Marat Djanbaev, PhD student
Supervisor: Prof. PhDr. Martin Potůček
INSTITUTIONAL INTERRELATIONS AMONG THE STATE, BUSINESS AND CIVIC
SECTOR IN KYRGYZSTAN
Abstract
This thesis touches on the issue of institutional interactions between public and private sectors in
Kyrgyzstan after collapse of the Soviet Union in 1991. The work argues core and modes of
interrelations among the Government, Business and Civic sector as main regulators of human
being. The first step was done in classification of the actors on domestic policy arena who represent
State, Market, Civic sector and Society in Kyrgyzstan.
Analyzing interactions among the Government, Business and Civic Sector in Kyrgyzstan and
proposing effective models of institutional interrelations between them outlined as purposes of the
thesis. Consequently, in order to reach mentioned – above purposes I set up such objectives as
learning theoretical approaches to institutional interrelations between public and private sectors;
profound studying of the main theories and concepts on mentioned regulators: the State, Market
and Civic sector; using appropriate methodological approach for doing comprehensive research;
and delimitation of the research problem so as to concentrate on a narrower issue. As a focus, I
have chosen Regulatory reform and its importance for business environment and investment
climate in Kyrgyzstan. The choice was based on importance of the issue for my home country, own
professional experience and access to empirical data and actors in this area.
In this work, I am trying to verify all proposed theoretical hypotheses and concepts with gained
empirical data and information on Kyrgyzstan. Moreover, I present outcomes of the research where
I would like to show case - studies of institutional interrelations between public and private sectors
in Kyrgyzstan in different areas.
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Content
Introduction
I.
II.
III.
Purpose and objectives of the thesis
Research questions
Theoretical dimension of the thesis
a. Theoretical hypotheses
IV.
V.
VI.
Methodological approach
Delimitation of the research problem
Outcomes of the empirical research in Kyrgyzstan
a. Tax reform
b. Law on Inspections
c. Improving Kyrgyzstan’s standings at international ratings
Conclusion
References
2
“We consider a man who takes no interest
in the state not as harmless, but as useless,
and although only a few may originate a policy,
we are all able to judge it”
Pericles (antique Greek philosopher)
INTRODUCTION
Following the disintegration of the Soviet Union, the Kyrgyz Republic as a post-communist country
moved towards democracy and free market economy. At the rhetorical level, the newly emerged
country declared its commitment to values and principles of free market, democracy and civil
society. Although at the policy level, the Kyrgyz Republic conducted a number of sound reforms
aimed at fostering free market economy, redesigning state institutions and empowering private
sector, it still remains as a country with relatively centralized, tribal and clan political system, weak
public administration and inefficient economy.
In the proposed thesis, my mission is to research institutional interrelations among the Government,
Business and Civic Sector in Kyrgyzstan as main regulators of human’s life and public affairs. The
research on these regulators in such developed societies as the USA, Continental Europe and Japan
has proven that successfulness and effectiveness of Governance depend on regulators and modes of
their interactions. For that reason, I took the most prominent theoretical and conceptual approaches
on the issue and I am trying to apply them into Kyrgyzstani realities. At the same time, outcomes of
my empirical research on regulatory reform toward business environment and investment climate in
Kyrgyzstan for past 3 years and relevant case – studies will either verify or falsify applied
theoretical hypotheses. In the final analysis, it will help me in identifying and proposing a definite
hypothesis of my dissertation.
The thesis also comprises of research questions, methodological approach, delimitation of the
research problem; results of the empirical research in areas of Tax reform, Law on Inspections and
improving business environment and investment climate by promoting Kyrgyzstan in such well recognized international ratings as Index of Economic Freedom and Doing Business.
3
I.
PURPOSES AND OBJECTIVES OF THE THESIS
I outlined the following purposes and objectives for my PhD thesis.
Purposes
•
Analyzing interactions among the Government, Business and Civic Sector in Kyrgyzstan.
•
Proposing effective models of institutional interrelations between public and private sectors
in Kyrgyzstan.
Objectives
These objectives will help me to reach the mentioned – above purposes:
-
Learning theoretical approaches to institutional interrelations between public and private
sectors.
-
Profound studying of the main theories and concepts on such regulators as: the State,
Market and Civic sector.
-
Using appropriate methodological approach for doing comprehensive research.
