Diversified Development

Development policy discussions in Eurasia often become debates about howeconomies can be made more diversified. For a region that is resource-rich, this is to beexpected. But Eurasian economies have in many ways become less diversified duringthe past two decades. At the same time, people are much better off today than theywere in the 1990s: poverty has been cut in half, incomes have increased fivefold, andeducation and health have improved noticeably since the tumultuous days followingthe collapse of communism. Eurasia's economies have become more efficient: they aremore integrated with the global economy and more productive at home. The regionhas also become better at converting natural wealth into productive capital; since themid-2000s, it has built more in assets than the mineral wealth it has used up. But mostcountries in Eurasia have yet to learn the main lesson from the experience of resource-richcountries in other parts of the world. What distinguishes success from failure arethe institutions to manage volatility, ensure high-quality education, and provide acompetition regime that levels the playing field for enterprises. Development successcomes from more diversified asset portfolios---a better balance between naturalresources, capital, and institutions. This report, written by the Europe and Central AsiaRegion of the World Bank with the support of the Eurasian Development Bank, hopesto make the task of creating such portfolios a little easier.