The economy of Uzbekistan: success or failure?

The modern economy of Uzbekistan originated with the sovereign Uzbek statehood that arose after the collapse of the USSR. Among the CIS members, this country was one of the first to enter the phase of economic development. By 2001, Uzbekistan was able to restore the Soviet level of production in accordance with GDP indicators. The locomotive of growth was and remains export (against the background of domestic consumption, which was in a state of stagnation). As a result, economic growth has little effect on the standard of living of the population.

Sovereign economy

To stabilize the state of the country, which has survived the emergence of a new statehood, the government of Uzbekistan has chosen a course of stage-by-stage reforms. Their key goal was the gradual transition of the economy from the planned Soviet to the modern market. Structural reforms included strengthening payment discipline and raising prices in the energy sector, transforming the former collective agricultural holdings into individual farmers' farms, as well as abandoning state monopolies.

At the same time, the privatization of enterprises did not become full-fledged. As a result, the basis of the Uzbek economy turned out to be a complete contradiction. This feature led to the fact that the transition to a market system slowed and did not end to this day. The private sector and business activities are hampered by government intervention.

Banks and finance

In 1994, the economy of Uzbekistan received its own national currency - sum (one sum is equal to one hundred tiins). In the second half of the 90's, its exchange rate relative to the US dollar remained relatively stable. In the early 2000s, the US currency jumped dramatically. At the same time, the change in value occurred on the initiative of the Central Bank of Uzbekistan. The fact is that the exchange rate in the Central Asian state is not free, but is regulated by state financial bodies. The central bank had to resort to unpopular measures in order to bring the value of Uzbek money closer to the real market indicator. Inflation is one of the main economic problems of the country. To reduce the high rate of price growth, the government continues to pursue a tight monetary and credit policy for 25 years.

Only in 2003 the Ministry of Economy of Uzbekistan announced the beginning of free conversion of the national currency. To implement the reform, it was necessary to unify the exchange rates, which was complicated by the then devaluation. Anyway, but thanks to the measures taken, inflation in 2003 fell to 3%. Later, the government continued to gradually integrate the currency of Uzbekistan into the international market.

The country's five largest banks are the National Bank, Uzpromstroybank, Asakabank, Ipotekobank and Agrobank (accounting for 62% of the total banking system in the country). In 2013, the aggregate capital of commercial credit organizations of the republic was 3 billion dollars.

In 1994, the Stock Exchange "Tashkent" was established, which became one of the main centers of the financial life of the country. It was established by key brokerage, investment and insurance companies of Uzbekistan. At the exchange, primary placement is conducted, as well as secondary trading in securities. In 2012, this site haggled by 85 million dollars.

External links

The modern economy of Uzbekistan is trying to become not only market, but open to the rest of the world. The main instrument for this is the country's participation in the international division of labor and world economic ties. In the 90s, the new sovereign state entered into various organizations that helped to establish trade contacts with a variety of countries. First and foremost, this is the UN, within which there are many economic institutions. Also, the Central Asian republic interacts with the World Bank and the International Finance Corporation.

Many organizations opened their representative offices in Tashkent. These are the UN, the IMF, the European Bank for Reconstruction and Development, the World Bank, the Commission of the European Union. Appear and their regional branches. Most of all, the economy of Uzbekistan is connected with the economies of other countries of Central Asia, Russia, Turkey, Pakistan and Iran (with the latter particularly closely linked economy of Kazakhstan, Uzbekistan and Russia). In all, the republic is included in 37 international financial organizations.

To simplify the establishment of enterprises with foreign capital, it was easier to register companies willing to invest in the economy of Uzbekistan. Especially positive was the adoption of new norms for licensing exported goods. But as before, so now the key partners of Uzbekistan are the CIS countries.

Attraction of investments

According to statistics, the economy of Uzbekistan today, from the point of view of investment, is most attractive in the field of energy (oil refining, chemical enterprises), transport and agriculture. Traditionally, foreign capital is sent to the Tashkent and Fergana regions. As noted above, the market economy of Uzbekistan still largely depends on the authorities. Therefore, the largest investment foreign projects in the country are realized only under state monitoring. Most often, the Ministry of Economy of Uzbekistan and other responsible institutions choose high-tech and high-tech production facilities, as well as inter-industry significance. All these initiatives stimulate the growth of the private sector.

Investments are not directed to short-term current programs, but to long-term projects that are necessary for solving strategically important tasks. According to these principles, the economic policy of the state is being built. Foreign capital facilitates the structural transformation of a wide range of industries, accelerates the modernization and technical re-equipment of industries. The economy of Uzbekistan today also needs investments in environmental projects. A serious problem is the situation on the Aral Sea, dried up due to the thoughtless use of water resources in the Soviet era.

