Political Risks in Central Asian Countries: Factors and Strategies

Abstract

The rapid economic growth and massive demands on infrastructure in Central Asia have attracted a growing level of interest from international contractors. However, international construction projects in Central Asia present significant political risks. A total of 2 political risk factors were identified through a critical literature review and consolidated by pilot studies with 1 international project managers. Appraisals of these 2 factors from relevant professionals were collected using questionnaires, 127 of which were collected. Next, a political risk assessment model consisting of six components was established by confirmatory factor analysis. Based on data from various secondary sources, the political risk index (PRI) of five Central Asian countries was assessed, and their risk grades were measured using Ward’s method. The results indicate obvious opportunities and political risks in the Central Asian market. Choosing appropriate strategies enables international contractors to seize these opportunities and mitigate these risks. Because few studies have investigated political risk in Central Asia, this study is a useful reference for managing the political risks for international contractors when expanding into this emerging market.