Tajikistan

IV

Economy

Tajikistan was the poorest of the former Soviet republics. Civil war wracked Tajikistan’s economy from the time of independence until a peace accord was signed in 1997. Turmoil in the south destroyed much of the region’s infrastructure, created thousands of refugees, and sorely disrupted agricultural production. A large number of Russian-speaking people, many of them technically skilled workers or professionals, fled the country to seek safety and more favorable economic conditions. The combination of these factors caused the gross domestic product (GDP), which measures the value of goods and services produced, to drop an average of 16 percent a year between 1990 and 1996. However, in 1997 the GDP began to rebound. GDP was $2.31 billion in 2005.

Economic reforms planned at the time of independence were mostly suspended because of the war. After the war, the government was able to focus on the difficult process of transforming the centrally planned economy of the Soviet period into one based on free-market principles. The government turned to mass privatization—the selling of state assets to the private sector—as a way to generate revenue, promote foreign investment, and gain support from international financial institutions such as the International Bank for Reconstruction and Development (World Bank). Although the reform process proceeded rapidly beginning in 1997, Tajikistan continued to face many serious economic problems, both as a legacy of Soviet central planning and civil war and as a consequence of economic transition.

A

Agriculture

Agriculture forms the foundation of Tajikistan’s economy. The sector employed 67 percent of the workforce in 2000. The principal crop is cotton, which is grown on irrigated lands along the tributaries of the Amu Darya and Syr Darya. The cultivation of cotton is a legacy of the Soviet period, when government planners mandated that cotton be grown as an export crop. Cotton continues to be an important source of revenue. Other major crops include grain, primarily wheat; vegetables, particularly potatoes, onions, and tomatoes; and fruit, such as grapes and apples. Silkworms, who feed on the leaves of mulberry trees, are also cultivated for the production of raw silk. Raising cattle and sheep is also important. Much of the best farmland is held by collective farms, which lease agricultural plots to private farmers.

B

Mining and Manufacturing

Mineral resources in the republic are extensive. Tajikistan has metals such as gold, silver, iron, lead, and tin; mineral fuels, mainly coal; and industrial materials such as phosphates and semiprecious stones. Much of the country’s mineral resources have yet to be developed. Many are in remote mountainous areas where the lack of transportation and severe weather make mining difficult. Several foreign companies have entered into joint ventures with the government of Tajikistan to mine gold, silver, and coal.

---

---

Some industrialization has taken place since the 1930s, but manufacturing still accounts for a relatively small part of Tajikistan’s economy. While Tajikistan produces substantial amounts of cotton, only about one-tenth of it is processed into textiles inside the country. Heavy manufacturing is limited to a few concerns, principally a massive aluminum plant located in Tursunzade, west of Dushanbe. However, the country has no deposits of aluminum ore and must import the raw material from other countries, mainly Ukraine and Kazakhstan.

C

Energy

Mountain rivers provide ample sources of hydroelectric power in Tajikistan, and an extensive hydroelectric power system was built during the Soviet period. Massive dams produced 98 percent of the country’s electricity in 2003, with the rest coming from thermal plants fueled by natural gas. Large quantities of electricity are needed to refine aluminum; the abundant supply of electricity in Tajikistan is why Soviet planners built the massive aluminum smelter in Tursunzade. New power stations are being built in Tajikistan with international assistance, positioning the country to become a major exporter of electricity in the region. Tajikistan is dependent on imports for other energy sources, including gas and oil.

D

Currency and Trade

Tajikistan’s chief trading partners are other former Soviet republics, principally Uzbekistan, Kazakhstan, and Russia. The country is also developing trading relationships with European and Asian nations.

In 2000 Tajikistan introduced a new currency, the somoni, to replace the Tajik ruble. One somoni is made up of 100 dirams. The government issued the new currency in the expectation that it would help facilitate the transition to a market economy. For example, the new currency was designed to simplify financial transactions, as 1 somoni replaced 1,000 Tajik rubles. The Tajik ruble had been in use since 1995, when it replaced the Russian ruble. In 1994 Tajikistan had joined the “ruble zone,” comprising Russia and some other former Soviet republics, but Russia’s economic problems caused a severe shortage of rubles in Tajikistan. By issuing its own currency in 1995, the country gained control over its own monetary policy.

	More from Encarta
	•  Presidential Myths Quiz •  Coffee break: Recharge your brain