In modern Uzbekistan, the most favorable investment situation has developed in the processing and mining industries. The appearance of technical innovations in them helps to reduce the resource costs that prevent the production of goods with low international prices. Today's rating of Uzbekistan in the economy is largely due to such exports (cotton, textiles, etc.). Investments are especially important in the transition period in which the Central Asian republic now lives.

Raw materials

Long-term development of Uzbekistan's economy made it the leading industrial state in Central Asia, which is the guarantor of the stability of the entire region. The country is distinguished by several principal advantages for foreign investors. This is macroeconomic and political stability, favorable climatic and natural conditions. The listed features are also a guarantee of a uniform development of the republic as a whole.

The economy of Uzbekistan has been evolving for 25 years due to its rich resource base and favorable geographic location (Uzbekistan is in the center of the largest regional market). The scientific and intellectual as well as the personnel potential of the country are also important. Access to raw materials allows you to reduce the cost of transporting materials, making the cost of manufactured products more optimized.

Today, the country has found about 2,800 different deposits. The republic's mineral resource base is estimated at 3.5 trillion dollars. Thanks to it, the following achievements of Uzbekistan in the economy were established: 9th in the world for the production of gold, 9th for uranium, and 5th for cotton fiber.

Power Engineering

The Central Asian state is one of the few fully energy-independent throughout the world. The industry of Uzbekistan is 100% provided with oil, oil products, natural gas, electricity and coal. Economic needs will be covered for at least 100 years. The country has explored about 200 gas, oil and condensate fields.

The economy of the Republic of Uzbekistan is effective from the point of view of electricity. It not only covers increasing needs, but also at its cost is several times cheaper, compared to even the most developed countries. In addition, there is also an unlimited potential, consisting of alternative sources of energy (wind, solar, etc.).

Today, 45 power plants operate in Uzbekistan, generating 12,000 megawatts a year. This complex generates about half of the energy of the entire international energy system of Central Asia. In 2012, Uzbekistan's power plants produced 52 billion kilowatt-hours.

Agriculture

Agriculture is a significant supplier of raw materials for industrial production. Regardless of who the Minister of Economy of Uzbekistan was, the agrarian sector has always been the pride of the country. The basis of agriculture is the production of cotton fiber. This is the most important export product. For example, in 2010, 3.4 million tons of cotton were harvested. Other important items of Uzbekistan's agriculture exports are raw silk, grapes, fruits, melons. In addition, the amount of fruit and vegetable products sold (10 million tons per year) is significant.

About 60% of the population lives in rural areas. In this connection, a significant part of the able-bodied population employed in the national economy is employed in the agrarian sector. Large areas used for crops are served by a huge irrigation system. It appeared in the Soviet era. Understanding the importance of this infrastructure, the authorities of an independent Uzbekistan regularly modernize it. Today, the area of crops in the republic is estimated at 4 million hectares (irrigation lands account for about 87%).

According to statistics provided by the Ministry of Economy of the Republic of Uzbekistan, there are more than 80,000 farms in the country. The average area of such a plot is 60 hectares. Agricultural enterprises are regularly exempted from taxes and mandatory deductions to the treasury. About 10 thousand of them specialize in animal husbandry, potato growing and vegetable growing, the other 22 thousand - in viticulture and horticulture (for a year about 50,000 tons of grapes and 15,000 tons of fruit are grown).

By decision of the late President Islam Karimov, Uzbekistan has joined the International Fund for Agricultural Development. In case of unforeseen circumstances, the government may receive from it concessional loans for the development of the agricultural sector. According to various estimates, about 700 million dollars from foreign funds are currently invested in this sphere of the Uzbek economy. This is the money of the Asian Development Bank, the World Bank and the Islamic Development Bank. Every year the republic's agriculture produces products, the total value of which is estimated at 12 trillion soums. Enterprises of the chemical industry in Uzbekistan supply more than 1 million tons of various fertilizers to the market.

The proximity of Uzbekistan to various sales markets remains a positive factor for the development of agriculture. Also, its economy is characterized by a developed transport infrastructure. It is integrated into the general system of communications that unite the whole of Eurasia. For example, Slovak companies that invest in Uzbekistan gain access to the five largest and fastest growing markets (CIS countries).

Human Resources

The Central Asian republic remains a significant source of labor resources. Uzbekistan is a multinational and densely populated state, located at the intersection of trade routes between East and West. Since ancient times, it has been a center for the concentration of educational and research institutions, as well as forge of highly skilled personnel.

