Economic Transformation and Institutional Development in Tajikistan

In Tajikistan, economic reform was substantially delayed in the initial period of transition. The negative effects of the long lasted civil war can be grasped here. But in the late 1990's, the Government abruptly accelerated its steps towards a market economy. For instance, domestic pricing was almost liberalized between 1995 and late 1996, and the state order system was completely abolished as early as before 1996. Moreover, the Government succeeded in establishing a relatively liberal trade and exchange system by late 1998. However, in striking contrast with the remarkable success in economic liberalization, privatization of state-owned industrial enterprises showed little progress. In addition, the Rakhmonov administration strove to prolong the life of inefficient enterprises by maintaining a soft budget and institutional constraint - inherited from the communist regime. For these reasons, marketization in Tajikistan, as a whole, is greatly out of balance. Hence, the Government ought to put in operation more drastic measures in such a way as to benefit from being a late starter in its economic transition.