts progress and widens social inequality.
Researchers who believe that remittances have a favourable effect on socioeconomic growth make up the second group of academics. Workers' remittances and remittances in general, according to authors like Korobkov and Lev V. (2005, 2007), Ivakhnyuk (2006), Jones, Black, and Skeldon (2007), Admos, Piesse and Pinder (2003), Marlene (2007), and others, can be particularly advantageous for developing nations. Additionally, they use a variety of strategies and techniques, such as time series cross to research these topics, use case studies or sectional analyses.
Some of them have a propensity to see worker remittances in a broad sense. For instance, Devesh and Singer (2005) contend that remittances help recipient nations by opening up new markets. They contend that nations with bigger remittance inflows have a stronger chance of effectively integrating into the world economy. Remittances, which are more predictable and do not impose restrictions on governmental policies or decisions, they contend, constitute a replacement for government spending that reduces market uncertainty. This is in contrast to FDI and other capital inflows, which do.
Advocates of remittances' beneficial effects on development also employ panel data techniques to analyse the factors that influence remittances. For instance, Mechthild (2006) focuses on the factors that determine remittances rather than explicitly examining the effects of remittances on development. His paper's study is supported by panel data analysis. His research's findings show that remittances are ongoing and increasing in tandem with domestic unemployment. They also demonstrate that the volume of migrant flows declines as GDP per capita rises and markets become more open as a result of global integration.
Korobkov V. and Lev V. (2005, 2007) are two scholars who favour examining remittances from a socio-economic perspective. In their analyses, they make the case that migrant money flows, through reducing poverty and eliminating hunger in some locations, have a considerable positive impact on stabilising the economic and political structure of the CIS. However, they contend that for it to be successful, governments must enhance their labour laws and regulations as well as their policies governing the flow of money.
Migration the authors contend that weak civil societies and inadequate governmental policies prevent remittances from reaching their full potential. Because of this, it's crucial to put into action specific political and financial efforts that can help to increase the impact of remittances, such as limiting labour movement or growing the financial sector to facilitate transactions.
This method is used by academics like Ivankhnyuk (2006) and Jones, Black, and Skeldon (2007) who attempt to investigate this problem in the context of migration and by using a case study methodology.
For instance, Ivakhnyuk (2006) evaluates current immigration trends, including the difficulties and advantages they present for both sending and receiving countries. Remittances, which are closely linked to migration, have an effect on sustained economic development, according to the author, especially for smaller nations like Kyrgyzstan or Tajikistan. Additionally, the author contends that they are even more significant than FDIs.
Tajikistan's progress is the subject of a case study by Jones, Black, and Ronald Skeldon from 2007. The authors contend that in Tajikistan, migration and remittances have served as a "shock absorber," easing socioeconomic pressures in this particular developing economy. The writers analyse the effects of globalisation and the post-Soviet Union era's economic and demographic factors on migratory trends. Additionally, they contend that remittances from migrants continue to be important sources of income for keeping individual homes afloat (because they are heavily depending on them). They conclude in their report that the Tajik government must encourage migration by enhancing the banking industry and developing foreign migrant employees are aware of their rights.
The scholarly group's authors unanimously agree that remittances have a favourable impact on socioeconomic development. They all concur that if appropriate governmental laws are put in place, it is a significant source of consistent financial flows that has an impact on reducing poverty and inequality.
Scholars who contend that remittances can have both favourable and unfavourable effects on effective growth make up the third academic group. According to scholars like Maimbol and Ratha (2005) and Laruelle, Chami, and Barajas (2008), in order to understand the true significance of worker remittances, it is necessary to examine the factors that influence them in a variety of contexts, including the global and socio-economic. This kind of study shows that remittances can buffer economic shocks during a crisis, but they can also seriously harm local production, which will have an impact on a country's economic growth, such as Tajikistan (Chimomhowu,Piesse and Pinder 2003).
Another body of academic research focuses on the political effects of globalisation, which are frequently linked to the extension of democracy and the uptake of neoliberal values by developing nations, both of which promote modernization and socioeconomic development. This academic study's central tenet is that the foundation for effective economic development is provided by democratic political and economic institutions (Thaker, 2007; Halperin, Siegel, and Weinstein, 2005; Grosgean and Senik, 2008; Prezworski, 2004). A compatibility perspective is the name given to this method. It contends that fundamental civil liberties and democratic institutions provide the social atmosphere most conducive to economic growth (Sirowy and Inkeles, 1990). However, a conflict perspective reflects another scholarly viewpoint on this matter.
That implies democracy impedes progress and economic growth. Studies by political scientists and economists like Walter Galenson (1995), Karl de Shweinitz (1959), Huntington and Dominguez (1975), as well as Huntington (1968), Barro (1996), and O'Donnell (2001), contend that as democracies spread, there is a problem with redistribution and an increase in the influence of interest groups. This method views democracy and economic development as opposing forces. Weak democratic institutions are unable to implement economic programmes effectively, hence economic progress requires a strong authoritarian regime (Sirowy and Inkeles, 1990)
A modernization thesis approach to democracy contends that economic expansion, not democracy, is what actually fosters democracy (Lipset, 1959).
Both qualitative and quantitative methods have been used to test all of those theoretical frameworks. Case studies that examined the effects of democracy on emerging nations in Latin America, Eastern Europe, Africa, and Asia were used in qualitative research (Chen, Liang-chih, 2007; Bruce Bueno de Mesquita and George Downs, 2005; Morton H. Halperin, Joseph Siegle, Michael M. Weinstein, 2005)
Cross-sectional analysis (Neubauer, 1967; Diamond, 1992; Muller, 1995; Przeworzky and Limongi, 1993; also Przeworzky, 2005) and simultaneous equation models were used in quantitative investigations (Rafael Reuveny and Quan Li, 2003).
Additionally, a number of significant studies have examined the factors that led Central Asian nations to choose cooperation over conflict in order to preserve regional stability. Some of them are only interested in theorising about how cooperation and regional integration work. The papers here employ a realism methodology to explain current patterns of synchronisation in Central Asia. For instance, Eric Miller's 2006 essay "To Balance or Not to Balance" uses the security risk and the weaker Central Asian nations' economic dependency on Russia as a basis to explain current collaboration (Jervis, 1999). Scholars frequently employ the "balance of power" and "balance of danger" theories by Kenneth A. Waltz and Stephen M. Walt to describe the foreign policies of the countries of Central Asia (Michael Mandelbaum, 1994; Roy Allison and Lena Johnson, 2001). These authors' writings, such as "Central Asian Security: The New International Context" (2001) and "The Rise of nation in the Soviet Union: American foreign policy and disintegration of the USSR" (1991), suggest that greater international cooperation in the Central Asian region is not feasible because each state is focused on maintaining its current status quo and maximising its power, making it difficult for those nations to reach common interests (Brown, 1996). However, the Central Asian nations' current participation in regional institutions and the relative stability of the area imply that cooperation is feasible.
A different group of studies is focused on regional cooperation in practise. They examine the effects of globalisation on patterns of cooperation in Central Asia from the viewpoints of economic interdependence, the advent of new political actors like China and the US as well as the reemergence of old ones like Russia. The analysis of these studies is based on a review of several regional organisations, including the Shanghai Cooperation Organization (SCO), the Eurasian Economic Community, and the Commonwealth of Independent States (CIS) (Bogaturov, 2004; Tolipov, 2005 and 2006; Weitz, 2006; Annand, 2006; Primbetov, 2006; UNDP 2005; Germanovich, 2008).
Economic impact of globalization: the impact of remittances on socio-economic development
This chapter examines how inward remittances immediately affect socioeconomic growth. It is based on broader data that includes countries in Eastern Europe and the former Soviet Union in addition to one particular country in Central Asia.
Remittances became one of the most significant sources of external financial flows in developing countries over the past 20 years (Kapur, 2006). Remittances are regarded as the third-largest financial source for the majority of former Soviet Union countries, after foreign aid and foreign direct investment (Mansoor and Quillin, 2007). Remittances are almost always linked to labour migration, which has increased over the past few years as globalisation has accelerated and a record-breaking volume of international migration has taken place.
There are approximately 200 million people living temporarily or permanently outside of their home countries, according to Schiff and Ozden (2005) and updated estimates from the World Bank. The CIS region's 5 to 15 million official irregular migrant workers, the majority of whom live in Russia and Kazakhstan, are among them (Marat 2005). Remittances are frequently used to examine labour migration trends and their effects on the host countries of migrant workers.
Remittances are funds that migrant workers send, formally or unofficially, to their home countries (US Congress 2005). International migration flows rose from 76 million in 1965 to 188 million in 2005, according to Taylor (2006). The majority of remittances—roughly 70%—go to less developed nations.
The main issue this chapter addresses is whether remittances have a favourable or unfavourable effect on recipient countries' socioeconomic development. The Human Development Index (HDI), which measures the conditions of education, health, and income as well as on other social indicators like migration and life expectancy, is used here to represent socioeconomic development.
I examine socioeconomic development theory, which contends that dependence on them slows rates of socioeconomic development, to find an answer to this question (Jaffe 1998). I employ this method to calculate the effects of remittances, which can be thought of as financial flows, on the socioeconomic development of the ECA region's recipient countries.
I also review the academic literature that focuses on migrant remittances and how it might affect sustainable development, which involves alterations to the socioeconomic structure of a nation (Economic development 2009). The improvement of living standards, including rising income and bettering health and educational systems, is a sign of these changes (Jaffe 1998). Additionally, some academics contend that these private financial flows influence poverty reduction and promote social stability by reducing unemployment.
This study's importance, in my opinion, stems from the fact that I will not only attempt to examine the significance of remittances from macroeconomic perspectives—which have already been thoroughly examined by other economists—but also from social perspectives, by taking social indicators of development and examining how they are affected by remittances. I'm using quantitative techniques to carry out my analysis. This strategy will enable me to identify marginal effects and causal relationships between the
Most political scientists who previously looked into this issue by using qualitative methods did so instead of simply establishing a simple correlation understanding how worker remittances affect development, whether positively or negatively, can be useful in a number of ways. First of all, it can offer practical tools for developing public policies that can foster favourable circumstances, such as lowering transaction costs or "strengthening a formal remittances infrastructure" for luring even more inward remittances, particularly in those nations that heavily rely on them (Ratha 2009). Second, it can aid in the development of strategies that will avert or reduce potential long-term negative effects of remittances on socio-economic development.
Remittances are a complex socio-political phenomenon that calls for knowledge of various social, political, and economic factors, as shown by the analysis of previous academic work. Remittances from workers serve as alternative sources of income and consumption that stimulate the economy by investing in or contributing to local economies. Due to the fresh perspectives and knowledge that immigrant workers bring, local communities can also benefit from positive structural changes. Even so, an excessive reliance on remittances can have unfavourable effects, such as brain drain or the Dutch disease, which paralyse nations and make them dependent on remittances, which stunt development and widen income gaps (Leon-Ledesma, Piracha 2004).
A thorough review of the literature also reveals some of the shortcomings of earlier research. I contend that a sizable number of the studies I've cited use qualitative analysis to gauge how remittances affect socioeconomic development. In my opinion, the qualitative approach fails to identify a coincidental link between these phenomena. Instead, it makes an argument for already-observed correlations without actually naming them. Furthermore, these studies do not examine any additional variables that might affect socio-economic development in addition to remittances.
