Tajikistan: Economy

Tajikistan is the poorest Commonwealth of Independent States (CIS) country and one of the poorest countries in the world. Foreign revenue is precariously dependent upon exports of cotton and aluminum, and on remittances from Tajik migrant workers abroad, mainly in Russia. The economy is highly vulnerable to external shocks. Despite this, Tajikistan managed modest growth during the height of the recent economic crisis, and growth picked up again in 2010.

Tajikistan has great hydropower potential, and has focused on attracting investment for projects for internal use and electricity exports. Meanwhile, the country faces severe electricity shortages, particularly during the winter and beyond, when most of Tajikistan's inhabitants receive little or no electricity for weeks at a time. The government sees the construction of the massive Roghun hydroelectric dam as the solution to the country’s chronic energy woes, but the dam has been a source of increasing friction with Uzbekistan.

Tajikistan has followed a relatively strict fiscal and monetary policy, which has resulted in macroeconomic stability. However, government interference in the economy and massive corruption stifle economic growth and private investment. The government has attracted state-led investment for major infrastructure projects, particularly from China, rather than implementing the necessary economic reforms to attract private investors. Two-thirds of the workforce of Tajikistan is in agriculture, where wages are abysmally low, and sometimes non-existent. Tajikistan struggles to implement agricultural reforms that would allow many farmers to grow the crop of their choice, rather than being forced to grow cotton, as has been the practice from Soviet times. Income from narcotics trafficking, while difficult to quantify, has an increasingly visible impact on the Tajik economy.

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