The interplay between the performance of the manufacturing sector and the success of transition to a market economy: A case study of Tajikistan

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Authors

Naemi, Ali

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University of Guelph

Abstract

The transition from a command economy to a market economy has been a challenging and unprecedented task for post-communist countries. Contrary to the frequent debates surrounding the benefits and downfalls of Big Bang vs. Gradualism, this study maintains that the most fundamental challenge for transitional economies in post-communist countries has been the sudden radical structural change and the ensuing socio-political and economic instability. Establishing the foundation for a pluralistic democratic society and a competitive market-based economy has required a complex combination of political reorganization, radical macroeconomic liberalization, and profound changes to existing institutional frameworks. Amidst these radical changes, the majority of post-communist countries have suffered a long-standing socio-political and economic instability, which has negatively affected investment in the private manufacturing sector in these countries. Manufacturing sector plays a significant role in promoting a market-based economy, as it encourages entrepreneurial and technical innovations, competition, quality production, diversity, resiliency and efficient utilization of resources through generating backward and forward linkages. Considering this role of the manufacturing sector, it is difficult to make sense of the aggregate challenges involved in transition of post-communist countries without taking into account the impact of the structural change in these countries on the performance of their secondary sector. This study examines linkages between the development of the private manufacturing sector and structural changes in Tajikistan. This is done within the scope of an analytical framework developed from the literature on post-communist transition. This framework was proven to be highly effective in studying transition in Tajikistan. It could also serve as a useful tool for studying transition in other post-communist countries. The findings of this study led to development of a model supporting the transition to a market economy by way of promoting a dynamic manufacturing sector in Tajikistan. Although the focus of this study is Tajikistan, much of the analysis, including the model, could be generalized and applied to various post-communist economies and developing countries around the world.

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Keywords

Tajikistan, manufacturing sector, market economy, transition, post-communist countries

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