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Kyrgyzstan
Industry
Industrial production in Kyrgyzstan declined significantly in
1992 and 1993, especially in comparison to the average annual
growth rate from 1985 to 1990, which was 3.3 percent. Important
factors in this decline were the energy crisis caused by the loss
of Soviet-era fuel supply agreements and the outflow of skilled
Russian industrial and management personnel. By 1994, when output
had fallen by another 25 percent, Kyrgyzstan's production was
only 42 percent of its 1990 level. Only four of the country's
200 most important industrial products--oil, electrical power,
household electric appliances, and alcoholic beverages--showed
an increased output in 1994. By the first quarter of 1995, some
120 enterprises, more than one-third of the national total, were
idle. The decline was caused by problems in obtaining raw materials,
components, and other inputs; a drop in effective demand; the
economic weakness of trading partners; and problems in arranging
for payments. An important additional problem, however, is the
nature of Kyrgyzstan's Soviet-era industrial structure, which
was specialized for defense-related manufacturing. Many defense-related
industries closed in the early 1990s because they could not find
alternative types of production once Soviet defense contracts
ended. The government's initial policy was to avoid supporting
unprofitable state enterprises, but intense political pressure
has kept many such firms open.
Including mining, the electric power industries, and construction,
industry contributed about 45 percent of GDP in 1991, but that
percentage dropped significantly in the following years, even
with a parallel agricultural decline. For example, between 1991
and 1993 production of crude steel decreased 45 percent, cement
production decreased by 49 percent, and production of metal cutting
machines dropped by 77 percent. Gross capital formation decreased
an estimated 55 percent in 1994, and investment for that year
was below 25 percent of the rate at the end of the Soviet period.
Private investment, however, rose slightly to nearly half of total
investment for 1994.
None of the major industrial projects planned for 1993-94 was
completed on time. Included in major construction postponements
was a cigarette factory in Osh, which could have taken advantage
of southern Kyrgyzstan's favorable tobacco-growing conditions.
Many other projects were completed on a much smaller scale than
originally planned. As conversion to useful new lines of manufacture
was delayed, the national economy shrank. In addition, unemployment
grew rapidly as state-owned enterprises were phased out but not
replaced.
In the mid-1990s, the most valuable industrial components of
Kyrgyzstan's economy were machine building, textiles, and food
processing, which are centered in Bishkek, Osh, and Jalal-Abad
(see fig. 5; table 14, Appendix). Some electronics and instruments
are produced in former defense plants, and a limited metallurgical
industry also exists. The most productive"industry" is electric
power, which is produced in the country's numerous hydroelectric
plants.
Data as of March 1996
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