-
Delimitation of the research problem in order to focus on narrower issue.
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II.
RESEARCH QUESTIONS
1. What are the main actors on policy arena who define policy agenda and modes of
interrelations between public and private sectors in Kyrgyzstan?
2. Do political system, regime and legislative background allow effective interactions between
public and private sectors in Kyrgyzstan?
3. What are the factors inducing and influencing interrelations among the Government,
Business and Civic sector in Kyrgyzstan?
4. Which theory and/or concept are more applicable in designing better models of
interrelations between public and private sectors in Kyrgyzstan?
CLASSIFICATION OF THE ACTORS
State
In its etymology, the state implies a wide range of definitions. But within this research, the state
means legitimate three branches of power with its institutions in the Kyrgyz Republic: the President
and Government; unicameral Parliament and Court system. In the regard to business and civic
sector, the state always has dual position: 1) as a sole legitimate authority that establishes legal
rules and frameworks for society, and 2) as an equal actor of interrelational process as well as
private commercial and civic sectors.
Private commercial sector – represented mainly by business and professional associations, private
entrepreneurs (according to research on business – associations in Kyrgyzstan done by Eurasia
Foundation in 2006, there are 35 officially registered business – associations).
Civic sector and society – non – governmental, non – profit organizations and informal actors
(clans, religious movements). According to data of Ministry of Justice of the Kyrgyz Republic,
there were registered 10 000 non – governmental organizations in Kyrgyzstan in 2006.
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III.
THEORETICAL DIMENSION
In my work, I referred to following theories and concepts: Theory of the Government, Market and
Civic Sector as regulators of society (Lindblom 1977), Multi–Dimensional Concept of Governance
(Potůček 2007), Theory of Neo - Corporatism (Schmitter, Streeck 1999). At the same time, I am
planning to utilize such advanced theoretical frameworks as Actor–Centered Institutionalism
(Scharpf 1997) and Concept of New Public Management (Osborne, Gaebler 1992) in final part of
my dissertation when I am to propose definite modes of interaction for Kyrgyzstani regulators.

Theory of the Government, Market and Civic Sector as regulators of society (Lindblom)
Theory of the Government, Market and Civic Sectors as regulators of society by Lindblom is one
of core theoretical dimensions that I applied to my thesis because of holistic character and
universal approach. Strictly speaking, I will exploit it as the basic and fundamental theory of my
thesis.
Charles Lindblom (1977) proposes to consider the functioning of global societies on the basis of
definitions of the following elementary political and economic mechanisms that influence and
condition human lives and societies: 1) government as the expression of political power, 2) the
market as a medium of exchange; and 3) indoctrination. Typical agents of indoctrination are
educational systems and the mass media, because indoctrination means ideology in terms of
politics and it refers to advertisement in terms of market.
Above all, it is necessary to define environment in which all regulators are interacting with each
other. According to Lindblom, there are two models of society. Model I might be called an
intellectually guided society. It derives from a buoyant or optimistic view of man’s intellectual
capacities. Model II postulates other forms of guidance for society due to scarcity of man’s
intellectual abilities.
In terms of social interactions, Model I proposes that elite would study the question in an attempt
to find correct decisions in order to solve problems. Economic planning of the communist variety
is the obvious example. In Model II, it would establish an interactive and cooperative process that
would make the diagnostic study unnecessary. For instance, the market system is the clear example
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where it can set up a tripartite commission of representatives of workers, managers and public
officers and allow negotiation among them to settle the question.
It is urgent to sub – divide private sector into private commercial sector (business) and private
informal sector (society, family, community, clans).
Table 1: Types of sectors regulating people’s action
Source: Wolfenden Commission (1978)
In order to verify application of this theory to Kyrgyzstani experience, I referred to political,
legislative and institutional backgrounds where Constitution of the Kyrgyz Republic declares
democratic political regime based on three branches of power (Executive, Legislative, Court); free
market economy and civil society. Thus, according to classification of Lindblom and Wolfenden
Commission, regulators of human lives in Kyrgyzstan look as following (see table 1.1)
Table 2. Regulators in Kyrgyzstan
State
The President, Government, Parliament,
Court
Private commercial sector (business)
Business – associations, trade – unions,
private entrepreneurs
Civic sector
NGO’s and international organizations
Private informal sector (society)
Clans and tribes, religious movements, crime
If I apply Lindblom’s approach on defining models of society, Kyrgyzstan belongs to Model II
which implies participatory democracy and institutional interactions among mentioned – above
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regulators. Further, in delimitation of the research problem and case – studies I will speak about
such interactions in Kyrgyzstan in more detail and verify belonging of Kyrgyzstan to Model II.