Following the dissolution of the Soviet Union, newly independent states made a variety of socioeconomic development decisions that were influenced by historical and economic factors that shaped their current circumstances. Significant differences in the level of development among the former Soviet Union countries are the result of weak political systems combined with the presence or absence of priceless natural resources. New patterns of population movement within the CIS region have been prompted by the economic stagnation in some republics. One illustration of these patterns is labour migration. It is linked to social and economic discontent that drives people to relocate to areas with better job opportunities.
Remittances made as a result of labour migration rank second only to foreign direct investment as a source of new money flows (Mansoor and Quillin 2006). According to data from the IMF and the World Bank, migrant workers contribute significantly to a country's GDP. For instance, remittances account for 36.2% of GDP in Tajikistan, 27.4% in Kyrgyzstan, and 18.3% in Armenia (IMF 2008). Workers' remittances are not only an external source of finance for nations like Tajikistan, Kyrgyzstan, and Armenia where remittances make up a sizable portion of GDP, but they are also a tool for addressing unemployment, which is a major issue in these nations.
According to the theory of socio-economic development (the international approach), a nation's inordinate reliance on receiving financial flows hinders its ability to develop its economy. Remittances, according to the argument, can harm social-economic development by causing a "brain drain" effect or the Dutch disease, which raises the prices of non-tradable goods, appreciates exchange rates, and drives out of business producers of tradable goods. They can also lead to social problems like widening economic disparities.
Based on the conclusions mentioned above, I have developed a hypothesis that claims that despite all the advantages of worker remittances, they have a detrimental impact on socio-economic development over the long and short terms. I contend that sizable inward remittances may have a favourable immediate effect on the economies of recipient countries by boosting GDP. However, due to the Dutch disease phenomenon, which affects production, its long-term economic impact will be detrimental. Economists have thoroughly examined this phenomenon. It demonstrates how excessive remittance flows can increase household incomes and, consequently, the consumption of goods produced for domestic markets or nontradeable goods, such as real estate, services, water, and electricity, at the expense of the sector that deals in goods that can be traded. It increases price pressure on non-tradable sectors, which may lessen the positive role that remittances play as a tool for reducing economic inequality (Acosta, Lartey and Mendelman 2007).
Additionally, I contend that remittances have a negative effect on social indicators like the Human Development Index and life expectancy. That can be explained in part by the fact that an overreliance on remittances may result in a decline in labour and intellectual forces.which is referred to as "brain drain," which could have an impact on social indicators like life expectancy or human development.
I have focused on the immediate effects of inbound remittances on the socioeconomic development of receiving countries in this chapter.
I use official statistical databases provided by the World Bank, IMF, Human Development Report (HDR), UNDP, International Labor Statistics (ILO), Eurostat, and UNESCO in the process of gathering data on remittances. I am aware that the databases on remittances I used for my research can be subjective because they only use official data provided by domestic governments using data from Census surveys or bank statistics and do not include undocumented remittance transactions. Because of this, it does not accurately reflect all of these financial flows to assess the developmental effects of remittances I decided to use remittance volume as an independent variable and socioeconomic development indicators as a dependent variable.
In this paper, remittances are measured in millions of current US dollars and are defined as "formal and informal payments that are sent by migrant workers to their home countries" (IMF, 2008).
The Human Development Index, created in 1990 by the United Nations Development Program, is used in my research to gauge social and economic development. It does so by "combining indicators of life" to measure socioeconomic development a composite human development index based on life expectancy, educational level, and income (Human Development Report).
"To give adult literacy more weight in the statistic, the gross enrolment ratio for primary, secondary, and tertiary education is combined with adult literacy rates in the educational component of the HDI. Since the adult literacy rate ranges from 0% to 100%, the combined gross enrolment statistic is calculated in a similar way. For example, a country with a literacy rate of 75% would have a literacy component of knowledge of 0.75. The longevity component for a country with a 55-year life expectancy would be 0.5 since the HDI calculates life expectancy using a minimum value of 25 years and a maximum value of 85 years. The minimum income goalpost for the wealth component is $100 (PPP), and the maximum is $40,000 (PPP). The HDI uses the logarithm of income to reflect how income is becoming less significant as GDP rises. (Report on Human Development).
It primarily evaluates three facets of human development: education, health, and adequate living conditions. As independent dependent variables, I also include the GDP per capita, literacy rate, and life expectancy. Life expectancy is defined as "an average number of years of life remaining at a given age," the literacy rate is defined as "a percentage of the population that can read and write," and GDP is defined as "a total value of all final goods and services produced in a particular economy; the dollar value of all goods and services produced within a country's borders in a given year" (Sullivan and Sheffrin 2003). (Sullivan and Sheffrin 2003). The availability of these variables and their fit with the definition of socio-economic development, which states that it is a process of "changes in the socio-economic the nation's economic structure, such as increasing income or enhancing the health and educational systems, I will use FDI (measured in millions of current US dollars) as my control variable to make sure there are no auxiliary variables or fictitious relationships between the primary variables. Foreign Direct Investment (FDI), as defined by the Economy Watch website (2009), is an investment "made to serve the investor's business interests in a company, which is in a different nation distinct from the investor's country of origin."
My primary analytical units are the nations I've tracked over a number of years. I examine the 27 nations of Eastern Europe and the former Soviet Union. I conduct an 18-year analysis of my variables, from 1990 to 2008. Due to data limitations and missing values for some countries and years, I instead use 24 countries and 4 time periods for some of my models that specifically examine HDI and literacy rates.
The fixed effects panel data model, which is based on "observation of multiple phenomena observed over multiple time periods," is another tool I use. By measuring all subjects at the same time multiple times, this technique enables me to "observe cumulative changes in particular phenomenon over time. It also enables the generation of more accurate findings and judgements (Johnson and Reynolds 2008).
Panel data regression analysis is used I have found three models that explain the causal link between remittances and the socioeconomic development-related dependent variables. Three different dependent variables (Human) are matched with three different models. Different sets of independent variables, such as remittances and FDI, are used, such as the Development Index, GDP per capita, and life expectancy.
My first model identifies how inward remittances unintentionally affect GDP per capita, a measure of economic development. This model also accounts for FDI, another variable that may have an impact on GDP.
GDP is a dependent variable.
Remittances are a separate factor.
Additional regulating factors: FDI.
The one-way fixed effects model's ANOVA results show that all of the model's individual fixed effects (remittances and FDI) are jointly significant. It determines if at least one of them is not equal to zero or whether they are all equal to zero (proving the null hypothesis) (it proves the alternative hypothesis).
The F test score of 20.07 is significantly higher than the threshold value (at 0.01 level of significance it is 2.327). The null hypothesis, which states that all individual specific fixed may be removed or set to zeroes, is strongly refuted by the test's P value, which is less than 1%. F test shows that at least one of my independent variables (FDI or remittances) has a statistically significant impact on GDP, to put it simply.
R Square is the percentage of variation in the dependent variable (GDP) that can be accounted for by each independent variable in the model (remittances and FDI). With an R square of 0.7125, FDI and remittances account for 71.2% of the volatility in GDP.
These coefficients show that GDP is impacted by both of our independent variables. With their t-values above 1.97, the data show that remittances and FDI have a large impact on GDP. However, FDI has a larger t-value than remittances. These findings support the notion that FDI and remittances both raise GDP. Numerous economic research' findings concur with this hypothesis.
The impact of remittances on life expectancy, one of the social indicators used to gauge social development, is examined. To rule out the potential of a fictitious association between life expectancy and remittances, I additionally control for FDI.
Expectancy of life is a dependent variable.
Remittances are a separate factor.
Additional regulating factors: FDI
F test is 16.73, as shown by an ANOVA, with a significance level of less than 1%. At least one of my independent factors significantly affects life expectancy, rejecting the null hypothesis. According to this hypothesis, FDI, not remittances, is the major factor influencing life expectancy.
The life expectancy dependent variable's R square, which measures the amount of variance that can be explained by the model's independent variables, is 0.9222. (remittances and FDI). According to the R square of 0.9222, FDI and remittances account for 92.2% of the difference in life expectancy. The findings indicate that remittances have a t value of 1.49, indicating that they do not significantly affect life expectancy (dependent variable).
The third model calculates how remittances affect HDI (Human Development Index). The HDI is the weighted average of GDP, literacy rate, and life expectancy.
HDI is a dependent variable.
Remittances are a non-dependent variable.
Controlling factors: FDI
F test = 8.26, as shown by an ANOVA, with a significance level of less than 1%. It proves that the null hypothesis is rejected and that the Human Development Index is affected by at least one independent variable (FDI or remittances).
According to this model's R square, which is equal to 0.9124, remittances and FDI account for 91.2% of the variation in HDI.
As a result of their t-value being smaller than 1.97, the findings indicate that remittances have no discernible impact on HDI. On the other hand, FDI has a strong, positive impact on human development.
The panel data analysis results support my claim that inward financial flows have an immediate positive impact by showing that remittances have a significant positive impact on just one economic development measure, such as GDP. However, compared to the impact of inward FDI flows, its influence is statistically somewhat less significant. The findings also disprove my alternative hypothesis, according to which remittances have a detrimental influence on the socio-economic development of ECA, that remittances have a large negative impact on social metrics of development like as the Human Development Index and life expectancy. This is based on a smaller collection of data, though. Due to data limitations, I am unable to make additional observations that would raise the statistical significance of the findings. These findings also suggest that FDI, for example, may have a greater impact on socioeconomic development in Eastern European and former Soviet Union countries than remittances, with the potential of the existence of other determinants.
On GDP, remittances have a favourable impact. The idea that remittances can raise living standards in those nations that rely largely on these financial flows is questioned by the fact that they have a weak impact on social indicators.
There are a number of reasons why remittances have neither a detrimental nor a good impact on the socioeconomic development of ECA counties. One of them is the fact that the data I used for this study came from official sources and did not include unofficial remittance numbers (especially for Central Asian countries). It might affect the findings I've come to, reducing the true influence of labour migrant payments on the development of recipient countries.
Many of the countries under study are still in the process of switching from central planning to more effective economic systems in their political systems. That might be yet another reason why remittances still have limited effects. In order to increase remittances and improve the efficiency of this process, political and financial institutions must continue to develop in a way that will efficiently govern the financial sectors.
I conduct a case study on the significantly dependent Kyrgyzstan in order to conduct a more thorough analysis of this issue and advance this research. It enables me to more correctly assess the effects of migrant payments on the socio-economic structures on a case-by-case basis and incorporate additional socio-economic variables. It is completed in chapter 5.
Social Impact Of Globalization: migration
Migration is a tool for measuring globalisation in this chapter. It, in my opinion, properly captures how growing economies and labour markets result in benefits and drawbacks for various nations. By generating new phenomena that are related to migration, globalisation has also changed its current characteristics. One example of how modern globalisation allows people to freely migrate from one place to another "without altering their permanent place of life" is economic-voluntarily migration (Korobkov and Paley, 2006).
An extraordinary increase in worldwide migratory movements has been occurring over the past few decades of accelerating globalisation. The "globalisation of the world economy and its labour market" (Salt, 1992), which has produced a system that forces economically marginalised people to leave their home countries and move to places where human capital is treated as another profitable resource, is one of the explanations for this process. Around 200 million people, either temporarily or permanently, are estimated to be living outside of their native nations by Schiff and Ozden (2005) and the most recent estimate from the World Bank. The former Soviet Union's region is not an exception.
