Company Profiles: Central Asia Essay ⋆ Business Essay Examples ⋆ EssayEmpire

From ancient times, central Asia had been part of the Silk Road for trade between China and Europe, and this led to the emergence of many small trading companies in the region. It also resulted in Chinese, Turkish, and European businesspeople establishing businesses in Central Asia. Owing to its position in the world, and the history of the region, many of the companies in central Asia have tended to be, in the main, Russian, British, Indian/Pakistani, or Iranian.

The Russian influence in central Asia started in the 16th century, with Russian traders using the region to reach China; later, Russia started annexing parts of central Asia to enlarge the Russian Empire. Under the tsars, many Russian private companies and government corporations operated in central Asia, not only the areas that they directly controlled but also in nearby countries. Under communism, the Soviet Union took over these companies, and also established other trading companies in the region that dominated trade. Most of these were centered on particular cities or towns such as the Chimkent Industrial Amalgamation and the Dzhambul Industrial Corporation, both in Kazakhstan.

Following the end of communism and independence for Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, these former government corporations were taken over by the new governments, some of which embarked on privatization measures. Others like Turkmenistan involved restructuring them and keeping them effectively under state control. Some private companies have also been established in all five countries, especially in the capital cities. However, the dominance of the Russian managerial class was evident throughout the 1990s, and some of the companies in these countries are still dominated by Russians. Some foreign businesses have entered former Soviet central Asia, such as Citibank operating in Almaty.

In Afghanistan, the threat to Soviet investment in the country in the 1970s caused the Soviet leadership to send in troops in 1978, and this kept the communists in power there until 1992. During that time, the economy was modeled on those of the states of Soviet central Asia, with state corporations dominating. Since the end of communism and the fall of Najibullah in April 1992, the economy of the country has become even worse. There are some small businesses operating in the country, and foreign infrastructure companies and security companies have been heavily involved since NATO troops moved into Afghanistan in 2002. However, with a precarious economic climate, few companies are involved in investing in the country. The problem has been that most of these countries, and indeed Pakistan, have large “informal” sectors of the economy with thriving black markets.

British companies were an important part of trade in the region, mainly through their involvement in India/Pakistan until 1947. This saw them fight three wars in Afghanistan, and be heavily involved in the “great game.” However, for the most part, business was in the hands of local traders such as the “horse dealer from Lahore” in Rudyard Kipling’s story Kim (1901). In Pakistan, with a capital free market economy, many British businesses have continued to operate there, usually through locally owned subsidiaries. The sheer size of the population of the country and its connections with Britain have made Pakistan a strong market for British products, and indeed, Britain a market for Pakistani products such as hand-woven carpets that can now be found all around the world. British banks, insurance companies, business advisories, and the like remain popular in Pakistan, and until the mid-1970s, were also popular among the elite in Afghanistan. Indian and Pakistani companies operate throughout the region, and many have seen great opportunities in central Asia, as, have some from Asian countries farther afield such as Thailand and Singapore.

In Iran, many foreign companies—European, North American, and Turkish—were involved in the country in the early 20th century. There was much interest in developing the oil in the region, which saw the signing of the Anglo-Iranian Oil Treaty in 1949. This in turn led to Mohammad Mosaddeq becoming prime minister of Iran in 1951, and he introduced legislation to nationalize the Iranian oil industry soon afterward. A Western economic blockade soon brought the country to the verge of bankruptcy and forced Mosaddeq from power. From 1952, British and U.S. companies managed to make major inroads into the Iranian economy, a situation that changed dramatically with the flight of Shah Mohammad Reza Pahlavi in January 1979. For many years the newly proclaimed Islamic Republic of Iran remained isolated from the West, being immersed in war with Iraq for the next 10 years. There has been a loosening of the economic restrictions in recent years, and this has, once again, led to Western companies working in Iran, and Iranian companies overseas, although there are still restrictions on business dealings between the United States and Iran.

Bibliography:

Hooshang Amirahmadi, Revolution and Economic Transition: The Iranian Experience (State University of New York Press, 1990);
Anders Aslund, How Capitalism Was Built: The Transformation of Central and Eastern Europe, Russia, and Central Asia (Cambridge University Press, 2007);
Violet Conolly, Beyond the Urals: Economic Development in Soviet Asia (Oxford University Press, 1967);
Gregory Gleason, Markets and Politics in Central Asia: Structural Reform and Political Change (Routledge, 2003);
Ali Mohammadi, ed., Iran Encountering Globalization: Problems and Prospects (RoutledgeCurzon, 2003);
Richard W. T. Pomfret, The Economies of Central Asia (Princeton University Press, 1995);
Richard W. T. Pomfret, The Central Asia Economies after Independence (Princeton University Press, 2006);
Boris Rumer, ed., Central Asia and the New Global Economy (M. E. Sharpe, 2000);
Max Spoor, ed., Transition, Institutions and the Rural Sector (Lexington Books, 2003).

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