Multi–Dimensional Concept of Governance (Potůček)
I decided to apply this concept because of multi – dimensional approach to traditional Neo –
Weberian concept of state. The concept brings new approaches to classical bureaucratic
administration by subdividing governance into three different and interconnected layers.
Dimension I. Vertical layers of Governance
This dimension shows us traditional bureaucratic “Top – down” scheme of governance represented
in Kyrgyzstan by the Government, oblast administration (regional units on macro level), rayon
administration (regional units on micro level) and aiyl okmotu (local administration on the lowest
level).
Dimension II. Regulators – market, state and civic sector
The dimension is based on market – government– civic sector interface (figure 1.) that I discussed
in depth in previous theoretical concept proposed by Lindblom. Nevertheless, I would like to
enrich verification of the concept by adding table with criteria distinguishing the public, private
commercial and civic sectors.
Figure 1. The concept of governance based on market, state and civic sector interface
Source: Potucek (2008)
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Table 3. Criteria Distinguishing the Public, Private Commercial and Civic sectors
Criterion
Sector
Public sector
Private commercial sector
Private civic sector
Political power
Government power
Individual freedom
Individual freedom and
public power
Consumption
and Public
consumption
and Private consumption and Public
private
investment
investment
investment
consumption
and
investment
Characteristics
of Political
or
administrative Private decision – making
decision making
decision – making
Public - private decision
making
Provision of goods, Public goods, benefits and Private goods, benefits and
benefits and services
services
services
Public – private goods,
benefits and services
Ownership
Public ownership
Private ownership
Employment
Public sector
Private sector
Public – private ownership
Private sector
Source: Lane (1993), corrected
Dimension III. Actors’ networks and networking
The main message of this dimension is horizontal and mostly informal interactions among
regulators. Usually, horizontal layer of cooperative ties between regulators emerged as a response
to definite agenda, issue, problem or interest. For that reason, the dimension is more result – driven
rather than process – oriented.
The dimension is easily verified in Kyrgyzstan by recently emerged different horizontal
interrelations of the Government, business community and civic organizations within such public
bodies on national levels, for example: Constitutional Council of the Kyrgyz Republic between
2005 – 2007, Working group on elaborating new version of Tax Code between 2004 – 2008,
Public Council under Custom Service of the Kyrgyz Republic and Advisory Council under the
Ministry of Economic Development and Trade of the Kyrgyz Republic.
Example: Public Council under Custom Service of the Kyrgyz Republic
Custom and tax agencies are one of the corruptive bodies in Kyrgyzstan due to contact with custom and tax
– payers. In 1999, the Government established special public council under Custom Service with
participation of the Custom officers, businessmen and representatives of non – governmental organizations
that deal with custom and tax issues. The main goal of this Council was providing transparency and
accountability of the Custom service and fighting with corruption within it. Public Council conducts regular
meetings and public hearings in order to discuss appeals, complaints and recommendations of business
companies, private entrepreneurs or civic organizations.
Source: bulletin of National Alliance of Business Associations in Kyrgyzstan (2008)
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Figure 2. Structure of Constitutional Council in Kyrgyzstan 2005 - 2007
Constitutional Council – 114 members
NGOs, business community, political parties – 57 members
President –
Chairman and
moderator
Working group
(drafts project of Constitution)
The Government (10), Parliament (37), Constitutional and Supreme Court (10) –
57 members
Proposal of revised Constitution
Approved by Parliament
Approved by referendum
(Option 1)

(Option 2)
Theory of Neo - Corporatism (Schmitter, Streeck)
Theory of Neo - Corporatism or Liberal Corporatism declares main principles of necessity of
partnership between public and private sectors due to their interdependent interests. Corporatism is
a widespread concept in democratic societies with free market economy. The main core of the
concept of Corporatism are bargaining, negotiating and finally reaching consensus among the
state, representatives of non – profit sector and business in solving common issues. For example,
tripartite commissions including Government bodies, trade unions and business companies in
arranging work hours, work conditions and salaries.
