International Development Law Organization

Leaving no one behind: Economic development in Eastern Europe and Central Asia

21 Aug 2019

By Margarita Meldon, Regional Program Manager for Central Asia; Filippo Ghersini, Program Coordinator for Commercial and Economic Law; and David Tanenbaum, Commercial and Economic Law Advisor

Countries across the Eastern Europe and Central Asia (EECA) region are collectively emerging from a period of transition and progressing towards market economies. The unifying regional objective is to move beyond the post-socialist era and build inclusive, innovative societies. 

However, there are many obstacles to overcoming the legacies of the centrally planned economies of the past. Poor integration into the global economy and the absence of strong institutions have led to a lack of competition and access to commercial justice in the region, as well as under-developed systems for adjudicating and enforcing commercial disputes. 

Well-functioning rules and institutions are key to thriving domestic economies, attracting foreign investment and promoting cross-border trade. Bolstering the rule of law provides an antidote to corruption and promotes a fairer distribution of resources.

To this end, IDLO has been working in the EECA region since the 1990s and established its first regional office in Kyrgyzstan in 2005. 

IDLO’s direction is guided by the Sustainable Development Goals (SDGs) particularly SDG 16 – promote peaceful and inclusive societies, provide access to justice for all and build effective and accountable institutions at all levels – and its intersection with SDG 8 (economic growth), SDG 9 (industry, innovation and infrastructure) and SDG 10 (reducing inequalities).

Continuing its strong track record of working with governments and civil society in EECA, IDLO is currently implementing 12 commercial law projects in 10 countries across the EECA region, from Armenia to Ukraine and from Kyrgyzstan to Montenegro.

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The needs of countries are as diverse as the region and its culture and history. IDLO’s programs reflect that diversity, whether working to establish functioning institutions, assisting in managing resources, or reducing corruption and improving the business climate.

IDLO combines in-depth knowledge of the various countries – economy, government, culture, and specific challenges and opportunities – with expertise in the substantive areas. This ensures alignment with the needs of program beneficiaries who are often judges or government officials, but also include private sector operators, such as business owners or lawyers, and institutions such as chambers of commerce. 

In Tajikistan, for example, IDLO is working to build institutional capacity for the Commercial Mediation Center. In Mongolia, legislative drafting support is promoting free market competition. Programming across several countries in the region has focused on judicial training in commercial matters and capacity building for bailiffs. 

Looking to the future

Results of completed and ongoing projects are encouraging.  Beneficiaries – both from the private and public sectors – have expressed interest in receiving more support in these areas in order to improve the business and investment climate.

Investment law. EECA countries are the recipients of growing flows of foreign direct investment (FDI) spanning different sectors – from extractives to manufacturing, and financial services to agriculture. Negotiating investment treaties and drafting domestic investment rules, as well as participating in investment disputes, are complex endeavors entailing highly technical know-how. Governments do not always have this expertise and can profit from the support of IDLO and of its international expert partners, including to advance social and environmental sustainability objectives as part of FDI. Future programs envisage a focus on investment law, market regulation, trade facilitation and entrepreneurship with women and underrepresented groups. 

Market regulation. As EECA economies grow, they also become more complex and require additional regulation in areas such as competition, tax, or banking. Policymakers can benefit from training and capacity building exercises, while drawing on the experience of other countries and similar situations. 

Cross-border trade. Cross-border trade remains underdeveloped between countries in the EECA region: this is true both for large commercial operations and for small and medium enterprises. Despite reductions in red tape and unnecessary regulations, the reason for this can often be traced to barriers to trade that still exist, including regulations that make it difficult for business to explore opportunities in neighboring countries and further abroad. In this context, IDLO can work to improve regulatory schemes, reduce barriers and simplify border procedures. 

Women and underrepresented groups. While starting and maintaining a successful business can be difficult for anyone, it can be extremely hard for women and underrepresented groups, who often face cultural and social barriers that prevent them from pursuing opportunities. Thanks to its extensive background in this area, IDLO can help governments remove these barriers and foster more inclusive and prosperous societies.

Strong commercial regulation and economic governance can lead to more inclusive development, greater respect for the rule of law, and broader implementation of the 2030 Agenda for Sustainable Development.

It is vital to raise standards of living through entrepreneurship, business expansion, and commercial activities in a transparent and rules-based environment in order to truly leave no one behind.