UZBEKISTAN IS THE EXCEPTION

UZBEKISTAN IS THE EXCEPTION

 

Economic indicators around the world do not comprise a positive or optimistic picture. Europe is struggling to avoid the devastation of the Euros collapse and the crumbling of the European Union and its reputable welfare state. The United States fails to achieve its targets in reducing unemployment and taming its frightening deficits. China’s rapid growth has halted and India does not appear to fare better. Russia is suffering from the shrinking world demand of raw materials while Brazil agonizingly is sharing its fate. Global gloom, therefore, and an emerging worldwide depression?

Well, not exactly! Uzbekistan is the exception. Contrary to all international forecasts and pessimistic outlooks this newly independent former Soviet republic is breaking almost all economic records. While most of the world’s economies are contracting Uzbekistan enters with dynamism a process of growth rapid and, it appears, sustainable. The economy has grown in the last fiscal year by 8.1%. It appears that the conditions pertaining to those developments are still in place so that the country’s future looks secure. 510,100 new jobs have been created, the majority of them (68%) in the rural sector.

The rest of the figures are equally impressive. The growth of industrial output is 7% and agriculture production 8.6%. The investment to fixed capital is 7.6%, while production of consumer goods rose by 7.7% and services by 14%. There is also an impressive structural transformation of the economy. The share of services in the GDP grew to 52.2 % in the first half of 2012 from 48.3% in 2011! Likewise, exports increased by 18.8% in the same period, while there is now a significant current foreign trade surplus. In all, the country seems to have built a robust economy able to care for the welfare of its citizens and the future of its younger generation.

What is really worth noting are the policies initiated to achieve the above mentioned results. Uzbekistan did not embark upon a policy of extensive state control of the economy and a heavily regulated market. On the contrary, overcoming the legacy of its recent statist past the country embarked upon a path of radical free market reforms. Without excesses and caring for stability and social consensus they tried to reconcile social protection with an open market and less state intervention.

The efforts of the government have been obviously successful. Avoiding turmoil and popular discomfort for its economic policies the central administration in Tashkent reconciled vigorous market reforms with generous policies to help the poor and strengthen family ties – especially older citizens and young couples. Within the state programme “The Year of Family”, some 1.1 trillion soums (local currency) were spent to sustain the standing of the average Uzbek family!

Growth without painful austerity measures has been the aim of the Uzbek government’s initiatives and they appear to have reached their target. A young state however is always in the lookout for difficulties ahead. The fact that the world economy is shrinking and that everywhere hardship and social disarray is the characteristic of most hitherto stable societies demands alertness. It is true that economic achievements in Uzbekistan came at a cost of the country not opening up to western style of liberal democracy as rapidly as many of its friends would have desired. One basic precondition for its success however is stability. And this cannot be achieved at a time of world turmoil if the winds of change take the country apart destroying what has been achieved at such a cost. It is therefore understandable that Uzbekistan would follow its own path to achieving full democratic freedoms albeit at the same time guaranteeing the sustainability of its economic achievements.

It is also important to take a glimpse of the initiatives taken to further economic growth. On the business sector the freedom of the free enterprise was established supported even by legislative initiatives. A new law introduced the principle of priority of the rights of entrepreneurs in the relationship of businesses with government, law enforcement and regulatory agencies. Such a provision is not traceable, as far as I know, in any legislation existing I countries of the West.

Beraucratic regulation concerning the functioning of the market was simplified while the processes of public procurement became more transparent, allowing for genuine competition and facilitating the government to achieve better and cheaper deals. Important also has been the introduction of specific indicators which regularly assess the level of liberalization of the economy! As a result, in comparison with 2000 the share of small businesses in gross domestic product increased from 31 to 54 percent, employment in this area increased over this period more than 2 times and it accounts for more than 75.1 percent of those employed in all sectors of the economy. Currently the private sector generates 82.5% of GDP, 91% of industrial output and almost all of agricultural production.

Many things for sure remain to be done. Regulation is still present and the legacy of a “command eonomy” past is always there, in various forms and cultural traits, in Uzbekistan. The optimistic aspect is that the government appears determined to tackle all obstacles gradually. The positive performance of the economy proves that market liberalization measures work and that in the long run the government will win the bet. Proving that the exception of Uzbekistan from the world wide economic downturn is not a product of chance, but the outcome of hard and conscientious measures along the road of economic liberalization.