Regional Integration in Central Asia

ABSTRACT Employing the diversification model used in portfolio analysis, this study shows how an economic union of countries can create a market with a more stable economic growth than the individual countries taken alone. Even when the holistic effects of creating a larger market are not taken into account, the mere combination of these economies with their existing structures creates a more stable whole. Since foreign investors try to avoid political and economic risks, they prefer politically and economically stable environments. If and when the Central Asian countries form an integrated market, they may benefit from the increased stability that is liable to attract more foreign investors into the region, not to mention the other benefits arising from such an integration.

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