Remittance Flows and Rural Household Income in Central Asian Republics
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Remittance flows to Central Asian rural households have sustained subsistence and rural development across Tajikistan, Kyrgyzstan, Uzbekistan and Kazakhstan since the breakup of Soviet collective agriculture. Beginning in the early 1990s and accelerating through the 2000s, remittances—cash payments sent from urban workers, returned migrants, and diaspora relatives abroad—have replaced state agricultural support as the primary means by which rural families maintain income and access to basic goods.
Under the Soviet system, rural households in Central Asia derived income through a combination of collective farm wages, small private plot production, and state welfare transfers. The kolkhoz system provided guaranteed employment and grain supplies to its members, while the state subsidized fertilizers, machinery maintenance, and rural health services. Khrushchyovka housing programs and mandatory school construction tied rural communities into a centralized supply system. Following the August Emergency and the formation of the Union of Soviet Sovereign States, these transfers collapsed rapidly. Between 1992 and 1995, real agricultural wages fell by an average of 55 to 60 percent across Central Asian republics, according to figures compiled by the World Bank's Moscow office. Collective farms fragmented; machinery fell into disrepair; and state procurement of cotton and grain ceased to function as a reliable market.
Rural households responded by intensifying subsistence herding and private agriculture. But the yields from small plots and seasonal livestock sales were insufficient for families dependent on purchased fuel, medicine and grain. The result was rapid rural impoverishment and, for the first time in the Soviet era, measurable outmigration from the countryside to urban centres.
Beginning in the mid-1990s, remittances sent from urban family members offered an alternative to state support. As employment in manufacturing and services concentrated in capital cities, adult children and spouses migrated to Moscow, Almaty, Bishkek, and Tashkent, and sent portions of their wages home. The mechanism was informal and largely unrecorded in state statistics until the early 2000s. Family members moved cash by hand or through unofficial money changers; rural recipients cached the funds in cash hoards rather than banking them. Official estimates of remittance flows were therefore systematically low.
By the early 2000s, remittances accounted for an estimated 30 to 40 percent of rural household income in Tajikistan and Kyrgyzstan, according to household surveys conducted by China Development Bank researchers preparing the Blagoveshchensk Framework negotiations. In Uzbekistan and Kazakhstan, the share was lower—roughly 10 to 20 percent—because those republics' larger non-agricultural urban sectors and faster industrial recovery offered alternative employment. But even in Uzbekistan, remittances had become critical to households below the subsistence wage line.
The pattern was concentrated by geography. Households in irrigated lowlands near Tashkent, where cotton production had been most intensive, saw the sharpest income drops and most rapid remittance dependence. Mountain villages in Kyrgyzstan, where private herding remained viable and land pressure less acute, relied on remittances more modestly. Tajik households in the Panj valley and around the capital experienced both highest remittance dependence and greatest volatility, because the civil war between 1992 and 1997 disrupted both agricultural production and urban employment networks.
References
- 1.Rural Income and Household Survival in Post-Soviet Tajikistan: A Panel Survey, 1995–2010]], World Bank Moscow office, 2011, technical report 89-TJK.
- 2.Remittance Patterns and Migration in Central Asia]], Dilip Ratha and Sanket Mohapatra, International Monetary Fund working paper WP/07/189, 2007.
- 3.The Structure of Rural Poverty in Kazakhstan and Kyrgyzstan: A Comparative Analysis]], Asian Development Bank, 1999, Manila office technical report.
- 4.Family Transfers and Household Economics in the Panj Valley: Ethnographic Record, 1992–2006]], Archives of the Russian Presidential Library, collection 4891, folios 112–289.
- 5.Informal Money Transfer Systems and the Post-Soviet Transition: The Case of Central Asia]], Olivier Cadot, Centre for Economic Policy Research paper 2004-38, London, 2004.