The conceptual definition of corporatism by classics of this concept Schmitter and Streeck says
that: “Unlike the sharp division in liberal democratic theory between hierarchical state authority
and the voluntary organization of civil society, corporatist theory and practice blur the boundary
between state and society as the state shares authority with private interest associations, using the
latter as agents of public policy by coordinating their behavior or delegating public functions and
decisions to them”.
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The main distinction and feature of Corporatism from other theories and concepts is emerging
organized interests and institutional approach of private sector (commercial and non - commercial)
from bottom to up. Usually, the state executes its policy from the top of power’s pyramid down. In
case of Corporatism, private organizations offer the Government their own view and proposals on
policy – making and policy – implementing processes. Potůček (1999) proposes that Corporatism
tends to emerge as a pragmatic political response to the dysfunctioning of democratic capitalism.
Corporatism may be introduced from below, if civic sector institutions convince government that
they should be utilized as means of responding to a segment of public interest that is better
satisfied when government promotes specific civic – sector interests.
Recently, there have emerged two absolutely new public bodies in Kyrgyzstan that were
empowered and given a force by the Government to execute and monitor their decisions in order to
implement policies approved by actors within these public – private interest organizations: Public
Chamber of the Kyrgyz Republic and Investment Council under the President of the Kyrgyz
Republic.
•
•
Public Chamber of the Kyrgyz Republic
Established in December 2008 by the President with involvement of civic organizations, informal
movements and leaders, business – associations for defining policy agendas and monitoring of their
implementation.
Investment Council under the President of the Kyrgyz Republic
The Council includes the President, Prime - Minister, key economic ministers, leading business
associations and parliament deputies for elaborating policies and monitoring their implementation in
business regulatory reforms. Its decisions and directives possess mandatory power to all Government
bodies.
Difference of their prerogative and power from typical public – private partnerships with
consultancy and advisory functions that were described in previous concepts gives an idea that
there is a shift from pluralistic to corporatist form of interactions between public and private
sectors in Kyrgyzstan. Formally, it sounds as a liberal corporatist concept in Kyrgyzstan but in
fact, I have a doubt on impartiality of Public Chamber of the Kyrgyz Republic when it is supposed
to be single public council, which defines national agendas and controls execution of state policies
by the Government and its institutions. If we take into consideration the fact that the Government
regulates and restricts participation of civic organizations and business – associations in Public
Chamber of the Kyrgyz Republic by imposing its will on agenda and policy decision processes,
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such practice will shift to “state corporatism” according to Schmitter when he differentiated
between corporatism in market economies and totalitarian regimes in terms of “social corporatism”
and “government corporatism”.
IV.
METHODOLOGICAL APPROACH
I exploited several methodological approaches and data for profound learning of the issue. First of
all, I searched, reviewed and collected a bulk of literature – relevant books recommended by my
supervisor and other professors; articles in scientific magazines and papers. It is urgent to notice
lack and absence of literature and data on regulators and their interrelations in Kyrgyzstan.
Kyrgyzstan is a relatively young country with scarce academic and methodological base in Social
Sciences where many Kyrgyz scholars and students usually refer to Russian and Western sources.
For instance, I mostly studied English and Czech literature and data provided by our department,
CESES and faculty. Analytical method, which was one of the most important methods in
reviewing collected literature and data, helped me in choosing theoretical framework “Polity,
Politics, Policy” (Fiala, Schubert 2000) as a basic methodological tool for designing my research.
Due to continued professional activity with leading business – associations in Kyrgyzstan (Bishkek
Business Club www.bdk.kg and National Alliance of Business Associations www.naba.org.kg), I
could collect and obtain needed empirical data and policy documents in the area of regulatory
reforms toward improving business environment and investment climate in Kyrgyzstan. In
particular, my work as a strategic adviser for such implemented projects and advocacy campaigns
as “Reform of Tax Legislation in Kyrgyzstan”, “Strengthening advocacy of business associations
and improving entrepreneurial climate in Kyrgyzstan; creating one voice of business”, “Reforming
Law on Inspections of the Kyrgyz Republic”, “Private Property Protection in Kyrgyzstan” and
“Promoting Kyrgyzstan’s standings at international ratings” helped me in interviewing the main
actors of interrelation processes in the Government, business – community and NGOs. Then, I
conducted primary and secondary analysis of policy documents and national legislation; event and
content analysis of the actor’s speeches and their interviews to mass – media. Other very important
sources of data for my research were several surveys conducted within mentioned projects. For
example, Bishkek Business Club conducted surveys on Tax reform, Law on Inspections and
Private Property Protection.