The USSR's dissolution has made it easier for the region to transition from the forced migration of the 1990s to voluntary economic migration (Tishkov, Zainchkovskaja, Vitkovskaja 2005). Members of the CIS share cultural similarities (language), similar educational systems, and freedom of movement within CIS boundaries. However, they also have contrasts, including as varying levels of economic development. Labour migration has a wonderful starting point thanks to economic development. Today, 5 to 15 million people make up the official undocumented migrant workforce from the CIS, most of who live in Russia and Kazakhstan (Marat, 2005).
In this chapter, I examine how this process affects the political, social, and economic growth of the countries that receive migrants. I focus in particular on the nations of the former Soviet Union and Eastern Europe where labour migration is on the rise. It is also crucial to note that in this chapter, I examine migration independently of the remittances category, which economists occasionally use as a stand-in for labour migration. I define labour migration primarily in terms of population outflow and attempt to quantify its social impact on migrant countries. Only in this chapter do I distinguish between migration and remittances as two distinct factors.
My main research subject is how migration affects social and economic growth, which I define as a process that involves "socio-economic structural changes" in those nations and what effects it might have on the public and governmental laws of sending countries for migrants.
Knowing whether labour migration has a good or negative impact can be useful in a variety of ways. First of all, it can offer practical tools for developing public policies that can better govern the migration process, which frequently takes the form of uncontrolled movement of people and can be detrimental to both the sending and receiving countries of migrants. By reducing or preventing the spread of phenomena like brain drain or the loss of skilled workers, which can have a long-term devastating effect on the economies of sending countries, it can also help to develop policies that will prevent or minimise a potential negative impact of labour migration on socio-economic development.
It is also necessary to examine how contemporary migration patterns in Eastern European and former Soviet Union nations have been impacted by globalisation processes and what new characteristics they have today in order to respond to my research topic and develop a thorough hypothesis. I also need to consider the factors that contribute to migration in the area because different factors, such as the need for temporary labour or long-term migration, result in different types of population flows. I'll do this by drawing on the push-pull theory of migration created by British thinker Ernest Ravenstain in 1885 for his book "Laws of Migration." According to his research, migration is a process that is influenced by push-pull factors (Ravenstain, 1985). He defined push factors as particular political or economic circumstances, such as famine or military and civil conflicts, that compel people to relocate to areas with better socioeconomic conditions, which operate as "pull" causes (Theories of Migration).
Understanding that migration is not a recent occurrence on the soil of the former Soviet Union and Eastern Europe is made easier by analysing academic literature. Different types of migratory movements have been evolving over time, from pre-modern and early modern types that reflected historical occurrences like "invasions from the steppes by nomadic Turk tribes, spread of Islam, mediaeval conquest, and later colonisation," events that caused massive and frequently forcible movements of people throughout that region (Held and McGrew, 1999), to modern types of migration that reflect contemporary issues like globalisation and the spread of information technology. Following the demise of communist ideology in the ECA region, new types of migratory movements within the region might be categorised as economic, labour, and illegal migration.
Following the fall of the Soviet Union, newly independent governments made a variety of socioeconomic development decisions, which in turn influenced the contemporary conditions of those states. Significant gaps in progress between the Soviet Union and Eastern European countries have been caused by weak political systems as well as the economic stagnation of some nations. These circumstances have acted as "push" factors, causing new patterns of population movement within the ECA region. As a result of this process, there is labour migration. It is linked to social and economic unhappiness, which drives people to relocate to new locations with better job possibilities and other "pull" reasons. A fuller investigation of this phenomenon's impact on the socioeconomic growth of ECA countries will hopefully result from my focus on temporary labour migration, which I shall do because the topic is so complex.
In this essay, I'm interested in examining the effects of labour migration as a phenomenon that has the potential to cause significant social and economic issues in the host countries of migrants. Labor migration could have a number of detrimental effects on development. One of these is a "brain drain," or a loss of labour and intellectual force, which frequently affects nations with tiny populations, like Kyrgyzstan or Bulgaria (Mansoor and Quillin, 2006). Additionally, it alters the dynamic and structure of migrant family households, which may result in a decline in fertility rates or a drop in children's educational achievement if mothers are the ones who migrate because they do not provide their kids with sufficient supervision to enable them to attend school (Mansoor and Quillin, 2006). Because of this, I consider labour migration to be a distinct category from remittances, which will enable me to evaluate this issue from both an economic and a social standpoint.
I have developed my hypothesis, which claims that migration has a detrimental impact on the socioeconomic growth of migrant home nations in the ECA region, based on the conclusions presented above. I contend that labour migration causes a "brain drain" that lowers the labour and intellectual forces and may have an impact on social indices like life expectancy or human development.
In addition, I contend that because of remittance inflows, migration may have an immediate favourable effect on economic indices in the home nations. However, due to the Dutch disease effect, which reduces production, its long-term economic impact would be detrimental. Economists have thoroughly investigated this phenomenon. It highlights how excessive remittance flows can harm the tradable sector by increasing household incomes and, consequently, the consumption of items produced for domestic markets or nontradable goods like real estate, services, water, and energy. It can potentially lessen the good impact of remittances as a strategy for reducing economic inequality because it increases demand pressure on nontradable sectors, driving prices to increase (Acosta, Lartey and Mendelman 2007).
In order to investigate how labour migration has impacted socioeconomic development, I will look at economic and social "push" factors like GDP, unemployment, or overall human development as measured by the Human Development Index (positively or negatively).
Research Design: Variables and Methods
I use official statistical databases offered by the World Bank, IMF, Human Development Report (HDR), UNDP, International Labor Statistics (ILO), Eurostat, and UNESCO in the process of gathering data on remittances. I am aware that the databases I used for my research on labour migration and remittances can be arbitrary. These datasets don't include undocumented transactions or remittances because they rely on official data from domestic governments and use information from census surveys or bank statistics. Because of this, it is unable to accurately depict all of these financial movements.
I used migration rate as an independent variable and socio-economic development as a dependent variable to analyse the effects of labour migration on socio-economic development.
The term "migration rate" is defined as "the number of migrants arriving and departing a country in a year, per 1000 midyear population. As percentages, the migration rate can also be described. A net immigration rate is a positive number, whereas a net emigration rate is a negative number (International Data Base).
A complex process called social-economic development involves shifting a nation's social and economic structures. The Human Development Index, created in 1990 by the United Nations Development Program, is used in my research to gauge progress. By "combining metrics of life expectancy, educational attainment, and income into a composite human development index," it assesses socioeconomic development (Human Development Report).
"To give adult literacy greater weight in the statistic, the gross enrolment ratio for primary, secondary, and tertiary education is coupled with adult literacy rates in the educational component of the HDI. Since the adult literacy rate ranges from 0% to 100%, the combined gross enrolment number is derived in a similar way. For example, a country with a literacy rate of 75% would have a literacy component of knowledge of 0.75. The longevity component for a country with a 55-year life expectancy would be 0.5 as the HDI calculates life expectancy using a minimum value of 25 years and a maximum value of 85 years. The smallest income goalpost for the wealth component is $100 (PPP), while the maximum is $40,000 (PPP). The HDI employs the logarithm of income to represent how income is becoming less significant as GDP rises (Human Development Report).
It primarily evaluates three facets of human development: education, health, and adequate living conditions.
As independent dependent variables, I also include the unemployment rate, GDP per capita, and life expectancy. Measured as a percentage, the unemployment rate is the proportion of jobless people in the labour force (Nation Master statistical database). Life expectancy is defined as "an average number of years of life remaining at a given age," the literacy rate as "a percentage of the population that can read and write," and GDP per capita as "an approximation of the value of goods produced per person in the country, equal to the country's GDP divided by the total number of people in the country" (Sullivan and Sheffrin 2003). (Investor Words).
Since these variables are readily available and meet the definition of socio-economic development, which is a process of "changes in the socio-economic structure of the country," such rising income or bettering health and educational systems, I have chosen to use them.
Ensuring that the primary variables do not have any erroneous relationships or intervening variables As my control variable, I'll look at FDI, which is expressed in millions of current US dollars. Foreign Direct Investment (FDI), as defined by the Economy Watch website (2009), is an investment "made to support the investor's commercial interests in a company, which is in a separate nation distinct from the investor's country of origin."
My primary analytical units are the nations I've tracked over a number of years. I examine the 27 nations of Eastern Europe and the former Soviet Union. I conduct an 18-year analysis of my variables, from 1990 to 2008. Due to data restrictions and missing values for some countries and years, I instead use 24 countries and 4 time periods for several of my models that specifically examine HDI and literacy rates.
The fixed effects panel data model, which is based on "observation of various phenomena observed over multiple time periods," is another tool I use. By monitoring all subjects at the same time multiple times, this technique enables me to "observe cumulative changes in certain phenomenon across time. It also enables the generation of more accurate findings and judgements (Johnson and Reynolds 2008).
My raw data are taken from databases that are provided by annual reports from the IMF, World Bank, HDR, ILO, UNDP, and MPI that are accessible on these organisations' official websites. The "Demographic Yearbook data collection system," established by the United Nations Statistical Division, uses data from the Population Census Questionary to compile official data on migration. To lessen the burden on nations, data on international migration are gathered jointly by a number of agencies. (UNDP)
I have discovered 4 models that explain the causal association between migration and the dependent variables of socio-economic development using panel data regression analysis. Human Development Index, GDP per capita, life expectancy, and unemployment rate are four dependent socioeconomic development variables that correspond to four alternative models. Migration rate and foreign direct investment are two sets of independent socioeconomic development variables.
In my first model, I analyse the haphazard impact of migration rate on GDP per capita, one of the economic measures of socioeconomic growth. This model also accounts for FDI, another variable that may have an effect on GDP per capita.
GDP is a dependent variable.
Unbiased factor: migration rate
Controlling factor: FDI
A second model examines how migration affects the unemployment rate, which is a further economic development metric. Additionally, I take into account FDI as a potential factor affecting unemployment rates.
Unemployment rate is a dependent variable.
Movement rate is a dependent variable.
Controlling factor: FDI
The third model calculates the impact of migration on life expectancy, one of the social development indicators. To rule out the potential of a fictitious association between migration and life expectancy, I additionally adjust for FDI.
Expectancy of life is a dependent variable.
Unbiased factor: migration rate
Controlling factor: FDI
The final model calculates how migration affects HDI (Human Development Index). The HDI is the weighted average of GDP, literacy rate, and life expectancy.
HDI is a dependent variable.
Unbiased factor: migration rate
Controlling factor: FDI
Analysis Of Data
The first model examines the effects of migration on economic growth, which is here represented by GDP. The panel data regression shows the results below. The one-way fixed effects model's ANOVA results show that the model's two individual fixed effects (FDI and migration rate) are jointly significant. The first model's F test score is 18.22. The null hypothesis, which states that all individual specific fixes might be removed or set to zeroes, is strongly refuted by the P value less than 1%. F test proves that at least one of my independent variables—FDI or migration rate—has a statistically significant impact on GDP, to put it in plain English.
R square reveals the percentage of variation in the dependent variable (GDP) that can be accounted for by each independent variable in the model (FDI and migration rate). The R square of 67.88 demonstrates that in this model, FDI and migration rate account for 67.8% of the variation in GDP.
Because the model's coefficients have t-values more than 1.97, it can be seen that the GDP is significantly impacted by the migration rate and FDI.
