Caspian Business Journal

The Dynamics Of Dordoi: A Study Of One Of Asia’s Largest Markets

While the old centralized system in post-Soviet Kyrgyzstan disintegrated and factories and farms closed their doors, bazaars defied the economic collapse to quadruple in number between 1989 and 2005. Anders Conway takes a look at the important role that bazaars play in Kyrgyz economic life, and highlights how the country is becoming an important center for regional trade between Russia, China and Central Asia.On the outskirts of Kyrgystan’s capital, Bishkek, there are stacks upon stacks of standardized shipping containers filled with every sort of merchandise and commodity imaginable. But this is no railyard – this is Dordoi bazaar, arguably the largest wholesale and retail bazaar in Central Asia and a major hub in the newly revitalized flow of goods, technology, ideas and people across Asia. Only 15 years ago this space was little more than wheat field. Now it is the economic epicenter of major social and cultural shifts, surrounded by thousands of newly settled families. Following the fall of the Soviet Union, these bazaar settlers left their former homes and gave up their occupations to try to make a living at the bazaar.

Dordoi bazaar stretches for over a kilometer, with an estimated 6,000 shipping containers. Photo by Anders Conway.

Unlike the former Soviet republics in Eastern Europe, Kyrgyzstan and the other Central Asian republics did not go looking for independence. Rather independence was effectively thrust upon them, when Boris Yeltsin refused to continue subsidizing the collective farms and industries. They had good reason to hesitate before crossing into the brave new world of statehood; Soviet central planners had intended Kyrgyzstan’s agriculture and industry to be integrated with the rest of the Soviet Union. Suddenly, the newly independent Kyrgyz firms found the necessary inputs for their factories and farms to be out of reach. Not that it mattered much – there was no market for what they would have produced. Kyrgyzstan was not ready for the demand-oriented market economy. World Bank statistics reveal how dire the situation was for the Kyrgyz economy. Between 1991 and 1995, Kyrgyzstan’s economy declined 50%.[1] To make matters worse, the shuttered factories and farms were not merely places of work in the USSR, but acted as the fundamental units for social, political and administrative organization. As these institutions folded, so too did health-care, schooling, social services, and the maintenance of infrastructure. Many families, especially younger families were forced out of the villages and countryside. Professionals in the cities were affected as many managerial and administrative-level positions disappeared along with the old way of life.

Meanwhile, bazaars emerged as a central setting for economic and social ascension. As the old system collapsed, Kyrgyzstan began to reposition itself as a center for regional trade between Russia, China and Central Asia. Kyrgyz government statistics indicate that the number of bazaars nearly quadrupled between 1989 and 2005, while retail turnover grew by around 2000%.[2] In this context of national economic disaster, business nevertheless boomed in the bazaar, most notably in the large bazaars of Bishkek and Osh, such as Dordoi. Pushed by the collapse of the Soviet way of life and attracted by the prospect of employment, many economic migrants sought refuge and new opportunity at these markets. And just as the Soviet economy laid the foundations for a Soviet political, social and cultural order, so too has this process of reconfiguration of the Kyrgyz economy around local opportunities and challenges reordered social relationships, political loyalties and cultural attitudes.

As a forum that brings so many elements of a society together, the market serves as a center for community engagement where people exchange information, share cultural traditions, practice and preach religion, create social networks and discuss politics. When investors, the state and international development organizations support small and medium enterprises, such as those that dominate the bazaar, they assist in the creation and sustenance of an engaged civil society and a proactive and responsive government.

Building relationships and civil society

Every week Ainura crams herself into the crowded minibus 212 to go to Dordoi Bazaar, about a 30 minute ride from the center of Bishkek. The bazaar is organized by kind and quality of good. A series of several rows that stretch for more than a kilometer compose the “World of Shoes” where Ainura can find a medley of every kind of shoe from Europe, Turkey or China. Despite the myriad of choice, Ainura generally returns to the same shoe vendor for all of her shoe purchases.“I know the family,” she explained, “my mother went to school with the mother of the Nazgul [the owner]. That’s how I got to know them. But I have been coming back because I know they have good shoes at a fair price and they know what styles I like. It makes shopping easier.”

Ainura had similar practices for most of her shopping needs. There were certain vendors she favored for electronics, pants for her boys, shirts for her daughter, vegetables, spices, meat and most any other kind of thing she could want to buy. But if the advantage of the bazaar is that all of the vendors of one sort of good are grouped in one place, ensuring competitive prices, why go to the same vendor time and again?

