The clearest sign of change in this hot and dusty town in central Asia is a new hotel for foreigners. But until it is completed and the first chaperoned tourists arrive, Osh is a place near the end of the world.

On the southern edge of the Soviet republic of Kirgizia, Osh rests in the shadow of the Pamir mountain range that forms a natural border between the Soviet Union and China. Strangers seldom come here. When they do, the surge of curiosity about them can be overpowering.

A man wearing a traditional, colorful striped coat and a skullcap approached a visitor in the street to ask where he was from. "That's not possible," he said gravely when told the visitor was from America. "We only see such people on television."

Substantial investments have been made to develop the region's industries. In fact, the second largest textile plant in the Soviet Union is here. Yet traditional agricultural societies have survived almost intact in much of this southern belt, which seems to belong to a different age. A new asphalt road seems like an imposition of the modern Soviet Union on a pastoral scene.

The cities, too, are not quite new. Behind the broad modern avenues and buildings of glass and concrete, one finds shacks made of mud bricks.

In multitudes of teahouses, mostly male customers sit for hours sipping green tea, playing chess, or just talking quietly. The traditional Moslem hospitality survives, and one is immediately invited to local homes for plov, a meat-and-rice dish mixed with local spices and vegetables, or mantu, which is meat-stuffed pasta shells. THE TALK of Osh, and other central Asian cities, is the government's new antialcoholism laws, which restrict sale and consumption of alcoholic beverages. The big question that seems to preoccupy many men here is how to avoid getting caught by the law.

This may seem odd in a predominantly Moslem area, since until the Bolshevik revolution the consumption of alcohol was punishable by public whipping or worse under Islamic law.

What about Islamic traditions? visitors inquired from a man in Dushanbe, the capital of neighboring Tajikistan. "Oh, yes, traditions are important, but we are modern people, too," he said. His friend volunteered that the strictness of the new law was creating resentment.

But the Moslems of central Asia drink far less alcohol than the Russians farther north, the visitor noted. Wrong, the man said, "We can outdrink anyone."

In the ancient Uzbek city of Samarkand, the smell of fermenting corn from a vodka distillery wafted over the roofs of mosques in a symbolic challenge to tradition, just as the imam's call to evening prayers was drowned out by the roar of jazz from a rooftop restaurant.

"We would like to offer you some white tea," an Uzbek man said, inviting a visitor to join him and his friend before midday. The two men laughed as one of them poured vodka from their teapot into blue china cups.

It is against the law to consume or sell alcohol before 2 p.m. Moreover, teahouses are not licensed to sell alcoholic beverages.

KIRGIZIA, LIKE neighboring Tajikistan and Uzbekistan, has entered an important and complex phase in its development. Living standards have risen sharply across the south during the past two decades and the area seems to be on the threshold of modern age.

But whether these southern republics can manage to sustain this trend is an open question.

Unlike the rest of the Soviet Union, Moslem central Asia has a labor surplus because of a continuing population explosion coupled with the people's reluctance to move away from their native areas. This is now being perceived as a brake on development.

It is normal here for a family to have eight, nine or 10 children -- unlike the one or none that the average urban family in Russia has. According to a Tajik sociologist, Makimat Hadji Yamarov, the central Asian population is increasing three times faster than that of the rest of the country. The rate has slowed a bit to about 3 percent annually, he said.

Future demographic patterns are the great unknowable here and likely to define regional economies for some time to come. Yamarov said that while the birthrate continues to remain very high, "younger women are beginning to have somewhat smaller families, especially those who work and who move to the cities."

All this gives local economic planners different headaches from those of their northern colleagues, who are crying out for more manpower. It also puts them at odds with Moscow's present shift toward an "intensive economic activity," which basically involves modernization of existing factories and their better use rather than investments in new capacities.

For central Asian economists, industrial expansion remains the desirable goal, since it involves the creation of new jobs.

Rashid Rakhimov, director of Dushanbe's Institute on Economics, says a compromise can be found. He favors continued industrialization of the area rather than sticking to traditional agricultural production of cotton, tobacco and other crops.

But, he added, "We have to build small independent factories spread out within the reach of villages so that people can commute to work."