The influence of migration on the unemployment rate is estimated by a second model. For this model, the ANOVA test shows that the F test equals 84.22, with a significance level under 1%. It demonstrates that at least one of my independent variables has a meaningful impact on unemployment and that the null hypothesis is rejected.
R square measures the proportion of variance in the dependent variable (unemployment) that can be accounted for by each independent variable in the model (FDI and migration rate). The R square of 0.8912 demonstrates that in this model, FDI and migration rate account for 89.1% of the variation in GDP.
The findings show that migration does not significantly affect unemployment because of its low t value. However, FDI affects migration in a statistically significant way. According to its t-value, significant FDI inflows slow down migration.
The outcomes of the panel data analysis of the first two models show that FDI and migration both have a significant effect on GDP. Migration, however, has no impact on unemployment. The influence of FDI on unemployment is significant. It is possible to infer from these findings that there is no connection between migration and unemployment, casting doubt on the notion that migration relieves governments of pressure and addresses the issue of unemployment in the sending countries, which typically have high unemployment rates (18% for Kyrgyzstan, 13.6% for Georgia, and 34.9% for Uzbekistan).
My third model calculates how migration affects life expectancy. ANOVA test results for this model indicate that F test equals 18.58, with a significance level under 1%. This shows that the null hypothesis is not true and that at least one of my independent variables—FDI or migration rate—has a statistically significant effect on life expectancy. This model's R square is equal to 0.8756, which indicates that FDI and migration rate account for 87.5% of the variation in life expectancy. The model coefficients show that migration has no appreciable impact.
Adversely affects life expectancy (migration rate t value is negative but less than 1.97 in magnitude). On the other hand, FDI significantly increases life expectancy in a favourable way.
My most recent model calculates how migration will affect HDI. The panel data regression findings show that F test is equivalent to 12.79 with a significance level less than 1%, indicating that the null hypothesis is rejected and at least one of the independent variables significantly affects HDI.
According to the model's coefficients, HDI is not significantly impacted by migration. FDI, however, does. The research of how migration affects social variables like life expectancy and HDI shows that, in contrast to FDI, which benefits these metrics, migration has no effect on them. It also implies that migration is not a significant factor in determining whether socioeconomic development is improving or declining.
The panel data analysis results confirm my theory regarding an instant positive effect of migration by showing that labour migration has a strong positive influence on just one economic indicator of growth, GDP (presumably because of the remittances). However, compared to the impact of inward FDI flows, its influence is statistically somewhat less significant. The findings also disprove my alternative hypothesis that migration has a large negative influence on social markers of progress, illustrated here by the Human Development Index and life expectancy.
Negatively impacts the socioeconomic growth of ECA. This is based on a smaller collection of data, though. Due to data limitations, I am unable to make additional observations that would raise the statistical significance of the findings. These findings also suggest that there may be other factors at play in the socioeconomic development of former Soviet Union and Eastern European nations, with FDI, for instance, having a more significant influence.
On the GDP, labour migration has a favourable impact. The idea that migration can raise living standards in nations with large migration rates, however, is called into question because of its weak impact on social variables.
There are a number of reasons why migration has neither a detrimental nor a positive impact on the socioeconomic growth of ECA counties. One of them is the fact that the data I used for this study came from official sources and did not include unofficial labour mobility numbers (especially for Central Asian countries). It might have an impact on the findings I came to, minimising the true influence of labour migration on the economic growth of recipient nations.
Many of the countries under study are still in the process of switching from central planning to more effective economic systems in their political systems. That could be another another reason why the effects of labour migration and remittances are still insignificant. In order to increase remittances and improve the efficiency of this process, political and financial institutions must continue to develop in a way that will efficiently govern the financial sectors.
Case study: Impact of Labour Migration and Worker’s Remittances on Socio- Economic Development of Kyrgyzstan I examine the economic and social implications of labour migration and remittances on the socioeconomic growth of Kyrgyzstan in this part of my thesis.
In Central Asia, migration is not a recent phenomenon. It has existed there historically in a variety of ways. The Great Silk Road, which linked several regions of Asia with Europe and "served as a transit corridor for people flows," passed through Central Asia (Schmidt and Sagynbekova, 2008). The nomadic tribes that resided there were likewise accustomed to the idea of seasonal movement from one area to another. Migration during the Tsarist and later Soviet Union eras took the form of Central Asian colonisation, which moved numerous people groups from the centre to the edges of the occupied lands (Schmidt and Sagynbekova, 2008). Then, during the Stalinist era, there was a forced exodus from the "European section of the Soviet Union to Central Asia" as a result of significant political and economic considerations (Schmidt and Sagynbekova, 2008).
This chapter investigates the effects of later kinds of migration and the remittances that followed them on the socioeconomic growth of Central Asian nations, with a focus on Kyrgyzstan. I'll start by outlining the main migration patterns throughout Kyrgyzstan's history. After that, I'll talk about the remittances phenomena and how it relates to labour migration. Following that, I'll try to
By examining the existing academic literature and utilising the dependency theory, make connections between remittances and socio-economic growth. By examining changes in Kyrgyzstan's socio-economic indices, I will also examine how remittances affect development. I'll wrap off with talking about the findings from this chapter.
History of migration in Kyrgyzstan
One of the 15 sovereign republics to form since the Soviet Union's collapse in 1991 is Kyrgyzstan. However, the history of the Kyrgyz people dates back to the year 840 AD, when nomadic Kyrgyz people occupied and ruled over the Tian-Shan mountain region.
The Kyrgyz nomadic tribes were known for their seasonal migration from one location to another in search of vegetation for their animals or during tribal conflicts. After the Central Asian region was colonised and added to the borders of Tsarist Russia in 1876, this way of life changed (Schmidt and Sagynbekova, 2008).
The process of colonisation was characterised by movement, which transported colonisers from the heart of the Russian Empire to its edges. Russian peasants were dispatched to Central Asia to take possession of native peoples' former lands. This is how the far boundaries of the Russian Empire were guarded. Native Americans resisted the occupation, which sparked a revolt in 1916. However, this opposition was brutally put down, and many Kyrgyz people were forced to flee by moving to nearby nations like Afghanistan and China.
Migration trends under the Soviet Union underwent another modification. The Soviet authorities determined that a nomadic lifestyle was ineffective, and the Kyrgyz people began the process of forcible settlement. During this time, numerous ethnic groups were forcibly transported to Kyrgyzstan, including Meschetian Turks, Germans, Koreans, Chechens, and others (Polian, 2004). This significant influx of individuals altered the ethnic makeup of the Kyrgyz population by reducing the proportion of native people.
With the fall of the USSR, new migration patterns appeared. When non-titular populations in Kyrgyzstan returned to their countries of origin, repatriation migration, which was based on the displacement of certain minority groups, replaced forced labour migration. Later, voluntary labour migration emerged during the post-Soviet era (Aidyngu, Hardin, Kuznetcov, 2006).
Following the fall of the Soviet Union, the newly independent states made varied decisions about their socioeconomic development that were influenced by the historical and economic forces that moulded their contemporary circumstances. Significant differences in the socioeconomic growth of the former Soviet Union countries have been caused by weak political systems, the presence or absence of valuable natural resources, and both.
One of the Central Asian nations that suffered greatly from the economic crises that followed the dissolution of the USSR was Kyrgyzstan. Kyrgyzstan's economy is stagnating as a result of a broken agricultural sector that was dependent on the "collective state farming" mentality, deindustrialization in the manufacturing, mining, and construction sectors, and the rise in the number of people who are working age (Marat, 2008).
The Kyrgyz government's inability to establish efficient political and economic structures was a factor in the nation's high unemployment rate, which led to a significant exodus of citizens. In 2002, statistics show that 1.3 million people relocated at least once in search of employment both domestically and abroad (Schmidt and Sagynbekova, 2008). The UN estimates that 20% of Kyrgyzstan's population is currently engaged in economic activity (UNIFEM, 2009).
New patterns of domestic and international migration emerged in conjunction with this process. One illustration of these tendencies is labour migration. It is linked to social and economic discontent that drives people to relocate to areas with greater job possibilities. According to the Government of the Kyrgyz Republic (2007), one of the main causes of widespread labour movement is still unemployment. There are between 500,000 to more than one million Kyrgyz working overseas, according to estimates (Marat, 2008). Kazakhstan, where Kyrgyz immigrants make up 30% of the overall immigrant population, and Russia, where they represent 50% of the whole immigrant population, are two of their preferred destinations (Tishkov, Vitkovskaja, 2005).
It is crucial to recognise that it is challenging to gauge the true extent of labour migration in Kyrgyzstan. One of the causes of such is the existence of unreported or illegal migration, as well as the Kyrgyz government's inability to address the urgent problem of the large-scale exodus of citizens from the nation (which is at ease with the current statistics) (Llense, 2008).
Labor migration and remittances
Labour migration has produced new types of socioeconomic phenomena and created new dynamics within Kyrgyzstan and Central Asia in general. The movement of labour is not a recent historical development. However, the outcomes brought about by economic migration are.
Remittances are the ideal illustration of the recent socioeconomic phenomenon connected to labour migration. The term "cross-border payments made by migrant workers to support people in their home countries" is used to describe them (Schrooten, 2006). Remittances are two different kinds of migrant transfers: wages paid to migrants who have lived abroad for more than a year or for a shorter period of time (Schrooten, 2006). The majority of migrant households view them as their primary sources of support (Tishkov, Vitkovskaja, 2005).
In terms of financial inflows, remittances are second only to foreign direct investment (Mansoor and Quillin, 2006). According to data from the IMF and the World Bank, migrant workers contribute significantly to a country's GDP. For instance, remittances account for 36.2% of GDP in Tajikistan, 27.4% in Kyrgyzstan, and 18.3% in Armenia (IMF 2008). Workers' remittances are not only an external source of income for nations like Tajikistan, Kyrgyzstan, and Armenia where remittances make up a sizable portion of GDP, but they are also a tool for addressing unemployment, which is a serious issue in these nations.
The economy of Kyrgyzstan is now mostly based on remittances. Although the actual amount paid by migrants is uncertain, official and alternative estimates indicate that it ranges from US$ 322 million to US$ 800 million (Aitymbetov, 2006). The quantity of remittances, which account for 27.4% of GDP, already exceeds the amount of FDI that comes into Kyrgyzstan, according to several World Bank research (Schrooten, 2006).
It is necessary to examine current theories of development, academic literature, studies in the field of migration and remittances, as well as define what socio-economic development is in order to properly comprehend the impact of remittances on the development of Kyrgyzstan.
The majority of the literature review for this work is based on my earlier research on this topic. Within academia, there are two ways to comprehend the significance of remittances and migration.
The first strategy is predicated on the notion that migrant payments have a favourable impact on social development. Workers' remittances and remittances in general, according to authors like Korobkov and Lev V. (2005, 2007), Ivakhnyuk (2006), Jones, Black, and Skeldon (2007), Admos, Piesse and Pinder (2003), Aitymbetov (2006), and others, can be particularly advantageous for developing nations. They contend that remittances can stabilise the economy by stimulating new investment, reducing poverty, averting hunger, and addressing unemployment issues. This group of academics employs case study or time-series cross-sectional analysis as methods. Samangan Aitymbetov, for instance, employs a case study methodology to examine how changes in consumption, income, and investment might help us understand how remittances have impacted the economic growth of Kyrgyzstan. Others, like Mechthild (2006), show through the use of panel data approaches that remittances are permanent and rise in correlation with domestic unemployment. They also demonstrate that the volume of migrant flows declines as GDP per capita rises and markets become more open as a result of global integration.