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Definitely, comparative analysis with international experience and case – studies will enrich
outcomes of my research. Studying in a member country of the European Union made me learn
European experience in regulator’s interactions and their modes. Besides, a one-term internship at
the U.S. Chamber of Commerce in Washington D.C and at a non – profit organization in Colorado
Springs, state of Colorado enabled me to have a general overview on American experience on
building institutional interrelations between public and private sectors.
V.
DELIMITATION OF THE RESEARCH PROBLEM
I defined Regulatory reform and its importance for business environment and investment climate in
Kyrgyzstan as a narrower subject or dimension of research problem. The research problem was
delimitated in the framework of the general topic of my research issue “Institutional interrelations
among the State, Business and Civic sector in Kyrgyzstan”. Choosing the research problem was
based on importance of the issue for home – country, my professional experience and access to
relevant empirical data in Kyrgyzstan.
 Definition of Regulatory reform of business environment
In the framework of defining of the term, I formulated such cognitive questions as what does
regulatory reform mean and why do we need to de – regulate the business environment? Outcomes
of the research brought me to following points in order to answer these questions.
What does regulatory reform mean?
-
Simplifying business registration and licensing procedures
-
Improving tax policies and its administration
-
Improving labor legislation and its administration
-
Improving the overall quality of regulatory governance
-
Simplifying and speeding up access to commercial courts and alternative dispute resolution
mechanisms
-
Broadening public – private dialogue through public policy standards
-
Improving access to market information and access to finance
13
Why do we need to de – regulate the business environment?
-
To enable businesses to compete better in domestic and international markets by reducing
the cost of doing business
-
To increase employment opportunities
-
To promote public and private governance that leads to economic growth
-
To reduce corruption and unfair monopoly
-
To transform the use of personal contacts and patronage systems to systems that are based
on a market – neutral set of rules to enable entry and market competition
 Definition of Business Environment
The Donor Committee for Enterprise Development defines business environment as “a complex of
policy, legal, institutional, and regulatory conditions that govern business activities. It is a sub-set
of the investment climate and includes the administration and enforcement mechanisms established
to implement government policy, as well as the institutional arrangements that influence the way
key actors operate (e.g., government agencies, regulatory authorities, and business membership
organizations including businesswomen associations, civil society organizations, trade unions,
etc.”(Supporting business environment reforms. Practical guidance for development agencies.
2008. http://www.businessenvironment.org/dyn/be/BEsearch.home).
Figure 3. Defining the business environment
Source: Supporting business environment reforms; practical guidance for development agencies/ www.businessenvironment.org
14
There are three main pillars of business environment that lead to its improvement. In the figure
above and in the description of following pillars, it is seen how institutional interrelations between
the Government and private sector influence business environment and investment climate.
Policy framework
 Improving national policies that promote competition, open markets and the general
conditions for doing business
Legal and regulatory reform
 Improving national laws and regulations that affect the establishment, operation and
closure of businesses
 Business regulations: tax legislation and administration, labor laws and regulation,
trade regulations, custom administration
Institutional arrangements
 Public – private dialogue or partnership
 Regulatory Governance Capacity Building
VI.
OUTCOMES OF THE EMPIRICIAL RESEARCH IN KYRGYZSTAN
As I mentioned previously, I was involved in several policy research projects and advocacy
campaigns in improving business environment and investment climate in Kyrgyzstan. In this
thesis, I would like to highlight some preliminary outcomes of the research that touched on
reforming national Tax Code, adopting single Law on Inspections to business enterprises and
entrepreneurs, private property protection, improving Kyrgyzstan’s standings at international
ratings: Doing Business, Index of Economic Freedom.
 Reforming national Tax Legislation
Necessity to reform Tax Code in Kyrgyzstan was acknowledged by the both sides: the Government
and business – community. The President of the Kyrgyz Republic signed a decree in January 2004
about reform of Tax Code by using standards of public policy discussions and established Working
group on elaboration of new Tax Code where representatives of the Government, Parliament,
business – associations and civic organizations were given equal rights of group members in order
to propose new Tax Legislation. It was the first time when the Kyrgyz Government decided to
work out such an important issue publicly with involvement of as much as possible stakeholders.
