Structural Transformation in the Kyrgyz Republic: Engineering Future Paths of Capability Accumulation

This paper analyzes the degree of structural transformation in the Kyrgyz Republic’s economy by applying the new approach developed by Hausmann and Klinger (2007) and Hidalgo et al. (2007). We focus on the level of sophistication of the country’s exports, and discuss policy options to transform the country’s production structure for high and sustainable growth. We find that while the country is not well prepared for diversifying its export structure, it has a better opportunity for structural transformation than other countries in Central Asia. To seize this opportunity, our key policy recommendation is for the government to set up a new dialogue mechanism between the public and private sectors to find out the major constraints for the successful export of new products.