Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Trade and Foreign Direct Investment in Uzbekistan
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5.5. firm Size Distribution Analysis
This section takes a firm-level perspective to examine the structural channels 
of competiveness and growth in Uzbekistan. During 2009–2018, a growing 
body of research has focused on the variation in firm-level growth to carefully 
assess a range of economic policies that affect both product and factor 
markets. The underlying interest is driven by the enormous variation in firm 
growth within narrowly defined industries (e.g., Syverson 2011, Haltiwanger et 
al. 2013). Hence, many countries have started to explicitly take into account 
firm heterogeneity as well as the interconnectivity between firms via supply 
chains when implementing new industrial policies (Aghion et al. 2015).
More importantly, understanding firm-specific or idiosyncratic shocks helps 
us identify micro-origins of an economy’s macroeconomic fluctuations. 
For example, idiosyncratic shocks to a specific industry can have important 
aggregate effects if the sector is strongly interlinked with other industries in 
the economy through supply chains. Recent insights confirm the existence 
of such interlinkages and find that firm-specific shocks can have a significant 
impact on cyclical fluctuations in GDP growth (Gabaix 2011; Acemoglu et 
al. 2012); unemployment (Moscarini and Postel-Vinay 2012); and aggregate 
prices (Amiti et al. 2014). A study by Di Giovanni et al. (2016) uses firm-level 
data to show how trade linkages at the firm level are associated with aggregate 
comovement. They find that 8% of firms in France directly connected to 
a trading country accounts for 56% of total value added generated by the
French economy. 
A hitherto unexploited data set of firms in Uzbekistan, collected through 
Bureau van Dijk’s Orbis database is used here. The data reported in Orbis are 
limited; however, they provide useful insights about the firm size distribution 
to document a number of key microeconomic structural features of the 
Uzbekistan economy, which can guide economic policy. The focus is on the 
year 2012 because the data set for this year reports the most observations, 
with total employment in private firms amounting to 98,976. Although this 
is only a small fraction of total registered employment, it provides a good 
first approximation for understanding firm-level heterogeneity. The data 
set contains 8,668 firms and allows the documentation of stylized facts 
characterizing Uzbekistan: in particular, the firm size distribution. 
Figure 5.12 shows the firm size distribution in Uzbekistan. As in most countries, 
Uzbekistan has many micro and small firms employing less than 20 workers, 
but also has a “fat tail” of very large firms. That the firm size distribution is 
“fat-tailed” indicates that idiosyncratic shocks matter, which may affect the 

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