2024-07-11 07:40:34
Source: Trend International Information Agency
The development of the Trans-Caspian International Transport Route (TITR, or Middle Corridor) as a viable route requires regional reforms.
As reported by Day.Az, economist and policy analyst at the Eurasian Department of the Organization for Economic Cooperation and Development (OECD) Amélie Schurich-Rey said this in an exclusive interview with Trend.
Development Paths of the Middle Corridor
“With sufficient investment and better procedures to reduce transport costs, the Trans-Caspian International Transport Route, also known as the Middle Corridor, could become an attractive additional trade route linking Kazakhstan to Europe, one of its main trading partners, and boost regional trade. If the TITR can lead to a significant increase in regional trade, it will become an alternative trade route at the international level,” she said.
As Shurikh-Rey noted, the geography of the TMTR requires more multimodal switching between road, rail and sea transport, as well as more border crossings, than the Northern Corridor.
“Even if the route can be shortened in the long term, it is still not attractive enough for the private sector. In addition, the current capacity of the TITR is only about 5 percent of the 100 million tons transported via the Northern Route, and this share is expected to reach 11 percent by 2030. However, at the regional level, the development of the route could better integrate the economies of Central Asia and the Caucasus,” the expert said.
She noted that realising the potential of the TMTM as a regional trade route will require significant investment in transport infrastructure.
“While transit through the Caspian countries has more than doubled since February 2022, the lack of sufficient road, rail and maritime infrastructure, as well as trade facilitation agreements along the route, has led to severe congestion at ports and border crossings. The TITR as a viable route will also require regional reforms in terms of regional integration, infrastructure, trade facilitation and coordination,” said Schurich-Rey.
Kazakhstan as a key transport hub
The expert noted that Kazakhstan is located on the Trans-Caspian international transport route, which gives the country the opportunity to strengthen its strategic regional position.
“Kazakhstan, which borders China and Russia, is located at the intersection of major trade routes such as the Northern Corridor and the North-South Corridor, and is an entry point to the Central Asia-Caucasus regional market. In 2022 alone, Kazakhstan’s cargo transportation volumes across the Caspian Sea increased 6.5 times compared to 2021, reaching 891 thousand tons. The total volume of container traffic along the TITR increased by 33 percent, reaching 33.6 thousand TEU in 2022. In the first seven months of 2022, Kazakhstan’s exports via the Caspian also increased ninefold compared to the same period last year, although enterprises reported operational difficulties and port congestion,” Shurih-Rey noted.
According to her, participation in the TITR is expected to have a positive impact on the economy of Kazakhstan.
“Improved logistics services could reduce Kazakhstan’s overall transit dependence on Russia and increase its trade potential, with exports expected to increase by 70 million tons by 2030 compared to 2021. In turn, improved export opportunities would open new doors for the development of industries producing more complex processed goods and contribute to the diversification of the country’s trade basket. Participation in the TITR could also improve regional transport connectivity and reduce trade costs and facilitate growth in trade volumes,” the expert added.
Sustainable economic growth in Kazakhstan
According to Amelie Schurich-Rey, Kazakhstan has been experiencing a period of sustained economic growth for more than two decades, supported by an ambitious reform program aimed at increasing the private sector’s contribution to economic development, diversifying employment, production and exports, and integrating into regional and international value chains.
“However, economic growth remains heavily dependent on commodity exports, particularly hydrocarbons and metals. In 2023, hydrocarbon products still accounted for more than 53 percent of total exports and generated 15 percent of GDP. Data from the Office for National Statistics shows that the commodities sector as a whole (hydrocarbons, metals and agricultural products) accounted for more than 85 percent of total exports in 2023,” she said.
As the economist noted, the continuing dependence on hydrocarbons and minerals reflects the low level of competitiveness of the manufacturing sectors and the underdevelopment of the private sector, especially small and medium-sized enterprises (SMEs).
“In addition, the country’s growth rate has also gradually declined over the past two decades, which may indicate that the boom in the commodity sector has not been accompanied by productivity growth in other sectors, especially agriculture and services,” added Amelie Schurich-Rey.