Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Figure 5.12: Firm Size Distribution in Uzbekistan, 2012 
Density
Employment
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97
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Trade and Foreign Direct Investment in Uzbekistan
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5.6. Gravity Model of Exports
This section estimates a gravity model of international trade to better 
understand the determinants of export flows of Uzbekistan. The gravity model 
explains the volume of trade as a function of distance and size of the countries 
of origin and destination. The model has become a workhorse of international 
trade for 50 years after being implemented by Tinbergen (1962). 
One of the important features of the gravity equation is that exports rise with 
the economic size of the destination country (Head and Mayer 2013). Using 
GDP as a proxy for economy size, this feature is illustrated by taking the trade 
flows between Uzbekistan and its major export destinations. Data on export 
values for 47 of Uzbekistan’s trading partners (listed in the Appendix) between 
2000 and 2016 are used from the International Monetary Fund’s Direction of 
Trade Statistics database. Together the 47 countries accounted for about 75% 
of Uzbekistan’s total exports in 2016. GDP in current dollars, converted at the 
current exchange rate were extracted from CEPII.
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Figure 5.14 shows the log 
of Uzbekistan’s bilateral exports on the vertical axis and the log of destination 
countries’ GDP on the horizontal axis. The red line shows predicted values 
from a simple regression of the log of export flow on the log of GDP. The GDP 
elasticity is 0.24 and is statistically significant, indicating a positive relation 
between the export volume and GDP of the destination country. 
5
Centre d'Etudes Prospectives et d'Informations Internationales.
Source: Authors’ calculations.