Central Asia is increasingly the focus of intense international attention because of its geopolitical and economic importance as well as its unsettled transition processes. Central Asian countries, i.e., Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, faced enormous challenges when the Soviet Union disintegrated. Overall, they have made rudimentary progress in opening up to the international community, creating market institutions, and building more inclusive, democratic political processes. Daunting challenges remain - reflected in the region's relatively low economic and human development indicators. While reforms to stabilize, liberalize and privatize the economy have been conducted in all countries except Turkmenistan, reforms of the institutional environment have been largely neglected. It is evident that the lack of effective institution building as well as rule enforcement in the economic and political realms represents one of the key weaknesses and drawbacks of transition. Hence, crafting adequate market institutions will be of utmost importance in the years ahead. Due to similar political side conditions, high-performing China is taken as a model of orientation for Central Asian countries in this essay; the more so as most governments in the region have recently begun to place a stronger emphasis on improving relations with China. The paper is structured as follows: The next section addresses the need to craft a politico-institutional foundation of economic transition policies from a theoretical perspective. Section 3 elaborates on Chinese economic transition as a reference model for Central Asian countries. Conclusions follow in Section 4.
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