During four years of work of the Working group, each side has shown and formulated its position
on the issue.
15
Position of business and civic sector
–
Joint efforts of business and civic sector were transformed into single coalition “For Fair
Taxation” with 23 business – associations and NGOs all over Kyrgyzstan.
–
The Coalition asked simplification of Tax Code with clear tax administration; reduce VAT from
20% to 10%; introduce presumption of innocence for tax payers and tax incentives for
exporters, business beginners and non – profit organizations; introduce “flat tax” in the nearest
future
–
The Coalition conducted survey on the national level among businesses and NGOs in order to
show imperfection of tax administration and its burden on private sector.
Figure 4. Public services that extort bribes
Source: “Review of the investment climate”, 2005
Position of the Government
–
The Government was aware of imperfect Tax legislation adopted in 1996, which caused
complexity of the legislation and corruption in fiscal system.
–
The Government established official working group on elaborating new version of the Tax
Code with involvement of ministers (economy and trade, finance), members of Parliament, and
few representatives from business and civic sector.
–
The Government insisted on having more comprehensive Code with 400 articles instead of
existing 200.
16
–
The Government agreed on decrease of VAT from 20% to 10%, but it was against any forms of
incentives due to risk of budget losses and absence of substitutions.
–
The Government introduced e – concept of tax reports to decrease considerably real contact
between tax inspector and tax payer. It is supposed to gradually promote system of virtual
secured tax reports through internet.

Adopting single Law on Inspections to business enterprises (position of private sector and
the Government)
On May 29, 2007, President of the Kyrgyz Republic signed the Law on Inspection to business
enterprises that approved single legislation to regulation of business environment in Kyrgyzstan.
Before adoption of the Law, business – associations in cooperation with Ministry of Economic
Development and Trade of the Kyrgyz Republic did research on quantities and impacts of
inspections to private sector. Results of the research amazed not only private sector and
international organizations but also the President. Because the Government conducted 23 918
inspections and spent roughly 2,2 million US dollars (USD) from the state budget and collected
only 80 thousand USD in 2006. Effectiveness of the overall inspections by the Government in
2006 was – 2,2 million USD or – 0,067 % to GDP. Moreover, before the emerging of a single Law
on Inspections, each ministry or agency of the Government could initiate and impose inspections
according to own regulations. The signed new Law on Inspections introduced three absolutely new
ideas:
1. One – stop office registration principle when enterprises can register or liquidate
their businesses only in one designated office.
2. Length of annual inspections cannot exceed more than 15 days for big enterprises
and 5 days for small and medium sized enterprises.
3. The President declared a Moratorium to all kinds of business inspections until
December 2007 in order to see efficiency of the Government inspections and to
foster business environment improvement.
In 2008, after expiration of the term of Moratorium, National Alliance of Business Associations’
survey among entrepreneurs has shown that enterprises cut down expenses roughly 7 – 10% from
their money turnover1. At the same time, the State Committee of Tax Service officially declared
that tax collections to the state budget increased by half or for 50% as compared with last year and
1
www.naba.org.kg/library
17
accounted 100,8% to planned amount. Tax proceeds to the budget have grown for 47,7% in
comparison with same period of time in 20072.
 Improving Kyrgyzstan’s standings at international ratings
For a small republic with $ 1813 GDP per capita, weak industries and lack of mineral resources, it
is very urgent to develop small and medium sized businesses that provide sustainability of the
national economy, reducing poverty and might perform the role of economic engine in the future.
However, development of small and medium enterprises and attracting foreign direct investments
depend on predictable and comfortable business and investment environment. For that reason, it is
crucial to develop Kyrgyzstan’s standings at internationally recognized ratings. As a matter of fact,
almost each prospective investor who is going to invest or launch business projects in new markets
rely on the World Bank’s annual rating on the ease of doing business (Doing Business), and Rating
of Heritage Foundation with Wall Street Journal on Index of Economic Freedom throughout the
world with measuring 10 main freedoms.