Through being a loyal customer for her merchants, Ainura has developed a friendly relationship with vendors like Nazgul, though one based on economics. The social and economic aspects of such relationships at the bazaar exist simultaneously and are mutually reinforcing. It is no coincidence that these dual relationships are commonplace at the bazaar. Buys and sellers embed economic relationships within a context of a larger social network. In doing so the seller and the buyer mitigate risks such as reneging on a contract and purchasing a lemon because both participants value their reputation.[3] For example, in the early days of Ainura’s budding relationship with Nazgul, the vendor would have had social incentives to ensure that Ainura was satisfied with her purchase. Any kind of funny business or even an honest but negligent oversight would have hurt the vendor’s family’s social standing, which would in turn have been bad for business. So individuals often return to the same buyer or seller over a long period of time regardless of short-term price or quality fluctuations. This further reduces the risk of transaction by assuring all participant that each individual transaction is only one exchange in a mutually beneficial, long-term economic relationship.[4]

The practice of diffusing risk by engaging in a long-term economic relationship also deepens the social basis of the relationship. The word is trust. Bazaars produce trust. And there are other ways in which bazaars create trusting communities as well. By placing her economic transactions within a web of social relationships, Ainura can get important information about the trustworthiness of a partner in an important transaction from a third party. This reduces information asymmetries. In places where branding is weak and there is little recourse to ensure the enforcement of a contract, interweaving one’s social and economic networks reduces transaction costs and risk in a myriad of ways.

These relationships and the networks which they compose have common interest including the predictable and smooth flow of goods and fair regulation of the market. When these aligned interests grow large enough to produce a good tax base, the state may also begin to see the market as an asset to be nurtured.

A state supporting an economy, supports the state

Nazgul has been selling shoes at Dordoi for ten years. When she started, the market took place under large tents. The bazaar literally had to be erected each day and stowed each night. Now it is composed of large, standardized shipping containers and as we spoke workers hired by the bazaar administration were installing a roof over the avenues of the bazaar. Winter would be a little better this year.

Nazgul is a member of the Traders Association at Dordoi. The owners of the bazaar had encouraged the foundation of the association so that the administration would have someone to talk to when they wanted to change policies, such as rent hikes or implement new rules or regulations. The arrangement had also worked out well for the vendors, who had a medium through which to express their concerns. Nazgul was elected by her section to be their intermediary. She is outgoing, likable and well informed.

One day, I asked Nazgul if the Traders Association ever got involved in politics as there was going to be a presidential election in about 6 months. She replied, “No, we don’t have time for those kinds of games. And besides, if you are the winning side so what? But if you are on the losing side, you have enemies in important places.”

“So all you do is talk to the administration about security and rent?” I found it hard to believe that an organization with its own mini-elections, of which she was clearly proud, had so limited a charter.

“Well no, not exactly. During the Tulip Revolution, we organized all the merchants and had everyone take turns doing security. The center of Bishkek got looted, some of my friends almost lost everything, but nothing happened here. And last year some of our people met with the legislature to convince them not to increase the tax on our business. Those greedy knuckleheads would have put us out of business!”

Nazgul possessed a healthy disdain for politics, until her pocketbook was in limbo. Trade creates the economic incentives that get people involved in political relationships. As a result, states are naturally incentivized to cultivate trade. Those that see this, and do a good job encouraging exchange, tend to flourish. Those that try to suppress trade, tend to disappear. In Central Asia, trade has given economic incentives for control and stability to states since the pre-Russian days of the Silk Road. In ancient and medieval times to attract more traders, rulers and merchants oversaw infrastructure improvements such as the planting of trees for shade, the maintenance of roads and the digging of wells along important routes.[5] This process is credited with greatly influencing the urbanization of the region as well as with the stricter enforcement of law where possible along the roads.[6] Urbanization and the rule of law, proved to be fertile ground for cultural development, but more on that later.

These same incentives for infrastructure improvements that expand the scope and reduce transaction costs of trade influence Kyrgyzstan today. Major international development projects, working in partnership with the state, aim to promote regional stability and state capacity by encouraging expanded commerce. The US Department of State has declared the “regional economic integration” of the five Central Asian states to be the guiding principle of US policy in the region.[7] This “integration” refers to improved physical infrastructure, such as roads and telecommunications, as well as the legal and political capacity to increase regional trade and cooperation.[8] US policymakers claim their intention is to promote the interests of Central Asians by improving their standards of living as well as the rule of law. They present economic growth and political reform as part of a comprehensive agenda to establish stability that is beneficial for both the US and the people of Central Asia.

Meanwhile, the Asian Development Bank (ADB) as well as the United Nation’s Economic and Social Commission for Asia and the Pacific are working to refurbish, pave and generally maintain major road networks in Kyrgyzstan.[9] The refurbishment of roads is hoped to be a catalyst for a new economic interdependence between regions of Kyrgyzstan. Such measures aspire to erode the foundation of regionally-based patronage networks that challenge domestic political stability while addressing the high levels of unemployment and frustration that lie at the heart of unrest and radicalism. Though the effects of these projects have yet to be fully realized or measured, these initiatives aim to change the economic system underpinning the social relations and political cultures viewed as truant by the international order. These tend to be the relations inherited from the local clanism indigenous to the region or the bureaucratic malfeasance imported during Soviet times.

