Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth
202
trading status. In this context, Uzbekistan is not the WTO member; however, 
it benefits from the preferential trade agreements with the EU. Finally, the real 
exchange rates explain how the depreciation or appreciation of Uzbekistan’s 
currency affect its trade. The hypothesis is that a depreciation increases the 
export flows because firms in Uzbekistan experience increased demand for 
goods sold abroad as they appear cheaper for foreigners. Evidence from the 
gravity model literature suggests that all of the above described factors can 
have significant implications for trade flows by increasing or decreasing the 
costs of moving goods globally. In this exercise, the objective is to obtain 
estimates of all parameters and relate them to Uzbekistan’s export flows.
Table 5.5 presents the regression results and points to important and expected 
directions of the gravity factors (such as distance, population, GDP, and real 
exchange rates) on exports of Uzbekistan. In particular, a 10% increase in 
distance between Uzbekistan and its trading partner is associated with a 19% 
decrease in exports. This underlines the important roles of transit, logistics, 
and infrastructure, which may help reduce transport costs. Uzbekistan’s GDP 
is also crucial—a 10% GDP increase leads to a 5% increase in exports. The 
Table 5.5: Estimates of Gravity Model for Uzbekistan
Variable
(1)
(2)
(3)
Log(distance)
–1.928
b
–1.877
b
–1.851
b
(0.918)
(0.879)
(0.857)
Log(GDP
exporter
)
0.525
a
0.483
b
0.404
a
(0.160)
(0.191)
(0.210)
Log(population
importer
)
0.772
a
0.748
a
0.748
a
(0.246)
(0.250)
(0.251)
Contiguity dummy
0.280
0.265
0.263
(2.407)
(2.329)
(2.282)
EU member dummy
0.101
0.0487
0.00988
(0.0829)
(0.0767)
(0.0708)
WTO member dummy
0.0525
0.0259
0.0188
(0.0770)
(0.0901)
(0.0991)
Log(RER)
0.347
a
(0.0338)
Log(RER(-1))
0.302
a
(0.0432)
Log(RER(-2))
0.275
a
(0.0453)
Observations
799
752
705
Robust standard errors in parentheses.
a
p<0.01, 
b
p<0.05, 
c
p<0.1
EU = European Union, GDP = gross domestic product, RER = real exchange rate.
Source: Authors’ calculations.

---