The second strategy is predicated on the notion that remittances have a detrimental effect on socioeconomic development (Dutch disease or brain drain). This academic pattern of thought is reflected in a number of thorough investigations (Acosta, Lartey, Mandelman, 2009; Agunias 2006; Cohen, 2005; Haas de Hain, 2007; Mechthil 2006; Shelburn and Jose Palacin 2007; Stuart 2006). These studies are based on claims that worker remittances may have a short-term positive impact on development but are unrelated to or have a long-term detrimental impact. Remittances, according to these authors, are a complicated phenomenon. They necessitate examining both the economic and other socio-political aspects of them in addition to the economic ones. To find the effects of remittance on development, they also try to apply other qualitative methodologies, such as partial and temporal scales of study, in addition to economic analysis of these phenomena.
The examination of the academic publications shows the complexity of this phenomena and the need to apply various scientific methodologies and methods that can support the creation of solid links between remittances and socioeconomic progress.
In Kyrgyzstan, "socio-economic structural changes" (Economic Development, 2009) that have an impact on the political, social, and economic realms of the nation are what I mean when I refer to a process as "socio-economic development." Improvements in living standards, including rising income and bettering health and educational systems, serve as indicators of these changes (Jaffe 1998). Development is based on advancements in the economy, politics, and society. Peterse (2002)
In order to calculate the effects of migration and remittances on Kyrgyzstan, I also use structural as well as functional methodologies from dependency theory and social development theory. Each of these strategies represents divergent views on how migration and remittances affect society. According to me, both viewpoints can be used to assess the positive and bad effects of remittances on the socioeconomic development of Kyrgyzstan. The functional approach, which suggests that foreign capital (in this example, remittances) can be re-invested in the local economy to stimulate economic growth, is a compelling argument made by certain scholars, can be used to explain the positive benefits of remittances (Aitymbetov, 2006).
The structural approach, which contends that reliance on foreign money thwarts development by posing major long-term economic and social repercussions, can be used to explain why remittances have negative effects. Remittances are a form of financial flow, and a nation's capacity to grow its economy is hampered by an excessive reliance on them. Remittances, according to the argument, can harm social-economic development by causing a "brain drain" effect or the Dutch disease, which raises the prices of nontradable goods, appreciates exchange rates, which drives out of business producers of tradable goods, and also leads to social complications in the form of widening economic disparities. According to some authors, excessive remittance flows in a nation enhance household earnings and, consequently, consumer spending on non-tradable items like real estate, services, water, and energy, among other things, at the expense of the tradable sector. It can potentially lessen the good effect of remittances as a strategy for reducing economic inequality by pushing prices up in the nontradable industries (Acosta, Lartey, and Mendelman, 2007).
In my earlier research on this subject, I tried to gauge the overall impact of remittances by performing a panel data regression analysis of 18 ECA nations. Here, I examine the effect of remittances on Kyrgyzstan particularly. I'm interested in seeing how some socio-economic metrics change as remittance inflows rise.
Gross Domestic Product (GDP) per capita, Foreign Direct Investment (FDI), exports as a percentage of GDP, output by sectors as a percentage of GDP, unemployment, private consumption, net migration rates, and life expectancy as social variables is all indicators of socioeconomic development and serves as my dependent variable.
Remittances in US dollar millions make up my independent variable. I'll examine how changes in those dependent variables are impacted by increases in remittance volume.
My first graph contrasts variations in GDP with variations in remittance inflows. The graph shows that there is a significant correlation between rising remittances and rising GDP. My earlier empirical work that discovered a link between these two variables supported this observation.
Figure 1. Impact of remittances inflows on change in GDP
The second graph compares changes in remittance inflows to changes in unemployment. According to the graphic, unemployment does not alter (it does not decline as anticipated) in response to increases in remittances, indicating that there is no clear relationship between them.
Analysing changes in FDI in relation to remittances is shown in the third graph.
From the graph, it can be seen that when remittances rise, the amount of FDI stops expanding, indicating that remittances have an impact on FDI inflows into the nation as a separate financial source. The fourth graph illustrates the evolution of net migration in relation to remittances. According to the data, remittance growth does not appear to have a significant impact on net migration, indicating that there is little correlation between these two variables.
The fifth graph describes changes in life expectancy with respect to remittances.
It demonstrates that raising remittances has no effect on the life expectancy variable, indicating that there isn't a direct correlation between the two. The impact of rising remittance inflows on private consumption is depicted in the sixth graph. As can be seen from the graph, private consumption rises as remittances rise. (Remittances are shown here in thousands.)
The next graph demonstrates how remittances affect export.
The graph's data demonstrates that rising remittance inflows have a marginally negative impact on exports inside the nation. The last graph shows how remittances have changed across various economic sectors.
According to the data in this graph, growing remittance inflows benefit the services sector more than the industry sector.
Remittances therefore only have a significant impact on GDP growth and increases in private spending; they have a negligible but nevertheless beneficial impact on the expansion of the portion of the Kyrgyz service sector. Other socio-economic indices are not significantly improved by them overall. Furthermore, remittances may have a long-lasting detrimental impact on economic growth, particularly in sectors like industry and exports. These conclusions are in line with my earlier empirical research for a panel of nations.
The importance of this case study, in my opinion, stems from my attempt to examine remittances not only from macroeconomic perspectives, which have already been thoroughly explored by other economists, but also from social perspectives, by examining how they affect social indicators of development like migration and life expectancy.
I used a case study approach to conduct my analysis, which allowed me to focus on Kyrgyzstan as one country and include several socio-economic variables that were not accessible for a group of nations. Additionally, it enabled me to more precisely assess individual cases' effects of migrant payments on socioeconomic systems.
There are many advantages to comprehending how worker remittances affect the economy. First of all, it can offer practical tools for developing public policies that can foster favourable circumstances, such as lowering transaction costs or "strengthening a formal remittances infrastructure" for luring even more inward remittances, particularly in those nations that heavily rely on them (Ratha 2009). Second, it can be useful to create plans that will avert or lessen the long-term detrimental effects of remittances on socioeconomic growth. The results for Kyrgyzstan indicate that remittances have two distinct effects. They do, in fact, raise the GDP per capita. On the other hand, they have a detrimental impact on the industrial sector, which may have a long-term, extremely detrimental impact on the Kyrgyz economy.
Political Impact of Globalization. Liberal Democracy and socio- economic development: China and India as a model for comparison of Kazakhstan and Ukraine
I examine the subject of globalisation and development from the viewpoints of political regimes in this chapter. I examine the phenomena of (Western model) democracy as a tool for gauging globalisation and examine the relationship between emerging nations' adoption of liberal democratic forms of governance and their economic progress.
Contrary to what some academics assume, this chapter makes the case that liberal democracy is not a need for effective economic development (Held, Goldblat, Perraton, 1999). For a comparison analysis of former Soviet Union nations like Kazakhstan, an authoritarian nation with a powerful economy, and democratic Ukraine, with significant economic issues, I use economically successful China (authoritarian regime) and India (the greatest democracy), which is currently lagging behind.
According to my theory, there are other economic factors that contribute to development in addition to a democratic political system, which is an important component of progress but is not a requirement for it. I use democratic theory, which aids in the analysis of various variables that could affect development, to support my claim. According to preliminary findings, democracy has no negative effects on effective socioeconomic development.
The previous few decades have seen an unparalleled rise in globalisation, which is frequently linked to the doctrines of neo-liberalism and democratisation. It is a complicated phenomenon that affects many different facets of society. I try to simplify it by focusing on only two aspects of globalisation: politics and economics.
I also focus on Central Asian nations who are still figuring out how to fit into the globalised, capitalist world. The socio-economic effects of globalisation, including migration and remittances, as well as how they affect the development of Central Asian nations, were covered in earlier portions of the thesis. Based on a panel data analysis of the nations that made up the former Soviet Union and a case study of Kyrgyzstan, I came to the conclusion that globalisation, as measured by migration and remittances, has had no positive impact on those nations. Additionally, there are detrimental long-term effects that could hinder successful socioeconomic growth.
I want to examine the political side of the globalisation phenomena in this chapter and how it affects socioeconomic growth. I choose democracy as a proxy for globalisation because, in certain definitions, it is either synonymous with or frequently occurs alongside it (Scholte, 2005). By examining and contrasting democratic and nondemocratic nations, as well as the degree of their socioeconomic development, I seek to establish a link between democratic regimes and development. I'm attempting to demonstrate that democracy cannot be the only important factor influencing progress. To support my claim, I combine quantitative (basic regression analysis) and qualitative (analysing social and economic variables of specific nations) methods. Then I conduct a case study by examining socioeconomic indicators in China and India and later contrasting them with Kazakhstan and Ukraine, nations that have some political and economic characteristics with China and India.Globalization's political aspects are frequently linked to ideas of democracy, international organisations, social movements, and NGOs ( Thorup, Sirensen, 2004).
This understanding of globalisation is based on liberal/neoliberal traditions, which contend that democratic institutions are a requirement for development (Smith, Baylis and Ownes, 2008). According to scholars like Huntington, Shin, and Diamond, the rise of democratic governance since the end of the Cold War has accelerated globalisation, which has not only helped topple military and communist regimes around the world but also accelerated economic development in many developing nations (Scholte, 2005).
Here, I want to take a new tack on a liberal philosophy that asserts democracy fosters growth. The existence of non-democratic nations that have seen significant economic growth led me to propose my major research issue, which aims to establish a link between democratic system and development.
My primary method for gauging globalisation is democracy. The Economist Intelligent Unit's Democracy Index, which was created to symbolise democracy, is used here. Utilizing aggregate indices like the Human Development Index (HDI) and Index of Economic Freedom, socioeconomic development is quantified.
Because they are congruent with the criteria of liberal democracy and socioeconomic development used in my thesis, one of the reasons I chose to utilise these indices as my primary political indicators of globalisation is because they are employed in the study. I am aware, however, that there are several constraints that have an impact on my findings and prevent me from drawing firm conclusions regarding the connection between democracy and socioeconomic progress. One of them is the application of the Index of Economic Freedom and the Democracy Index to the nations of the former Soviet Union. Some Central Asian nations are still regarded as being in the process of shifting from a centrally planned to a market economy, despite all statements that they are moving in that direction. Because of this, several of the indices' indicators are unable to accurately reflect the political or economic climate in various Central Asian republics. The fact that aggregated indexes often do not always cover all pertinent components is another issue. For instance, the Index of Economic Freedom takes into account a number of variables that are crucial for economic growth, but it ignores the power of entrepreneurship, which is a crucial component of economic growth in China, the country I used as a comparative comparison model in my thesis. One of the greatest issues with the Human Development Index is that it does not take into account "a gap between industrialised and underdeveloped countries" (Anand and Sen, 1994).
The importance of this study, in my opinion, is in its attempt to investigate liberal principles from a fresh angle rather than drawing conclusions about the benefits or drawbacks of democracy for economic growth. A result of that could be important, particularly if it is in line with empirical research conducted by eminent political scientists and intellectuals. The foreign policies of hegemonic powers toward the developing world may be changed in the future as a result. Regarding developing nations, realising that democracy does not equate to steady socioeconomic development can influence their decision to adopt alternative forms of governance to the western model that will take into account the political, social, and cultural diversity among nations and perhaps avert the possibility of cross-cultural conflicts.
