Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Table 5.4: Logistics Performance Index and Infrastructure Index Scores, 
Uzbekistan and Comparators
Country
Logistics Performance Index 
Infrastructure Index 
PRC
3.7
3.8
Kyrgyz Republic
2.2
2.0
India
3.4
3.3
Kazakhstan
2.8
2.8
Russian Federation
2.6
2.4
Uzbekistan
2.4
2.4
Note: 1 = low, 5 = high.
PRC = People’s Republic of China.
Source: World Bank. World Development Indicators. http://www.databank.worldbank.org/ (accessed 12 
December 2019). 

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Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth
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Openness to international trade is also believed to affect growth through 
poverty reduction. If trade fosters economic growth, then absolute poverty 
will be alleviated more quickly with faster economic growth (Cockburn and 
Giordano 2008). However, poverty is linked to other factors, such as access 
to capital, health and education services, logistics, and infrastructure. Thus, 
trade liberalization itself may not guarantee faster growth because it requires 
that other structural changes and policies are addressed simultaneously. For 
example, Africa is the poorest continent, yet African economies have made 
substantial progress in trade liberalization (Le Goff, Rocher, and Singh 2014). 
But it has weak institutions, limited access to finance, poor education, and 
geographical isolation. This suggests that poor policies and strategies not 
only negatively affect total welfare, but also hamper developing economies 
from benefiting from the gains from trade. The situation is also relevant for 
Uzbekistan, because over 11% of its population lived below the poverty line 
in 2018 (ADB 2019). Thus, trade liberalization policies should not be seen in 
isolation: reforms to other policies are needed to maximize the potential of 
liberalizing effects, including the alleviation of poverty and wage inequality. 
From the micro-level perspective, trade openness promotes the reallocation 
of resources where the least productive firms exit the market and the most 
productive ones expand and enter the export market, thus increasing average 
industry productivity (Bernard and Jensen 1999, Pavcnik 2002, Melitz 
2003, Bernard et al. 2012). Another channel through which trade affects 
the production decision and price adjustments is the extent to which firms 
face foreign competition. Mayer, Melitz, and Ottaviano (2014) show that 
exporting to more competitive markets increases the relative market share of 
the best performing products within firms. Trade openness also induces lower 
average prices and markups due to increased product varieties and tougher 
competition in a trading country (Melitz and Ottaviano 2008).
The literature on the impacts of trade liberalization on the economic growth 
of Central Asian economies, including Uzbekistan, is limited. Nannicini and 
Billmeier (2011) attempted to answer whether open transition economies 
(Armenia, Azerbaijan, Georgia, and Tajikistan) grow faster than a closed one 
(Uzbekistan). The paper found that trade liberalization had a positive effect 
on economic growth in the transition economies. It concluded that, for 
Uzbekistan, missing the opportunity for trade liberalization could come at a 
substantial cost in the medium-to-long run. Mogilevskii (2012) provided an 
overview of the trade initiatives and recent trade trends and patterns in Central 
Asian economies, including Uzbekistan. The study found that openness 
to trade has increased, and ranged from 20% (share of trade in GDP) for 
Uzbekistan to 50% for Turkmenistan in 2010. 

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