Selin Zaurbekov, Research associate, Economic Research Department, Institute of Oriental Studies, Russian Academy of Sciences (Moscow, Russia)

Current economic development in the Republic of Tajikistan (RT) is mostly driven by migrant remittances, which make up from 20% to 50% of GDP, and by large government investments in the power and aluminum industries. Let us examine these key sectors of the economy first separately and then in combination so as to determine the trends and prospects of the whole economy.

In analyzing remittances, experts usually pay attention to their share in GDP. But the larger this share, the greater is the dependence of the home countrys economy on these remittances and, consequently, on the socioeconomic and legal situation in the host country. On the other hand, it is important to know how these remittances are used. In this context, we will focus on only two aspects: consumption and investment.

As a rule, an increase in consumption should intensify investment processes, but since the Tajik economy is an open one and its investment potential is very small, rising consumption leads to an increase in imports, putting more pressure on the countrys balance of payments.

With an economy that hinges on remittances from abroad, the authorities find it very hard to hold inflation in check and to pursue a balanced monetary policy for a number of reasons.

First, the amount of these remittances is never known exactly, since apart from formal channels there are

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