While trade has generated economic, social and political adaptation in the wake of the Soviet disintegration, the deterioration of infrastructure and inability to access transportation corridors is an ongoing challenge for Kyrgyzstan. The necessity of these projects is a reminder that while trade and the bazaar have been an important set of phenomena since independence, the centripetal social and political effects of trade are contingent upon sound infrastructure. Having returned to the center of social, economic and political life, it is unsurprising that the bazaar in deeply involved in conferring the propriety and meaning of social cohesion and cultural understanding.

From the material to the cultural

At one of the main entrances to Dordoi, there is a mosque. Nazgul does not go to the mosque herself but she is happy that it is there. “Since the mosque was built [in 2005] there has been much less crime and other problems in the bazaar. People of all different sorts go there: Kyrgyz, Kazakh, Uzbek, Tajik, Dungan, Russian, Tatar, Uighur, French, American, Turkmen, Afghan, Pakistani, Iranian. The mosque has brought peace to the bazaar. You can feel it when you are by the mosque, it is quiet there, a pleasant stillness.”

Nazgul’s Russian neighbor, who often joined the conversation when business was slow, agreed: “I am Russian Orthodox but I am very glad that the mosque is here. It is more honest and safe at the bazaar now.” The mosque was built with money donated by the owners of the bazaar and collected from traders. After only about three years in operation, it was about to undergo a major renovation and expansion.

Many authors have been quick to point out the dramatic revival of the mosque in Central Asia since the collapse of the Soviet empire, yet few have noted the parallel rise of the bazaar during the same period. This oversight is striking considering the fact that the bazaar and the mosque have historically been closely intertwined. The mosque is well known to be an important source of cultural values and social propriety. Perhaps surprising, the bazaar also contains phenomenal cultural gravity as a key point of production for society’s material as well as symbolic needs. Much of this cultural weight is transmitted with help the mosque or by other religious symbolism. By transforming material wealth into legitimate power and forming a language of common values and cultural understandings, the bazaar moves beyond being a place for trade where social and political alliances converge. Recognizing the bazaar’s role in society’s spiritual life allows for a deeper sense of the cultural ether at the heart of Kyrgyz understandings of wealth, meaning and propriety.

For the rich and powerful in Muslim communities, Islam offers a comprehensive framework of values to be realized through practices in which a wealthy and powerful member of society may display wealth appropriately while gaining prestige. Like American Rotary, Lions or Shriners clubs, the Islamic groups also serve a very important unofficial purpose of creating strong social connections which allow for the exchange of information and the accumulation of trust. Both information and trust are key components for successful marketing practice because they reduce the risk of transaction. Islam’s emphasis on social unity encourages strong economic relations. The social basis of economic relations reinforces and complements the economic basis for social relationships already discussed.

Before the Soviet period, the intimate social alliance between the bazaar and the mosque was mirrored by the physical geographic proximity of these institutions. In major cities,the principle mosques and the main bazaars sat side by side, forming the commercial as well as the spiritual heart of the city. According to Eugene Schuyler, an American diplomat who toured the Russian empire and published his work in 1877, “To really be a city it must have a mosque that can hold all inhabitants on Friday prayer and must possess all 32-guilds or trades which are supposed to comprise the world of commerce.”[10]

In Kyrgyzstan today, mosques have appeared in and around the country’s major bazaars. Religiosity among Kyrgyz is likewise growing rapidly. More men wear symbols of their Islamic faith openly. Attendance at mosques in and around bazaars has likewise increased greatly in recent year.By donating to local Islamic charities and completing the Hajj, a merchant may display wealth and prestige while enjoying the benefits of elevated social esteem. Indeed, such usages of wealth benefit wealthy and influential merchants as religious respect is often an expected element of their prominent social status.[11] Proper use of wealth also traditionally includes support for the local ulema, especially provisioning the construction and renovation of local mosques.

The upsurge in mosque construction may well be a reassertion of local values governing everyday life, the physical embodiment of a common language of moral norms and shared values. The bazaar literally fuels this process. Its profits pay for the physical construction of spiritual and cultural icons and the centrality of honest relationships lends great significance to the establishment of common values and trust. Often the rapid reconstruction of mosques in the region is warily assessed as a foreign funded turn toward shallow religiosity which is depicted as fertile breeding grounds for Islamist extremism.[12] Understanding the economic basis for religious practice helps explain why the alarmist warning of widespread Islamist influence have thus far proven unfounded, despite the supposedly fertile regional environment.

