Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Executive Summary

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carries about 4% of the country’s international cargo. It could carry a much 
greater share, and boost tourism if a more open skies policy brought greater 
competition to airline services, resulting in improved access and service quality.
The energy sector continues to play a very significant role in the economy 
of Uzbekistan. It accounted for about one-quarter of total industry output 
during 1995–2014, and natural gas comprised one-eighth of total exports. 
Revenue from energy exports has been a key source of government finance. 
The reliability of energy supplies is vital for sustaining economic growth and 
development. Heavy dependence on natural gas has posed load management 
problems: the country continues to struggle with an unreliable power supply 
that, coupled with rapidly growing demands for electricity, has led to frequent 
blackouts. Demand-side inefficiencies from outdated production technologies 
and supply-side inefficiencies due to old infrastructure for power generation, 
transmission, and distribution, plus an inadequate billing system, have 
contributed to economic losses, which the World Bank estimated at $1.5 billion 
in 2016. A low-tariff policy also contributes to inefficiencies by encouraging 
wasteful electricity consumption and undermining the financial performance 
of the power utility. This has discouraged investments in maintenance of the 
electricity infrastructure, which clearly needs to be upgraded and expanded if 
it is to adequately serve the needs of the rapidly growing economy. 
An energy sector plan that provides a framework for the development of the 
sector should be finalized and implemented. This needs to be supported by an 
improved regulatory system, by establishing an independent energy regulator 
and reforming the current inefficient tariff-setting policies. Funding needs to 
be available to revitalize the energy institutions. Also, a favorable business 
environment for small-scale renewable energy applications would reduce 
dependence on natural gas consumption. More active participation in regional 
energy trade should be encouraged, to meet the growing demands for power 
at lower cost. 
For the transport sector to continue contributing to the country’s goal of 
sustaining its high economic growth rate, continual planning and coordination 
among the agencies that govern the country’s transport modes is required. 
That is, institutional reforms need to be harmonious and complementary 
to each other. Investments in improved road and rail infrastructure and in 
the electrification of railways could reduce transport inefficiencies. Such 
investments would also help Uzbekistan take advantage of its role as a key 
transit country between Asia and Europe, and spur cooperation between 
countries of the region.