Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth
178
ChApTER 5
Trade and Foreign Direct Investment
in Uzbekistan
Jozef Konings and Aigerim Yergabulova
Uzbekistan’s external trade is currently dominated by the export of primary 
commodities and other low-value-added goods. The development of regional 
trade and cooperation in the past was hampered by state intervention, which 
included import substitution strategies and foreign exchange restrictions. In 
addition, the continued slowdown in economic growth of the country’s major 
trading partners—the People’s Republic of China (PRC) and the Russian 
Federation—and falling world commodity prices have adversely affected 
trade tax contributions to the government’s budget in recent years. Moreover, 
Uzbekistan attracts the least foreign direct investment (FDI) inflows among 
Central Asian economies.
1
This challenging external position suggests the need 
to transform toward a more open, diversified, and market-based economy. 
To this end, a set of reforms advocating a new development strategy has been 
initiated to accelerate the country’s modernization and development of key 
industries. An important priority is liberalizing trade via tariff reductions and 
initiating structural reforms in the state sector to boost both domestic and 
foreign competition. In line with that agenda, government authorities have 
already implemented a series of policy actions. In particular, to strengthen 
monetary policy, the national currency has floated freely since September 
2017. That has reduced the negative impact of external competitiveness 
on domestic enterprises. Other actions include resuming negotiations to 
accede to the World Trade Organization (WTO), improving relations with 
regional trading partners, and introducing legislative changes to attract foreign 
investors. Membership in trade agreements and FDI liberalization would 
further promote domestic competition and contribute to the efficiency of the 
country’s economy. 
1
Data from the World Bank. World Development Indicators. https://databank.worldbank.org/source/world-
development-indicators (accessed December 2019) 

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