Before I can analyse how political regimes affect development, I need to identify the terms that will be used in this chapter and evaluate the literature to find the theories and methodologies I can utilise for my research.
Definitions of democracy, authoritarianism and socio-economic development
Democracy is a very complicated phenomenon with many different views and definitions that represent different situations (Fish, 2008). Many of them were created within the topic of comparative politics. Joseph Schumpeter created one of the most popular definitions of democracy, seeing it in the context of free elections (Fish, 2008). Later, a number of well-known academics, including Huntington, Di Palma, Sartori, Shapiro, and Dahl, adopted this strategy to further their own definitions and ideas about democracy. In my view, the 1982 definition of democracy by Robert Dahl encompasses all variations on this theme. It states unequivocally that for a society to be considered democratic, there must be elections, the right to vote and run for office, the freedom to engage in political activity, access to the press, and freedom of speech (Fish, 2008).
A different meaning of democracy is closely related to Dahl's idea. Stephen Fish, who measures political regimes (which democracy is) in terms of levels of openness, came up with the concept. He argues that a system is democratic if everyone is free to participate in politics, there is open competition, and political discourse is free to flow (Fish, 2008).
He also provides a definition of authoritarianism, implying that this idea is not quite a suitable contrast to democracy. In contrast to the idea of democracy, which entails a rule by the people, it suggests a strict rule but makes no mention of the ruler (Fish, 19). Fish proposes using the notion of monocracy, a sort of supposedly authoritarian government centred on "ruling of a unified collective actor (person or party) and where political life is closed to everyone else" (Fish, 2008).
I refer to the nations in my case study—China, India, Kazakhstan, and Ukraine—as monocracies and democracies based on these categories.
As a gauge of democracy, I also use the Democracy Index. It examines civil freedoms, the operation of the government, political engagement, and political culture in addition to the electoral process and pluralism (Economist Intelligent Unit, 2008).
Another key idea that is relevant for my research is socio-economic development. According to Economic Development (2009), socio-economic development refers to a process of "socio-economic structural changes" that have an impact on a nation's political, economic, and social realms. Improvements in living standards, including rising income and strengthening health and educational institutions, serve as a proxy for these developments (Jaffe, 1998). Development is built on economic expansion, political modernisation, and social progress (Pieterse, 2001).
In my research, the Human Development Index—which was created in 1990 by the United Nations Development Program—is used to measure socioeconomic progress. By "combining metrics of life expectancy, educational attainment, and income into a composite human development index," it assesses socioeconomic development (Human Development Report). It primarily evaluates three facets of human development: education, health, and adequate living conditions.
I also gauge progress using the Index of Economic Freedom. It was created in 1995 by the Wall Street Journal and the Heritage Foundation, and it includes categories such financial freedom, investment freedom, business freedom, trade freedom, government size, property rights, anti-corruption, and labour freedom (Wall Street Journal and Heritage Foundation, 1995). In essence, "these categories constitute the essential components of the concept of economic freedom, which is a basic human right to govern one's own labour and property. Individuals are free to work, create, consume, and invest in any way they choose in a society where economic freedom is both safeguarded and unrestricted by the government. Governments in economically free societies permit the free flow of labour, capital, and goods and refrain from restricting individual freedoms in excess of what is essential to uphold and safeguard that freedom. Heritage Foundation and the Wall Street Journal,1995.
Theoretical background and literature review
I choose to look at democratic theory because my topic is liberal democracy and how it affects development. I discovered that both the theory and the definition of democracy are difficult. There isn't just one theory. On the other hand, there are numerous democratic theories and academics who advocate them, and each of them addresses a different facet of democracy. Shumpeter (1950), Huntington (1968), Dahl (1971), Huntington and Dominguez (1975), and O'Donnell (1973) were among the academics who focused on the influence of democracy on a society's social, political, and economic facets.
For the purposes of the thesis, I would like to focus just on the liberal democratic theory's economic component, which is concerned with economic freedom, which includes private property and business ownership, free markets, and a minimal role for the federal government. The fundamental tenet of this strategy is that sustainable economic development requires a background of democratic political and economic institutions.
Many academic publications that contend that democratic regimes favourably influence socioeconomic progress reflect this understanding of democracy (Thaker, 2007; Halperin, Siegel, and Weinstein, 2005; Grosgean and Senik, 2008; Prezworski, 2004). A compatibility perspective is the name given to this method.
However, a conflict viewpoint, which contends that democracy impedes economic growth and development, represents another academic take on this problem. The growth of democracy, according to academics like Walter Galenson, Karl de Shweinitz, Huntington and Domingues, Huntington, (1975), Huntington, (1968), Barro, (1998), and O'Donnell (2001), is accompanied with a problem of redistribution and an increased role for interest groups. This method views democracy and economic development as opposing forces. Weak democratic institutions are unable to implement economic programmes effectively; hence economic progress requires a strong authoritarian regime (Sirowy and Inkeles, 1990). According to the modernization thesis, economic growth—not democracy—is what actually encourages democracy (Lipset, 1959).
Both qualitative and quantitative methods have been used to test all of those theoretical frameworks. Case studies that examined the effects of democracy on emerging nations in Latin America, Eastern Europe, Africa, and Asia were used in qualitative research (Chen, Liang-chih,2009; Bruce Bueno de Mesquita and George Downs, 2005; Morton H. Halperin, Joseph Siegle, Michael M. Weinstein, 2005) Cross-sectional analysis (Neubauer, 1967; Diamond, 1992; Muller, 1995; Przeworzky and Limongi, 1993; also Przeworzky, 2005) and simultaneous equation models were used in quantitative investigations (Rafael Reuveny and Quan Li, 2003).
It is evident from a review of the academic literature that no research has been done on the Central Asian region.
Hypothesis and research design
An examination of academic literature reveals unequivocally that, despite the complexity and contentiousness of the democratic debate, the compatibility of democratic and economic development has been growing over the past two decades, which is strongly in line with the rapid spread of globalisation (the adoption of the western political and economic paradigm) throughout the world. However, based on a review of the research, I offer a hypothesis that contends that democracy is not a prerequisite for socioeconomic growth and development. The best examples of that are various countries in Latin America (Argentina, Chile in the late 1970s), East Asia (East Asian Tigers between 1960 and 1970), modern China, and Central Asian nations (current times) (Thacker, 2007).
I must utilise both quantitative and qualitative methods to test my theory. I compare socioeconomic indicators of transition democracies (like India and the Ukraine) with those of monocracies like China and Kazakhstan using a straightforward regression analysis and a case study. Economic growth and development, as measured by the GDP, HDI, and Economic Freedom Index, are my dependent variables.
Democracy, as determined by the Democracy Index, is my independent variable. It is crucial to note the index scaling here since I utilised it for both a regression analysis and a case study.
Full democracies receive ratings of 8 to 10 on the Economist Intelligence Unit Index of Democracy:
Full democracies - scores of 8-10.
Flawed democracies - scores of 6 to 7.9. Hybrid regimes - scores of 4 to 5.9.
Authoritarian regimes - scores below 4.
According to the Wall Street Journal and Heritage foundation's Economic Freedom Rankings:
Each of the ten freedoms is rated on a scale of 0 to 100, with 100 being the greatest degree of freedom. A score of 100 denotes the greatest free-market-friendly economic climate or set of policies (Heritage Foundation).
Index of Human Development (HDI)
There are 0 to 1 HDI scores (1 indicates high human development)
Case Study: China
China's economy is currently one of the fastest expanding in the world, and it is a significant player on the global stage. It actively engaged in extending its sway not just in East Asia but also in the resource-rich Central Asian region, which is essential for China's erratic 9.9% - 12% annual economic development according to a World Bank report, 10.1% in 2004 and 2005 (2005).
According to Stephen Fish, the political system in place there is one-party communist dictatorship, and it has been successful in reforming the economy by "limiting the significance of ideology in economic policies" (state.gov). By increasing trade, especially with the US where imports from China accounted for 16.1% of all US imports in 2008 (state.gov), bringing in more FDI ($69.5 billion annually), and taking part in projects for economic liberalisation, China has significantly reduced poverty and raised living standards (GDP per capita is $4,644).
China is still viewed as a monocracy where all power belongs to a highly centralised political institution because of the communist party, which does not tolerate any form of disobedience or criticism of the regime and frequently results in violations of human rights. This is true even though China has made significant economic progress.
India, the world's 12th largest economy and another quickly emerging nation that competes with China for a dominant position in the area, is ranked fourth in the world in terms of absolute Gross National Income, behind the US, China, and Japan (Srinivasan, 2006).
Since 1991, when significant economic reforms began to take effect, India has remained steadfast to the fundamentals of a market-oriented economy. Reducing trade and tariff obstacles, modernising the banking system, expanding trade ties with other nations, and creating a climate that encourages foreign investment all contributed to bringing in $16.9 billion in yearly foreign investment (state.gov). Reforms also raised some standards of living, such as the $2,469 GDP per capita.
The political system in India views itself as a democracy. Nevertheless, despite having 1.1 billion people and being the second-largest democracy in the world after the US, it is still falling behind China. Compared to China, its socioeconomic statistics like GDP and HDI are substantially lower. 6.4% of the population is unemployed, 61% of adults are literate, and 25% of people live below the poverty line. These metrics are 4%, 90.9%, and 8% in China, respectively.
One of the former Soviet Union nations to emerge after the Soviet Union's fall is Kazakhstan. According to state.gov, it is the ninth-largest nation in the world and one of the developed nations in the Central Asian region with a wealth of natural resources. It has 15.6 billion people and a $9,832 GDP per person. According to the Human Development Index, Kazakhstan is a medium-developed nation with a 7.3% unemployment rate, a 13.8% poverty rate, and a 98.4% literacy rate.
Kazakhstan decided to follow a path of democracy after winning independence in 1991, which included actively pursuing economic liberalisation and embracing a western-style of government. Contrary to political reforms that moved away from democratic rule and toward old-style Soviet rule, which was centred on the idea of unlimited control of one leader or party, economic reforms turned out to be successful. The current political system of Kazakhstan can be characterised as a monocracy with a powerful institution of the presidency.
Oil and gas exports from Kazakhstan were aided in part by the country's economic prosperity. However, it was the strong leadership that enabled "effective management of monetary policies" (state.gov) In 2000, Kazakhstan became the first nation from the former Soviet Union to pay off all of its debt to the IMF (state.gov). Additionally, the leadership was able to raise overall living standards, which requires competent administration and a certain amount of control.
Another former Soviet Union nation that formed with the collapse of the USSR is Ukraine. It is the biggest nation in all of Europe. It shares a similar starting point with Kazakhstan to some extent. Like many other former communist nations in the area, Ukraine began its existence in 1991 and followed a path toward Western-style administration, which was reflected in the way its political system was structured, which was founded on the concept of checks and balances. Every one of Dahl's democratic requirements, including election freedom, had been met. As a result of widespread electoral fraud and abuse of power in 2004, Ukraine experienced the so-called "Orange Revolution," which began when voters defended democratic ideals like "free and fair elections." The pro-western government was formed as a result of large-scale but largely peaceful demonstrations, and it would continue to uphold western democratic ideas (stat.gov) Despite the success of the democratic ideology, Ukraine's economic progress has lagged behind Kazakhstan. It has 46.8 million people, a GDP per capita of $6,212, and a 6.9% unemployment rate. Its HDI is nearly identical to Kazakhstan's. However, the percentage of the population living in poverty is almost 29%. (2006). Ukraine's FDI flows ($5.2 billion vs. 6.1%) and GDP per capita are lower than those of Kazakhstan, which may indicate that economic reforms failed to establish an atmosphere that would have attracted greater FDI and investors in general. In my opinion, it occurs because democratic administrations, like those in India or Ukraine, are unable to deliver the political and social stability that strong leadership can, even if it means using coercive force to suppress discontent.
