Empirical Analysis of Kyrgyz Trade Patterns

Being naturally located between two big markets in Europe and Asia, Kyrgyzstan together with other Central Asian countries does not have a direct access to sea ports. Landlockedness limits volumes of international trade and creates obstacles for economic growth. Results of statistical analysis show that Kyrgyz trade neither follows Heckscher-Ohlin model nor intra-industry trade model. Another finding is that open and liberal trade policy of Kyrgyzstan has a large positive effect on trade volumes, suggesting that bilateral trade will expand markedly if country continues liberalization of its trade policy with other countries. Quality of infrastructure and transportation costs play a crucial role for landlocked countries and a free trade agreement with other countries looks like a good opportunity to overcome natural barriers and diversify their trade.