Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth
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distribution in Uzbekistan (section 5.5). Section 5.6 estimates a gravity model 
to explain Uzbekistan’s trade pattern, using a sample of major trading partners. 
Section 5.7 summarizes and provides policy recommendations to improve the 
country’s trade and investment climate. 
5.1. Uzbekistan’s Trade and International Economic
Cooperation: An Overview
A fundamental principle in international economics is that reducing trade 
barriers to free up flows of goods and services between countries raises social 
welfare. It provides welfare gains to consumers through increased product 
variety, lower prices and improved quality of goods, as well as opportunities for 
producers to specialize more and so reap greater economies of scale. In this 
context, the WTO plays a key role in promoting free trade by setting the rules 
of international trade, providing a platform for negotiating bilateral, regional, 
plurilateral, and especially multilateral trade agreements to reduce tariffs and 
other trade barriers. As of 2019, 164 countries were members of the WTO. 
Regional and bilateral cooperation can stimulate national transit systems, 
harmonize transport regulations, and facilitate customs transit, which can 
significantly reduce transport costs (ADB 2006). Lower transport costs and 
shorter transit times in turn increase the gains from trade by attracting FDI, 
diversifying source and destination countries through global supply chains, 
and differentiating exports in terms of product composition. 
Economic integration in Central Asia reflects institutional trade policies and 
the geography and geopolitics of the region (Table 5.1). As of 2019, only three 
Central Asian economies are WTO members—the Kyrgyz Republic (from 
1998), Tajikistan (from 2013), and Kazakhstan (from 2015). Uzbekistan is 
currently an observer economy. Its accession to the WTO would help it access 
export markets and achieve higher returns on investment. 
In terms of regional cooperation, Uzbekistan is a member of the 
Commonwealth of Independent States (CIS), the organization formed by the 
former Soviet Union countries at the end of 1991. The initial aims of creating 
the organization were to sustain free trade and movement of people, protect 
human rights, and prevent armed conflicts in the territory of the CIS. However, 
the integration started to fail due to large differences between the economy 
and territorial potential of the Russian Federation versus other member states 
(Kononczuk 2007). 

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