Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Executive Summary

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Boosting International Trade and Foreign Direct Investment 
The roles of international trade and FDI have become increasingly important 
in a globalized world. Uzbekistan is well behind in exploiting benefits from 
trade and FDI: since 1995, Uzbekistan’s share of total trade in gross domestic 
product has been the lowest of all Central Asian countries. The country has 
little engagement with regional and international groups, and is not a member 
of the Eurasian Economic Union or the World Trade Organization (WTO), but 
could increase its engagement. Greater integration is also possible through the 
gas pipelines from Turkmenistan to the People’s Republic of China, Kazakhstan, 
and the Russian Federation, including via the Belt and Road Initiative. 
The weighted average import tariff rate is still high in Uzbekistan compared 
with the average rates for Kazakhstan, the Kyrgyz Republic, and Tajikistan. The 
highest import tariff protection is for footwear, leather, apparel, and textile 
manufacturing, even though parts of these industries are among the country’s 
main exports. 
In addition, Uzbekistan attracts the least FDI inflows among Central Asian 
economies, and such flows have declined substantially in recent years. 
Moreover, the inflows are confined mainly to the extractive sector rather than 
flowing into a broad range of industries. 
Gradual trade liberalization will inevitably be associated with accession to the 
WTO, when the government completes that process. Further regional trade 
cooperation also would increase trade flows and result in more and better jobs 
and improved productivity growth. 
Opening up to regional and global trade requires more than just reducing 
high levels of import tariffs, however. Nontariff trade barriers may be even 
more of an issue, including cumbersome domestic regulations. Improving the 
business climate by deregulation would generate a more dynamic business 
environment, which would allow faster firm growth, attract more FDI, and 
generate more high-quality jobs. A single public–private or private agency 
could help promote export opportunities for domestic enterprises and attract 
investors by providing research on new market opportunities, measuring 
export capacities, and assisting with all regulatory aspects of establishing a 
new enterprise in Uzbekistan. Greater investments in transport infrastructure, 
human capital development, and research and innovation would increase the 
Uzbek economy’s competitiveness and diversity.