I selected those nations for a number of reasons. Regarding their historical backgrounds (all four were once colonies), political systems (monocracies and democracies), human resources (huge populations), and political and economic objectives, I believe there are certain commonalities among them all (both China and India want to be regional political leaders in Asian region as well as Kazakhstan and Ukraine in Central Asian and Eastern Europe respectively).Based on a brief examination of fundamental indicators for those nations, it can be inferred that those nations have more successful outcomes consistent with O'Donnell's theory of bureaucratic authoritarianism, which calls for strong leadership and better political and economic management in authoritarian regimes (1988). According to this, "developing nations must have a robust bureaucracy that can guide the nation toward modernity" (Nozari, 1999). According to this strategy, a strong state is created and intensive socioeconomic development is promoted, as in China and Kazakhstan, through "industrial capitalism, imperialist expansion, and rationalisation of bureaucratic order" (Chicollte, 1994).
India and Ukraine are devoted to democratic ideals. However, the absence of effective leadership and management greatly retards their socioeconomic development, as can be seen by examining the lower HDI, which measures income, literacy, and life expectancy, and the smaller quantity of FDI.
I have created two models that explain ad hoc links between socioeconomic progress and democracy using a straightforward regression analysis.
Model 1 examines the overall effect of democracy on GDP using information from 154 countries.
I have created two models that explain ad hoc links between socioeconomic progress and democracy using a straightforward regression analysis.
Model 1 examines the overall effect of democracy on GDP using information from 154 countries.
Even if a formal regression analysis indicates that there is a statistically significant link between these two variables (its t-value is 8.51), a closer look at the graph reveals that this conclusion may be deceptive.
Impact of democracy on the Human Development Index as measured by Model 2
The relationship between democracy and the human development index is incredibly weak—almost nonexistent. The distribution of the regression line indicates that there are numerous countries with high HDI and low democracy index (mainly former communist bloc nations plus China). There are nations with high HDI scores as well as high democracy scores. There are some nations with high democratization indices but low HDI. A sizable number of nations have middling HDI and democratization scores. These findings show that any conclusion is possible. A person may contend that there is a link between democracy and development, or they may contend that there is no connection between democratic regimes and socioeconomic progress.
I can demonstrate my claim that democracy is not a prerequisite for effective economic development on the basis of data comparison and regression analysis. Democracies can exist in nations with low or moderate socioeconomic development (HDI), like India or Ukraine. Additionally, they may be undemocratic and advanced (China or Kazakhstan). It is necessary to consider economic, geopolitical, and social aspects in addition to political regimes in order to have a complete picture of the variables that affect and foster progress.
Impact of globalization on political development of the Central Asian countries
The earlier parts of this thesis discuss the political, social, and economic effects of globalisation as measured by migration, remittances, and liberal democracy. To determine how globalisation processes affect socioeconomic growth, I strive to use both empirical and qualitative methodologies.
In this chapter, I examine how the political evolution of the Central Asian nations is impacted by globalisation. I am particularly interested in how these governments respond to the new political and economic reality brought about by globalisation and develop their interactions with other nations. I understand the global issues brought about by the opening of political and economic borders to mean the new political and economic realities. The emergence of new international players in the region, the fight against terrorism, drug trafficking, and the management of natural resources have compelled the leaders of the Central Asian countries to come up with strategies and solutions that would not only address these issues but also safeguard their own political and economic interests (International Relations in Central Asia, 2004)
The fundamental hypothesis is that these governments prioritised the growth and preservation of political and economic stability by prioritising functional collaboration, one type of regionalism, and to some extent regional integration, notably in economic domains (Baylis, Smith, and Own, 2008)
After the Soviet Union fell apart, five new Central Asian entities were created. The territory that was seen included Tajikistan, Kazakhstan, Kyrgyzstan, Uzbekistan, and Turkmenistan. Additionally, other researchers mention Mongolia, regions of Iran, Afghanistan, and northwest China, which are heavily populated by Turkic people (ADB, 2008). The nations of Central Asia are similar in terms of their cultures, religions, and ethnicities. With the exception of Tajikistan, which has Persian roots, Turkic roots can be found in Kazakhstan, Kyrgyzstan, Uzbekistan, and Turkmenistan. They all regard themselves as Muslim nations with comparable customs. They do not, however, all share the same level of socioeconomic development. Every nation has distinctive qualities. For instance, with a population of 27 million, Uzbekistan is the country in Central Asia with the greatest transportation network (Swanstrom, 2004). After Russia, Kazakhstan is the former Soviet Union country with the most land area, the greatest nominal GDP ($6,791), and the most abundant oil reserves (CIA, 2007). More than 90% of Central Asia's water resources are under the jurisdiction of Tajikistan and Kyrgyzstan (Primbetov, 2006). Due to its borders with three Central Asian republics and being along a land route between the Indian subcontinent and resource-rich Central Asia, Afghanistan has a distinct strategic significance in the area. These distinguishing characteristics have caused the leaders of the Central Asian governments to reconsider their positions in the area and on the global stage, deciding between the pursuit of individual aims and group efforts in the form of cooperation. The problem can be solved by looking at the difficulties that newly independent nations have encountered.
Following their independence in 1991, Central Asian republics have been actively rebuilding their national statehood institutions. However, the lack of trust among Central Asian nations, their poor economic growth, and the appearance of new foreign actors seeking to influence the region's politics and economy have hampered the changeover process. Since then, post-Soviet Central Asia has had to deal with a number of significant problems brought on by both local and international factors. Interdependence across regions, illegal drug trafficking, water resource management, international crime and extremism, immigration, and the expanding power of Russia and China.
Lack of institutional framework and economic interdependence that these states inherited as a result of Soviet Union legacy, which have been impeding states' ability to pursue their own sovereign policies and engage in economic activity, was one of the biggest local challenges that Central Asian countries have been facing since gaining independence (Zhalimbetova and Gleason, 2006). During their early years of independence, Central Asian governments experienced a socioeconomic collapse due to their intricate economic, political, and social connections.
The management of water resources, which was formerly overseen by Moscow through intergovernmental cooperation, is another issue that surfaced right away after the fall of the Soviet Union (UNDP, 2005) Independence has given each state the freedom to follow its own water distribution strategies, which has increased the risk of conflict in the area where water is a major resource. For instance, Kyrgyzstan and Tajikistan are in charge of almost 90% of the region's water resources. One of the major water providers to all republics, Kyrgyzstan has already cut back on delivery due to technical issues. Mismanagement of water resources has also led to more serious issues, like the drying up of the Aral Sea, which has an effect on Kazakhstan's and Uzbekistan's agricultural sectors.
Other significant issues for the region include the illicit drug trade, international crime, and terrorism. Huge illicit drug flows, particularly from Afghanistan, use Central Asia as a transit route to reach the main demand centres in Europe, Russia, and China (www.globalsecurity.org). High demand, a lack of local institutions, and a lack of cross-border collaboration have all contributed to the situation's deterioration and the growth of transnational crime. Due to the demarcation of area during the Soviet era, Central Asia has inherited border conflicts with one another. The Fergana Valley, which is at the intersection of three states and three ethnic groups (Kyrgyz, Uzbek, and Tajik), was created as a result of the same demarcation of the territory and is now a hotbed for several militant and religious organisations that successfully hide there from Tajik and Uzbek authorities and periodically disrupt the situation in those nations.
One of the largest international problems for Central Asian nations was the emergence of new players like Russia, China, and the USA, all of whom were anxious to fill a void left following the disintegration of the USSR. Each of these states has been eager to increase its sway in the area.
With the opening of an air base in Kyrgyzstan in 2003, the expansion of bilateral agreements with Kazakhstan to lease four military test sites, the signing of a security package with Uzbekistan known as the "Treaty of Allied Relations" in 2005, and a joint military exercise with Uzbekistan in 2006, Russia has been regaining its influence in the Central Asian region (Vinod, 2006). In order to preserve its control over Turkmen gas supply, Russia also maintains close ties with Turkmenistan (Fawn, 2003). Some Central Asian nations, especially Kazakhstan, view Russia as a major threat given its expanding influence. According to certain statistics, 31.6% of ethnic Kazakhs (just behind China) see Russia as a severe threat to Kazakhstan's sovereignty (Cornell, 2003).
Another significant player to emerge in Central Asia is China, which has its own objectives for expanding influence there. One of these is the Xingjian autonomous province, which is located in the Chinese portion of Central Asia and is heavily populated by Turkic peoples of various ethnicities, including Uyghur, Kazakh, and Kyrgyz, and which is unwilling to integrate into Chinese political and economic frameworks (Engdahl, 2005). Four Turkic states declaring their independence has compelled China to monitor the operations of Uygur militant groups pushing for Xingjian's independence. Energy reserves in Central Asia are a major concern for China as they are essential for its economic development. It has already completed one section of a pipeline from Kazakhstan to Xingjian that will run from West China to East Kazakhstan and be able to transport 10 million tonnes of oil annually. Additionally, China was able to reach an agreement with Petro Kazakhstan, a Canadian oil business that was recently purchased by China National Petroleum Corporation in 2005. As a result, China now has access to Kazakh oil (Allouche, 2007). Additionally, China has shown interest in the hydropower potential of Tajikistan and Kyrgyzstan, which together control over 90% of the water resources in the region and are crucial for Western China, which is experiencing a massive state-sponsored population influx into this region that is dependent on the agricultural sector (ICGR, 2007). However, China's economic and commercial progress in the region, which fuels worries of Chinese control among the local populace, is the biggest threat to Central Asian states. Following the uprisings of 2001, Kyrgyzstan and China secretly signed a border agreement that would grant China an additional 90,000 hectares of land providing access to a glacial watershed that is crucial for Western China, which is frequently water-scarce (Cornell, 2003).
The US is another significant player in Central Asian politics that has actively stepped up its influence after the events of September 11, altering the region's "geopolitical map" and posing new problems for the region's republics (Vinod, 2006). The US began vigorously implementing Western policies for the democratisation of the Central Asian states and other former Soviet Union republics as soon as it entered the region under the cover of the War on Terror. The US actively supported "coloured" revolutions that were occurring in many former Soviet Union nations. It also welcomed the Kyrgyz Tulip Revolution, which was supposed to instal an American-friendly administration but did not. By opening military facilities in Kyrgyzstan and Uzbekistan and allowing the US military and NATO to conduct operations in Afghanistan over Tajikistan and Kazakhstan airspace, it has also begun to expand its military footprint. Due to the slaughter in Andijan, the US was forced to leave its air base in Uzbekistan in 2005. Weakening Russian control in the area and gaining access to oil, gas, and routes that connect the Sub-Indian continent and resource-rich Central Asia and serve as a potential route to Iran and the Middle East are two of the key motivations for US participation in the region. (2006) Miller
The regional and global forces that influence the region's security dynamics and conditions have led to political strategies in Central Asian nations that can be characterised as a balancing act between internal and external players. The Central Asian governments have prioritised regional collaboration as a means of effective growth and preserving stability in light of such balancing. To address shared problems and safeguard their own interests, they have chosen to actively participate in international institutions. The majority of Central Asian countries are currently active participants or observers in a number of international organisations, including the OSCE, Eurasian Economic Community, Shanghai Cooperation Organization, and Commonwealth of Independent States.
