There are two basic different approaches to evaluating a nation’s growth strategies:
1. Aid & trade: This area concerns how connected a domestic economy interacts with the global economy; whether it can expect to receive aid from other nations, and how they interact as trading partners.
- Uzbekistan is what is considered a country of medium development. It has received various forms of aid in the past, but for the most part, the “aid and trade” approach to growth does not really apply to Uzbekistan. Humanitarian aid is not the key to Uzbekistan’s economic growth.
2. Market-led and interventionist strategies
- Uzbekistan is one of the couple dozen former members of the Soviet Union that is in the process of gradually transforming from a command-style, or “interventionist” oriented economy to one that is market-led and more democratic. This approach is therefore highly applicable to Uzbekistan’s situation.
- Uzbekistan may benefit from adopting more rapid privatization. A more market-based approach will help the country make better use of its rich natural resources and interact more positively with foreign nations.
Different components should be considered when evaluating a nation like Uzbekistan’s growth strategies. Here are some components to be considered and how they pertain to Uzbekistan:
1. IMF & World Bank
IMF: An organization whose purpose is to promote international monetary cooperation; exchange rate stability and orderly exchange arrangements; to foster economic growth and high levels of employment; and to provide temporary financial assistance to countries to help ease balance of payments adjustment.
- The IMF has criticized Ubzekistan for having “weak” monetary policy, and recommends that the government “stiffen monetary policy and up the nominal exchange rate”. Increasing interest rates should lower inflation, which the IMF considers a priority for Uzbekistan. The IMF also recommends Uzbekistan to continue its structural and institutional reforms, working towards becoming a market economy. In opposition to Uzbekistan’s “gradualistic” approach, however, the IMF suggests a more rapid development of private enterprise. Cooperation with other countries in Central Asia experiencing similar difficulties will improve their changes of achieving steady, long-term development through increased commerce and investment.
World Bank: A collaboration of different countries who maintain a collective fund, and are concerned with financing reconstruction and development through the construction of national infrastructure.
- Uzbekistan joined the World Bank in 1992. The World Bank supports increasing the productivity and sustainability of agriculture in Uzbekistan. Most recently, the WB has supported improving water resource management in the Ferghana Valley (highly populated and extremely fertile region rich in resources that covers parts of Uzbekistan, Kyrgistan, and Tajikstan and includes Uzbekistan’s only port, the Amu Darya). The organization is helping to fund a project that will focus on improving irrigation and drainage and supporting agricultural development. The program will strengthen institutions by offering support to public works and privately owned organizations involving water management and utilization. The project is funded primarily by the International Development Association of the World Bank and partly by the Uzbek government. Uzbekistan should encourage programs like these that help make more efficient use of its resources and deal with the ongoing problem it faces of overpopulation.
2. Other international organizations
Food and Agriculture Organization of the United Nations: One of the largest specialized agencies in the United Nations system and the lead agency for agriculture, forestry, fisheries and rural development.
- Uzbekistan is an FAO member, and part of a FAO endeavor called The Crop Wild Relative Project, whose focus is the conservation of crop wild relatives through enhanced information management and field application. Such programs help Uzbekistan to better manage its natural resources.
UNICEF: Organization whose aim is to work with children and remove all the obstacles like disease, poverty and discrimination that prevent their full and proper development.
WHO: Organization whose focus is the attainment of all people of the highest possible level of health.
- In recent years UNICEF has called on the Uzbek government to “place child survival at the top of its political agenda”. Uzbekistan has made significant progress towards achieving the Millennium Development goals in terms of child survival, largely thanks to the help of organizations like UNICEF, WHO, World Bank, and Asian Developmental Bank in the form of technical assistance to improve medical technologies and fund research. Child rights, as mentioned in previous blogs, are an issue for Uzbekistan, and given the country’s extremely young population should be one of the government’s top priorities.
3. Private sector banks: make loans to developing countries at commercial rates of interest
- Loans from private sector banks are not a particularly prominent part of Uzbekistan’s development. The best strategy for growth in Uzbekistan will probably focus more on attracting investments rather than loans.
4. Non-Governmental Organizations
- According to IWPR, “Uzbekistan is seeing a steady decline in the number of non-government organisations, NGOs, with a string of closures reported recently. Not only is the government hostile to any group with foreign links, it has blurred the lines with a semi-state umbrella body that manages the theoretically independent NGO sector.” In other words, NGOs in Uzbekistan exist, but many are not actually as “independent” as they are supposed to be; those who are truly independent and have foreign links are dying out and being pushed out of the country by a hostile Uzbek government and the umbrella program itself, National NGO of NGOs in Uzbekistan (NaNaOuz). However, “The official statistics show more than 5,000 NGOs working on economic, cultural and social programmes in Uzbekistan.” Some are funded by foreign donors, others by the NaNaOuz–which many external sources claim is corrupt. Independent organizations are pressured to join this “corrupt” umbrella program. Often, funds intended for projects are stolen or misused. Therefore, although Uzbekistan has a relatively strong network of NGOs, that network is diminishing in size, as the government becomes more tightlipped about its policies and stricter about allowing foreigners or non-government related programs to have any independent influence inside the country.
- Uzbekistan needs to improve its foreign standing by attracting NGOs into the country. The only way to do this is by allowing such organizations to have more autonomy. The government needs to loosen its control if it wishes to benefit from the help of external agencies.
5. Multinational Corporations: Company which possesses and controls means of production or services outside the country in which it was established.
- Influential MNCs are largely absent from Uzbekistan.
6. Commodity Agreements
Buffer stock scheme: scheme operated by a central authority and aimed to stabilize prices and protect producers from sudden shifts in demand and supply (often supply in the case of agriculture).
- Buffer stock schemes are not particularly applicable to Uzbekistan, although it is a major exporter of the commodity cotton. In the past, Uzbekistan has suffered from poor weather that heavily influenced its supply of cotton; perhaps a buffer stock scheme would better equip Uzbekistan to deal with such fluctuations in supply in the future.
Cartel Arrangement: involve the formation of a single selling organisation, i.e. a cartel, to restrict output of individual members through the issuing of quotas.
- Uzbekistan is potential member of an evolving natural gas cartel, headed by Russia. If this plan goes through, Uzbekistan could benefit a great deal through improved internal infrastructure as well as investments from abroad. Such a cartel would allow the countries involved to wield a great deal of economic power.
Uzbekistan is home to a number of a programs aimed at improving resource usage, child mortality, and similar problems. Issues dealing with children are especially important for Uzbekistan given the country’s large number of them, and the fact that its tendency towards forced child labor scares off many foreign investors and programs otherwise interested in investing in or helping Uzbekistan to grow. Ultimately, institutional and political factors still stand in the way to economic growth for Uzbekistan. Corruption is a real problem that is causing sharp declines in NGOs and foreign investment as well. Uzbekistan also faces widespread unemployment and underemployment. Perhaps more rapid privatization and focus on developing its export industry will provide more job opportunities for its citizens in the future–government subsidies aimed at preventing the “shocks” of transformation from a command-style economy to one more market led are certainly a cause of unemployment and underemployment. If the government can make compromises and loosen their hold on its citizens political and economic mobility, FDI especially for Uzbekistan would likely be a successful strategy to achieve growth. On a final note, in the future it seems more powerful programs will have to be implemented to control Uzbekistan’s booming population.