Economic Development in selected regions of Uzbekistan

Project description

Title: Economic Development in selected regions of Uzbekistan
Commissioned by: Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ)
Country: Uzbekistan
Lead executing agency: Agency for Foreign Economic Relations and Foreign Investment of the Cabinet of Ministers of the Republic of Uzbekistan
Overall term: January 2005 to December 2011

Context

The collapse of the Soviet Union led to a hesitant economic opening of the country, characterised predominently by planned-economy approaches. Economic growth was correspondingly weak, and agriculture remains one of the most important economic sectors. About 40 percent of the population are employed in this sector, which contributes about 35 percent of the gross domestic product. Since the end of the 1990s, average annual income has been in decline, and 27 percent of the population live below the poverty line. Particularly affected are the thinly settled rural areas in which 60 percent of the total population live. They suffer the most from the country’s structural crisis.

Through the desiccation of the Aral Sea and its ecological consequences, imbalances are exacerbated particularly in the Karakalpakstan region. The formerly prosperous Karakul sheep raisers and the profitable sheepskin processing trade in the Navoi region were especially hard-hit by the lapse of old trade relationships – the subsistence base of broad population segments is in danger. Local government structures and procedures afford little help. They are still heavily influenced by planned-economy principles, and they lack experience with planning and implementing region-specific promotional measures to revive local business cycles.

Objective

Transformation-related income losses suffered by the rural population in structurally weak regions are cushioned by promotion of small and medium-sized enterprises.  Promotion measures support reactivation of local business cycles and improve value-added chains, especially in upstream and downstream areas of the agriculture sector. They contribute to reduction of rural poverty and reintegration of the agricultural sector into the national economy. Establishment of  effective promotion structures in disadvantaged rural regions increases chances for the economic integration of impoverished population groups.

The project works closely with the small loans programme financed by the Asian Development Bank for small and medium-sized enterprises.

Approach

Partner institutions are supported with technical expertise in the planning and implementation of region-specific promotion instruments, and government interventions in the production and marketing process are being reduced.  Priority areas of the advisory services are the establishment of decentralised governmental and private-sector-oriented regional promotion structures and the analysis and evaluation of trade obstacles in agricultural structures and state agricultural intervention mechanisms.

Promoting the extension of pastoral farming is to guarantee sustainable land use in marginal locations. Participation in international auctions gives flanking support to the marketing and market-oriented processing of Karakul sheepskin.