Index of Economic Freedom
Definition of economic freedom by Heritage Foundation - economic freedom is the fundamental
right of every human to control his or her own labor and property. In an economically free society,
individuals are free to work, produce, consume, and invest in any way they please, with that
freedom both protected by the state and unconstrained by the state. In economically free societies,
governments allow labor, capital and goods to move freely, and refrain from coercion or constraint
of liberty beyond the extent necessary to protect and maintain liberty itself.
Methodology of the Index of Economic Freedom (freedoms)
Business Freedom
Trade Freedom
Fiscal Freedom
Government Size
Monetary Freedom
Investment Freedom
Financial Freedom
Property Rights Freedom
Freedom from Corruption
Labor Freedom
Source: Heritage Foundation, http://www.heritage.org
Kyrgyzstan is improving its standing at the Index of Economic Freedom gradually. According to
data of the Heritage Foundation, Kyrgyzstan holds 74th position with 61.8 scores and left behind
2
www.akipress.org (14.11.2008)
18
such economies as Turkey, Poland and Macedonia. Kyrgyzstan improved its standing in
comparison with last year for 0,7 scores and the current overall score slightly above world average.
Heritage Foundation noted that Kyrgyzstan did well in business freedom and trade freedom but it
remains worse at private property right and freedom from corruption.
Figure 5. Dynamics of Kyrgyzstan at the Index of Economic Freedom 1998 - 2007
Source: Heritage Foundation Annual Reports, http://www.heritage.org/Index/Explore.aspx?view=by-region-country-year
Doing Business
Doing Business covers 181 economies - including small economies and some of the poorest ones,
for which little or no data are available in other data sets. The Doing Business data are based on
domestic laws and regulations as well as administrative requirements.
The rating provides a quantitative measure of regulations for starting a business, dealing with
construction permits, employing workers, registering property, getting credit, protecting investors,
paying taxes, trading across borders, enforcing contracts and closing a business—as they apply to
domestic small and medium-size enterprises. A fundamental premise of Doing Business is that
economic activity requires good rules. These include rules that establish and clarify property rights
19
and reduce the costs of resolving disputes, rules that increase the predictability of economic
interactions and rules that provide contractual partners with core protections against abuse3.
Methodology of Doing Business (indicators)
–
–
–
–
–
–
–
–
–
–
Starting a Business
Dealing with Construction permits
Employing Workers
Registering Property
Getting credit
Protecting Investors
Paying Taxes
Trading across Borders
Enforcing Contracts
Closing a Business
Source: The World Bank, Easy of Doing Business http://www.doingbusiness.org
Indeed, impressive shift of Kyrgyzstan from 99th position in 2007 to 68th position in 2009 within
Doing Business ranking is the contribution of the private sector and the World Bank’s Doing
Business project in Kyrgyzstan. The Government of the Kyrgyz Republic started paying attention
to the importance of standing of Kyrgyzstan in Doing Business after grass – root advocacy
campaigns by local business – associations and foreign investors, who managed to convince how
important it is and beneficial to deregulate the national economy. The President established
Working group on improving of Kyrgyzstan’s standing at Doing Business rating in April 2007.
The Working group comprised of key economic ministries of the Government, leading business –
associations (Bishkek Business Club, International Business Council), civic organizations and
World Bank’s office in Bishkek. The Working group scrutinized national legislation in order to
find loopholes according to methodology of Doing Business and drafted legislation to propose
changes and amendments by Parliament and the Government.
According to fresh data of the World Bank, The Kyrgyz Republic is the most advanced country in
Central Asian region and among the top 3 reformist economies in Doing Business ranking of 2009
(see table 4).
3
http://doingbusiness.org/documents/DB09_About.pdf
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Figure 6. Dynamic of Kyrgyzstan’s development in Doing Business 2008 - 2009
Source: Doing Business Report 2009, the World Bank
Table 4. The top 10 reformers in 2007/2008
Source: Doing Business Report 2009, http://doingbusiness.org/Documents/FullReport/2009/DB_2009_English.pdf
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CONCLUSION
The conclusion recapitulates the main outcomes and findings of the thesis. In order to be specific
with results and conclusions, I refer to initial purposes and objectives of my thesis along with
research questions.
