The Uzbek Model of Economic Development, 1991–91

Abstract

Uzbekistan has been difficult to classify among the thirty-plus economies in transition during the 1990s and has posed a puzzle, because it is a slow reformer but relatively good performer. This paper argues that there is no simple Uzbek model. Uzbekistan's economic reform process has been inconsistent gradualism through three different phases during the 1990s. Economic performance was due to favourable external conditions during the first half of the 1990s and to reasonably good policy-making, although policy errors in late 1996 led to negative effects. Uzbekistan illustrates the importance of policy, but sheds little light on a debate framed in terms of rapid reform versus gradualism.JEL classification: P27, O53, N15.

Central Asia after Two Decades of Independence

“…In rail transport and in some utilities, the government gradually allowed some market forces to operate. Overall, Uzbekistan became a market-oriented economy, but with substantial government direction (Pomfret 2000). A key distinction between Uzbekistan and the Kyrgyz Republic or Tajikistan is that Uzbekistan's legislative record is less reformist but its implementation is more effective.…”

“…Initial conditions were at first seen as neutral and its economic reforms were cautious, but during the 1990s Uzbekistan was the most successful of all Soviet successor states-including the rapidly reforming and geographically advantaged Baltic countries-in terms of output performance (Pomfret 2000;Spechler 2000). The Uzbek government had frosty relations with the international financial institutions, and this may have clouded judgements of what became known as the Uzbek puzzle: how to explain the good economic performance of a lagging economic reformer?…”

“…Much more important was the renunciation of commitments to establish currency convertibility and resort to forex controls after cotton prices declined in 1996. Such controls can have a short-term stabilizing impact, but the substantial long-term resource misallocation costs are familiar from other countries that have relied on similar agricultural taxes (Pomfret 2000;2008a). Although the government recognized their cost by the end of the 1990s, the forex controls were a stumbling block to reform, even as the government professed a desire to abolish them.…”

“…In July 1996 President Karimov was warmly received by President Clinton in Washington DC. For more details of Uzbekistan's evolving foreign economic policies, see Bohr (1998), Pomfret (2000 and Spechler (1999).…”

Business and society on the transitional periphery: Comparative perspectives

“…In turn, politicians have been ambivalent, and sometimes contradictory, in driving economic reform agendas. To further complicate things, there appears to be little direct connection between the speed and nature of liberalization and economic growth, at least in the first decade of independence (Pomfret 2000;Spechler 2004). In some instances, the leadership has been dominated by Soviet era politicians (Murphy 2006) and, in others, placed firmly under the sway of quasi-criminal oligarchs.…”