Today's place of Uzbekistan in the world economy is based on the work of specialists, graduating from 65 universities of the country (especially professionals of industry and technology). Since 1943 the Academy of Sciences has been working in the republic. It consists of eighteen research institutes. These are key innovation centers not only in the country, but in the entire Central Asian region. A significant number of Uzbek workers are involved in the Russian economy. For earnings in the Russian Federation, the most active young people go.

Trading partners

To understand which Uzbekistan's economy has developed in the country in 25 years of independence, it should be noted that it is closely connected with several dynamically developing markets - the CIS, South Asia, East and South-East Asia, the Middle East, Afghanistan, Central and Eastern Europe.

Integration not only gives advantages, but also makes the republic vulnerable to external cataclysms from abroad. For example, the global economic crisis of 2008-2009. Led to serious costs in the national economy. To cope with the challenge, the government adopted the Anti-Crisis Program. In the course of it, modernization was speeded up, the most important industries were updated, the costs of energy intensity were reduced, the producers' competitiveness was increased, the modern infrastructure was developed, the liquidity and reliability of the banking and financial system were radically strengthened. According to the program, the implementation of more than 300 important projects, the total amount of which amounted to about 43 billion dollars.

In order to establish economic ties with the outside world, in the 1990s the republic had to create from scratch several institutions. First of all, it is the Ministry of Foreign Economic Relations, the customs service, and the National Bank for Foreign Economic Affairs. These structures are controlled by the Cabinet of Uzbekistan. In the case of especially important partners, chambers of commerce and industry have been established (with the United Kingdom, the United States, Germany and other countries). Today the right to enter the foreign market is actively used by about two thousand large enterprises of the Central Asian republic (concerns, associations, etc.). The export potential of Uzbekistan developed along with the gradual liberalization of the country's international economic cooperation.

Entrepreneurship

Over the past 10 years, private entrepreneurship has significantly increased its own contribution to the GDP of Uzbekistan (from 30% to 50%). Particularly noticeable is small business in construction, agriculture, trade services. Its importance continues to grow in the light industry.

Out of every four employed people in Uzbekistan, three work in small businesses (either they themselves deal with, or are hired by such employers). These indicators are only growing. Every year, private entrepreneurship gives the country half a million new jobs (almost half of them are in agriculture, 36% in services, and 20% in industry). Stable business development strengthens Uzbekistan as a major regional power.

After the collapse of the USSR, the government faced the need to create a favorable legal basis for the establishment and operation of small private enterprises. In the future, the procedure for registering an individual case was only facilitated and modernized. At the same time, reforms related to taxation were carried out (an updated Tax Code was adopted).

Business and government

It is significant that the recent 2011 was declared the President of the Central Asian Republic Islam Karimov "a year of small business and private entrepreneurship". The Minister of Economy of Uzbekistan (now occupied by Saidova Galina Karimovna), on behalf of the first person, introduced a program of measures necessary to attract new investments and additional jobs. In particular, the budget provided individual credit lines for the most outstanding projects and undertakings of small business in the country.

A separate program operates in the field of entrepreneurship in agriculture. The state additionally finances housing construction in the agrarian regions of Uzbekistan. Already this infrastructure alone is a fertile ground for further business development. Retail trade is growing, the service sector, family business. Borrowers-agrarians receive benefits when providing loans and financing, necessary for the implementation of private projects.

Small rural construction companies are being created under the state "Program for the Development of Rural Regions". About one thousand such firms give forty thousand jobs for skilled builders. For Uzbekistan, as for any other country with a transition economy, it is important to create a competitive environment in all areas, so that in the future the market itself could regulate itself.

Small business affects not only the employment of the population, but also the entire social situation in the state. Only developed entrepreneurship allows the most efficient use of human labor resources. It stimulates the well-being and confidence of society in the future and is an important driving force guiding the country along the path of progress.

Success or failure?

One of the key shortcomings of the modern economy of Uzbekistan remains its dependence on grain imports. Production within the country covers only a quarter of the total demand for this resource. Structurally, the economy of the republic is as follows: agriculture accounts for 17% of GDP, services - 50%, industry - 25%.

The situation in Uzbekistan abroad is familiar to the world community rather superficially. The country is distinguished by a closed information space. The nuances of the economic system are known only by the severely filtered official information of the authorities. In general, the authoritarian nature of the state in Uzbekistan is reflected in the economy itself. It is contradictory, if only because, on the one hand, it is developing as a market one, and on the other hand, it is under pressure from authorities trying to control its most important industries.