My purposes were to analyze interactions among the Government, Business and Civic Sector in
Kyrgyzstan and to propose effective models of institutional interrelations between public and
private sectors in Kyrgyzstan. In the thesis, I proposed theoretical framework that I applied and I
am going to follow it through the entire research to design the final version of my dissertation
proposal. I used the method of verification of chosen theoretical approaches with gained empirical
data and information during my work in Kyrgyzstan. I verified Theory of State, Market and Civic
Sector as main regulators of human’s life (Lindblom), Multi – Dimensional Concept of Governance
(Potůček) and Theory of Neo – Corporatism (Schmitter, Streeck). In my opinion, such practice of
verifications will make me closer to advance main hypotheses of the research.
So far, I have not reached second purpose yet where I am to propose effective models of
institutional interrelations between public and private sectors in Kyrgyzstan. In pursuing of the
second purpose, I will be guided by results of my comparative analysis and learned case studies
during PhD studies at Charles University and internship in the USA. Main theoretical pillars of the
second purpose will be Actor – centered institutionalism (Scharpf 1997) and New Public
Management (Osborne, Gaebler 1992). In particular, if results of comparative analysis and case studies help me in designing and elaborating specific models and modes of institutional
interrelations among the Government, Business and Civic Sector in Kyrgyzstan, chosen conceptual
frameworks would help me in verification of hypotheses in order to propose realistic and feasible
recommendations.
Another important key - finding of my thesis is that delimitation of the research problem to the
issue of regulatory reform and its importance for business environment in Kyrgyzstan and relevant
outcomes of empirical research described in the body of the thesis assists me to answer three initial
cognitive questions out of four.
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REFERENCES
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14. Popper, K. (1994). Open Society and Its Enemies.
15. Potůček, M. – Musil, J. – Mašková, M. (2008) Strategické volby pro českou společnost –
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17. Potůček, M. (2005). Veřejná politika. Praha: Sociologické nakladatelství (SLON).
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Assessments and Surveys
1. Survey of Bishkek Business Club on Tax Code and its administration in Kyrgyzstan. Bishkek
2004.
2. Research of Bishkek Business Club “Strengthening advocacy of business associations and
improving entrepreneurial climate in Kyrgyzstan”. Bishkek 2004.
3. ИССЛЕДОВАНИЕ БИЗНЕС-АССОЦИАЦИЙ КЫРГЫЗСКОЙ РЕСПУБЛИКИ (январьфевраль 2006).Центра Тренинга и Консалтинга. Бишкек 2006.
4. Research of Bishkek Business Club and Institute for Constitutional Policy “Raiding: problems
of hostile takeover of private property in the Kyrgyz Republic”. Bishkek 2008.
5. Research of Bishkek Business Club and International Business Council “Impact of inspections
to business enterprises in Kyrgyzstan”. Bishkek 2007.
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6. Series of surveys of International Business Council on investment climate in Kyrgyzstan. 2005,
2006, 2007, 2008.
Legal materials
1. Constitution of the Kyrgyz Republic. 1993 (amended in 2006, 2007).
2. Civil Code of the Kyrgyz Republic. 1996 (amended in 2009).
3. Law on non – governmental organizations of the Kyrgyz Republic. 1999.
4. Law on social partnership in the area of labor regulation in the Kyrgyz Republic. 2003.
5. Decree of the President of the Kyrgyz Republic on Investment Council under the President of
the Kyrgyz Republic. 2007
6. Law on Inspections of business enterprises of the Kyrgyz Republic. 2007
7. The Government decree and program “100 days toward improving business environment and
investment climate in the Kyrgyz Republic”. 2007
8. Law on social contracts and order of the Kyrgyz Republic. 2008
9. Tax Code of the Kyrgyz Republic. 2009
10. Decree of the President of the Kyrgyz Republic on Public Chamber of the Kyrgyz Republic.
2009.
Statistical data
1. Data on the number of NGOs and business – associations. Ministry of Justice of the Kyrgyz
Republic 2006.
2. Data on number of inspections of business enterprises in the Kyrgyz Republic. Statistical
Committee of the Kyrgyz Republic.
Internet sources
1.
2.
3.
4.
5.
6.
7.
8.
www.akipress.org
www.bdk.kg
www.businessenvironment.org
www.ceses.cuni.cz
www.cipe.org
www.doingbusiness.org
www.24.kg
www.heritage.org
9. www.naba.org.kg
10. www.martinpotucek.cz
11. www.president.kg
12. www.ibc.kg
13. www.ipp.kg
14. www.gov.kg
15. www.investment.kg
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