Strengthening sustainable economic development
Title: Support for economic reforms and sustainable economic development in regions of Uzbekistan
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Lead executing agency: Ministry of Economic Development and Poverty Reduction of the Republic of Uzbekistan
Overall term: 2021 bis 2023
After the collapse of the Soviet Union, Uzbekistan’s economy only opened up cautiously. Today, the country still remains strongly influenced by the principles of a planned economy. Nevertheless, the liberal economic reforms introduced at the end of 2016 are beginning to bear fruit. In 2019, as part of its privatisation policy, the Uzbek government offered share packages in state-owned companies in the chemical, oil and gas, mechanical engineering, banking and insurance sectors to both the local population and to foreign investors. In the first quarter of 2019, foreign direct investment in the country rose to USD 1.2 billion, an increase of around 90 per cent compared to the same quarter of the previous year. With annual growth in the gross domestic product (GDP) of 5 to 8 per cent since 2005, Uzbekistan is one of the most rapidly growing economies in Central Asia, due largely to the extraction of gold, oil and gas and the extensive cultivation of cotton. Furthermore, Uzbekistan responded to the global financial and economic crisis of 2008/2009 by launching comprehensive state support measures, such as infrastructure investments and subsidies for agriculture and the key industries mentioned above.
Despite this, the Welfare Improvement Strategy of Uzbekistan adopted by the Government has yet to impact the economy in a way which is balanced across regions and sectors. The high level of underemployment in rural areas remains a major challenge.
Economic reforms strengthen local economic development in Uzbekistan’s regions, focusing on Karakalpakstan, Fergana, Namangan and Andijan.
The project contributes to the implementation of economic policy reform in agriculture and tourism as well as in related industries such as handicrafts and silk production. It promotes inclusive growth and sustainable economic development with a focus on rural areas. At the same time, it helps to create employment and income-generating opportunities. The project focuses on the region of Karakalpakstan and on the three regions in the Fergana Valley – Namangan, Andijan and Fergana.
The project works in four areas:
Firstly, it strengthens proven and innovative approaches in selected employment and income-generating value chains. This is intended to promote local economic development driven by the private sector.
Secondly, the project increases the performance capabilities of service providers along the value chain. This will enable them to expand their advisory capacities for growth-oriented businesses in the project regions, and to offer these services on a long-term basis.
Furthermore, the capabilities of local actors are strengthened with the aim of identifying regional value-chain partnerships in agriculture, tourism and other sectors. The local economy is thus to be given the broadest possible base.
Finally, through public-private exchange formats, the project collates the experience gained to date in order to create suggestions for future economic policy reforms.
Together with selected economic interest groups and specialist institutions (chambers, associations, agricultural institutes), the project fosters regional economic development and develops services (information, education, training, advice). Local and regional government as well as policy-makers are part of this process. This enhances their skills in regional and local economic development, and also improves dialogue between private and public institutions. In addition, the project works jointly with relevant line ministries, research institutions and national academies.
Last updated: January 2021