The bazaar: A microcosm of economic change

Ainura and Nazgul have been through a lot since Kyrgyzstan’s sudden independence 18 years ago. Ainura’s family moved from a village on the land of their ancestral home to Bishkek. Her parents’ lives changed dramatically in ways that no one could have predicted: her mother’s secure life as schoolteacher replaced by the uncertain income of a tea-seller at the bazaar. Her father’s stable employment as a farm laborer has been abruptly traded for a search for seasonal construction and vodka. Ainura herself studies Turkish and Business at her university and hopes to become a successful business woman so that she can provide well for her mother and father, as well as her future family.

The market is divided into different specialized areas, from construction materials to shoes. Photo by Anders Conway.

Nazgul has likewise attempted to navigate the rocky shoals of the burgeoning market-economy. As a Soviet school teacher for French, she could earned enough to provide for her families needs. After the collapse, however, her services brought in far less – not enough to house, feed and clothe her two boys. She started selling shoes by borrowing a little bit of start-up money from her extended family. Since then, her boys have finished school. The younger son now studies law at the Slavic University; the older has recently become the proud owner of a taxi and an even prouder father. Some of her brothers have discovered peace and meaning in Islam, some of her nephews have sought work and success in the construction industries of Almaty and Novosibirsk.

Kyrgyzstan itself has also gone through considerable turmoil during the 18 years since independence. An old economy ruled by fiat, control and the black market has all but vanished, replaced by a frightfully chaotic yet potential-filled market economy. The old Communist Party is gone, but new opaque political alliances have taken its place. Former definitions of rights and propriety have been replaced in the reconstituted system. New power-brokers and successful entrepreneurs are redefining social prestige and success. Some build mosques, some buy BMWs for themselves and their families, many do both. As people are forming new partnerships and discovering fresh paths to success, they are creating substance and meaning distinct from the previous system. In order to make sense of and legitimize these current modes of living, people have created new means of expression, of participating in and transmitting culture whether through pop music, stricter observance of the tenets of Islam or obsessively following Manchester United. And whether it’s the latest Shakira album, a mosque or a football jersey, it can be found at the bazaar.

Footnotes:

1. World Bank Online. World Development Indicators. www.worldbank.org/data Accessed December 13, 2007.

2. Bazaar growth: Statisticheskii Ezhegodnik Kyrgyzskoi Respubliki, Chast II, National’nyi staticheskii Komitet Kyrgyzskoi Respubliki, Bishkek: 1996, 1997. By 1995 there were already nearly 350 bazaars, by 2005, over 400.

Retail Sales: Potrebitel’skii Rynok Kyrgyzskoi Respubliki, Natsional’nyi statisticheskii komitet kyrgyzskoi respubliki, Bishkek: 2001-2005. Bazaars outpace store sales in 1997 and in 2005 accounted for 2/3 of retail activity.

3. Hampel-Milagrosa, Aimee (2007). “Social Capital, Ethnicity and Decision-Making in the Philippine Vegetable Market.” ZEF-Discussion Papers on Development Policy. Bonn, September 2007.

4. Rotblat, Howard J (1975). “Social Organization and Development in an Iranian Provincial Bazaar.” Economic Development and Cultural Change 23:2 (January, 1975).

5. Burton, Audrey (1993). Bukharan Trade. Bloomington, Indiana: Indiana University, Research Institute for Inner Asian Studies.

6. Levi, Scott (2002). The Indian Diaspora in Central Asia and Its Trade 1550-1900. Boston: Brill.

7. Evan A. Feigenbaum (2007). «Approach to Central Asia (Deputy Assistant Secretary for South and Central Asian Affirs).» Remarks at the Central Asia-Caucasus Institute, Nitze School of Advanced International Studies, Johns Hopkins University. Washington D.C.: February 6, 2007.

8. US Department of State (2007). Media Note: Assistant Secretary of State for South and Central Asian Affairs Richard Boucher Hosts Regional Economic Integration Meeting. Washington D.C.: July 19th, 2007.

9. Asian Development Bank: CAREC (Central Asian Regional Economic Cooperation) (2007). Transport Sector Status Report. Dushanbe, Tajikistan: Sixth Ministerial Conference on CAREC, November 2-4, 2007.

10. Eugene Schuyler (1876). Turkistan; notes for a journey in Russian Turkistan, Khokand, Bukhara and Kuldja. New York: Scribner, Armstrong & Co.

11. Michael E. Bonine (1981). “Shops and Shopkeepers: Dynamics of an Iranian Provincial Bazaar.” Modern Iran: The Dialectics of Continuity and Change. Albany, NY: State University of New York Press.

12. For the most prevalent articulation of this view, see: RASHID, A. (2002). Jihad: the rise of militant Islam in Central Asia. New Haven, Yale University Press.