This chapter's analytical framework is based on examining the phenomenon of cooperation among Central Asian states from the perspective of liberal institutionalism, which contends that participation in such institutions encourages cooperation, which in turn fosters economic development and political stability.
Liberal institutionalism acknowledges the egocentric motivations of nations. Assuming that these selfish interests of individual nations are not fundamentally at odds with one another and that states have incentives to collaborate or not cooperate, it focuses on explaining patterns of regional cooperation (Brown, 2006). Through international institutions, they can get over their selfishness (Walt, 1998). The "Complex interdependence" theory, created by the liberal institutionalists Robert Keohane and Josef Nye, contends that economic interdependence and other types of interdependence (interstate, transgovernmental, and transnational) that involve international institutions should raise the likelihood of cooperation among states (Keohane and Nye, 1989). Additionally, "certain forms of collaboration might be the most logical method for governments to accommodate national needs" (Baylis, Smith and Own, 2008). Keohane and Nye also make the argument that due to economic and political interconnectedness, the costs of ceasing cooperation will be greater than the advantages.
My analysis of the available literature on this topic reveals several of the prior studies' shortcomings. One of them is the dominance of the realist perspective in explaining the evolution of international politics in the area. As a result, many academics and political analysts are gloomy about the chances of collaboration, which may be advantageous for the countries of Central Asia's political and economic stability. Because of this, I approach this problem from the standpoint of liberal institutionalism, which is, in my opinion, the most useful framework for doing so.
Regional Cooperation versus Integration
Political, economic, and security cooperation have evolved into a decision that has characterised the foreign policies of those countries as a result of the shared challenges that all Central Asian states have faced in the face of regional and global influences.
Since Central Asian countries predominantly engage in functional cooperation, which is a kind of regionalism, with some attempts at integration, notably in the domain of economy, it is crucial to define cooperation here and explain how it varies from integration, which is significant for this study (EEC).
Cooperation is one of the characteristics of regionalism, according to Edward Best and Thomas Christiansen, a process that refers to "the expansion of societal integration within a region and often involves economic and social interaction" (Baylis, Smith and Own, 2008). However, because each region and its inhabitants are distinct, there are diverse ways in which they interact "between the various dimensions and dynamics of regionalism" (Baylis, Smith and Own, 2008). There are two well recognised types of regionalism. It is regional integration and practical cooperation.
Functional cooperation is a term for restricted or focused agreements between governments that work to unite nations on specific concerns like security or resource management. Under functional cooperation, there is some "commercial preferentialism with no harmonisation of domestic regulations or requirements for collective action in international issues" in the economic relationships between the states (Baylis, Smith and Own, 2008). Political cooperation is the commitment of nations to address specific concerns, like security, and is based on adopting shared stances in international organisations, like the SCO, and occasionally collaborative actions, such participating in military drills within the SCO. Unlike regional integration, which refers to the removal of barriers to create a unified political or economic space like the EU, functional cooperation assumes that states will participate in cooperation arrangements to solve immediate problems but do not have long-term agendas to create a space that will be subject to some "distinctive rules" (ADB, 2006 -2008).
Increased collaboration among the Central Asian republics "stands to yield huge dividends for the people of the region," claims a research from the Asian Development Bank. A region's economy that is twice as large and prosperous after ten years may result from lower trade costs, more efficient use of water, and other natural resources. Additionally, the cost of missed possibilities for employment, conflict, and insecurity could be high (Maksutov, 2006)
As members of many regional organisations, the Central Asian governments actively participate in regional cooperation, as I have already discussed. Two organisations, however, in which Central Asian countries participate are worth examining in more detail. These groups are well positioned to have a significant influence on regional politics and best represent the security and economic needs these nations face. These institutions include the Eurasian Economic Community and the Shanghai Cooperation Organization (SCO) (EEC).
Shanghai Cooperation Organization
In 2001, the Shanghai Cooperation Organization was established as an international body. It developed from the security group known as the "Shanghai Five," which was founded in the middle of the 1990s following the settlement of many border conflicts involving China, Russia, and Central Asian governments (Germanovich, 2008). China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan are among its five members. Additionally, there are four observers: Iran, Mongolia, Pakistan, and India. In order to address ongoing issues of economic growth and security, such as safeguarding borders and boosting commerce among member states, the SCO was founded. The SCO Charter outlines the organization's primary objectives, which include border security, the battle against terrorism, extremism and separatism, control of drug trafficking, and a long-term goal of creating a free economic zone within the SCO.
Due to the specific characteristics of the Shanghai Cooperation Organization, its members have a unique opportunity to shape regional politics in the Central Asian region. It is an excellent illustration of collaboration using institutional liberalism's viewpoints. Russian military presence in Kyrgyzstan, Kazakhstan, and Uzbekistan, as well as significant Chinese FDI in the economies of Kyrgyzstan and Kazakhstan, which are China's main trading partners, are examples of how smaller powers in the region balance between East (China) and West (Russia) by appeasing them and giving up some sovereignty in exchange for benefits of stability and economic growth (Germanovich, 2008). However, the distinctive features of the SCO framework in some ways allow smaller states to play more significant roles in the organisation by drawing China and Russia's attention to issues that are significant to these nations by outlining their concerns for their security, economy, and national interests. By pursuing relatively independent foreign policy in the direction of a cooperation with the USA, they are also able to counterbalance the ambitions of more powerful nations. Despite growing dissatisfaction from China and Russia with American presence in the region, Kyrgyzstan, Kazakhstan, and Uzbekistan provided territories for US military bases and joined the coalition against the war on terror. This is an example of how smaller powers pursue their own national agendas through cooperation. Through the execution of massive military exercises like "Peace Mission 2007," the SCO has a tendency to overcome the influence of the US by balancing the interests of major nations (Vinod, 2006). As a result of multi-vector foreign policies driven by regional interests of lesser powers, Central Asian nations participate in various international security and cooperation initiatives that enable them to uphold the status quo and sustain stability (Vinod, 2006).
Eurasian Economic Community
The Eurasian Economic Community (EEC), which is also an illustration of liberal institutionalism, is a significant organisation that focuses on regional integration and the socioeconomic growth of the Central Asian region. Initiated by Kazakhstan, the EEC was founded that year. It is the largest organisation in the Commonwealth of Independent States created to encourage regional economic development in Central Asia. As of 2006, it includes Belarus, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.
The primary drivers for the creation of the EEC were each member state's ambition to maximise its economic potential and counteract development challenges that could be avoided due to shared infrastructure, educational, cultural, and informational resources that could facilitate cooperation (Vinod, 2006).
EEC is crucial for the successful socioeconomic development of the area for a number of reasons. One of them is that EEC members have tremendous natural and economic potential. A receptive market is another. For instance, natural resources from Tajikistan, Kazakhstan, and Kyrgyzstan are mostly delivered to Russia and Belarus. These two taken together can help the economy and encourage steady economic growth over the entire region. The main objectives of the EEC are the creation of a common economic space, the harmonisation of customs tariffs, and the development of a common market for labour and services that will eliminate current economic borders, promote trade among member states, and eventually lead to regional integration. It is significant to note that effective economic development in the landlocked Central Asian region depends in large part on commerce. Lowering trade expenses and restrictions, per the UN Regional Human Development Report for Central Asia, boosts income, employment, and consumption in the region by 20–55%. (Primbetov, 2006).
A crucial region with tremendous natural, human, and strategic potential, Central Asia has long drawn the interest of major world powers. It has become simpler for international forces to enter the region and begin expanding their influence as a result of the collapse of the USSR and the emergence of new sovereign Central Asian nations. Young and weak Central Asian republics have been pushed to develop a political stance that would safeguard their own interests and satisfy those of global powers in the face of Russia, China, and the US due to domestic and international problems that have arisen since those countries' independence.
The findings of this study show that Central Asian republics built their foreign policies under the liberal institutionalist model. Liberal institutionalism contends that collaboration and integration in politics and the social and economic spheres will be advantageous to nations. These nations have had some success participating in various regional organisations, such as the Shanghai Cooperation Organization or the Eurasian Economic Community, which address the immediate requirements of those nations, particularly in the economy and security sectors. The foreign policy of Central Asia demonstrates that the idea that collaboration is impossible because each state is only interested in its own interests and relative benefits is untrue in that region. Selfish interests indeed drive Central Asian countries, but they are overcome by their participation in regional organisations and institutions that ensure their stability and upkeep of the status quo. There is also evidence that these regional organisations, particularly the SCO and EEC, have long-term political and economic goals for elevating the region to a significant role on the global stage in addition to assisting member nations in resolving regional difficulties that are shared by all.
Understanding the economic, social, and political effects of globalisation on Kyrgyzstan, Kazakhstan, and Central Asian nations in general is the main goal of this thesis. The case study on Kyrgyzstan and the empirical research based on panel data analyses show that globalisation has a dual impact on these nations' socioeconomic development. One the one hand, short-term economic growth may benefit from globalization's positive effects like migration and remittances. They act as a "shock absorber" for the difficulties brought on by the shift to a free market economy. Remittances and migration have a minor but favourable immediate impact on the expansion of the services sector, as seen by the rise in private consumption and GDP per capita. However, they may have detrimental long-term effects on the economy, particularly where trade and industry are concerned. According to economists' forecasts, the Dutch illness phenomenon will have detrimental impacts on both migration and remittances. According to it, an excessive reliance on foreign financial flows might paralyse the nation's manufacturing sector, which would cause the economy to stagnate in the long run. The study's empirical portion shows that migration and remittances have no beneficial effects on the social metrics used to gauge development. Furthermore, it can result in a loss of human capital and a distortion of conventional social systems inside civilizations in the future.
The lack of data is one of the reasons for the inability to determine if remittances and migration have a good or negative impact on development. The majority of the information is derived from official sources that exclude unofficial statistics, particularly for Central Asian nations.
For the same reason, data are completely unavailable for certain nations, including Tajikistan and Uzbekistan.
Globalization has two political effects, as well. The empirical analysis, which is based on simple regression analysis, shows that Central Asian governments do not necessarily need to follow the liberal democracy model in order to have successful economic growth. Democracies can exist in nations with poor or moderate socioeconomic growth, as India or Ukraine. They have the potential to develop and be undemocratic, like China or Kazakhstan. Other significant economic, geopolitical, and social issues that can affect development must be examined in order to draw a conclusion on the relationship between democracy and development.
Considering the notion that Central Asia is a significant region with immense ecological, human, and strategic potential is one method to approach this issue. Major global and regional forces have been paying attention to it, especially since the fall of the Soviet Union. Because of this, weak Central Asian nations are being pressured to adopt a political stance that will satisfy both internal and external interests and create the ideal conditions for steady political and economic development. By participating in regional organisations like the SCO and EEC, Central Asian nations chose the road of political integration and cooperation, as shown by the descriptive study. This tactic can support political stability and regional economic progress while assisting them in overcoming difficulties brought on by globalisation.