The PRINCIPLE of GRADUALISM ensures the country's high economic growth rates and successful implementation of market reforms

At the beginning of the last decade, when new states appeared on the world map instead of the collapsed Soviet Union, all of them, including the Central Asian republics, had to solve the same, truly global task of building an independently functioning economic system. At the same time, the solution of this problem was complicated by the fact that it was not so much about building, but rather about rebuilding the "fragment" of the former huge economic space inherited by each state. The main problem faced by the newly independent states is the skew in economic development in one or another industry, which was a consequence of the policy of division of labor in the USSR. Despite the commonality of economic problems, each state had different starting opportunities for the development of its own economy, and therefore chose its own model of economic transformation, unlike others.

Let us consider the features of Uzbekistan's economic development in the 1990s and 2000s and the model of transition to a market economy chosen in this state.

diagnosis: SLOW DEGRADATION

In the USSR, Uzbekistan was assigned the role of one of the main suppliers of industrial and agricultural raw materials-gas, various minerals, cotton, fruits and vegetables, although there were also powerful manufacturing and machine-building enterprises. The economic base inherited by this country seemed more than unenviable. It was characterized by a monocultural focus on growing raw cotton. Moreover, most of the cotton-over 70% - was exported from the republic in unprocessed form or after primary processing, which significantly reduced export revenues ^.1 In 1988, the share of workers in the agricultural sector of the economy was 37.8% of the total number of people employed in the national economy, exceeding the share of those working in industry and construction (23.7%) by 1.6 times ² . According to the 1989 census, 59% of the population of Uzbekistan lived in rural localities ^.3

In the last years of Uzbekistan's stay in the USSR, its economy was characterized by the same degradation processes as in other republics, in particular, a slowdown in economic growth (although the average annual growth rate was at the level, and sometimes higher than the union-wide ones, and amounted to 3% per year, but per capita the volume of economic growth in the country was national income increased slowly ( 0.3 - 0.4% per year). The reasons for this dissonance are: the demographic situation in the republic - a large number of large families, high birth rates and population growth rates; the growing imbalance of production and the financial and credit system; the worsening deficit of the consumer market; the depreciation of money.

However, in the context of a general economic downturn and rising inflation, the national economy of Uzbekistan looked better than in other republics. Therefore, the collapse of the Union's economic system did not have the same shock effect on the economy of Uzbekistan as it did on the economy of most other republics. The predominance of the agricultural sector in the national economy of Uzbekistan in this case played a positive role. The orientation of the country's underdeveloped industry mainly to the republican and Central Asian markets and its lower dependence on supplies from the European republics of the CIS and non-CIS countries contributed to the fact that industrial production in Uzbekistan declined less than in other republics ^.4

At the same time, despite the reduction in the area allocated for cotton and the expansion of fruit and vegetable and grain crops, Uzbekistan managed to maintain cotton production at the "Soviet" level - 4 million tons per year5, while the grain harvest doubled 6 . Thus, the purely agricultural specialization of Uzbekistan, which has always been considered as a lack of economic development, in this particular case helped the republic to stay afloat, since the deepest decline in production occurred in the manufacturing industry, which played a less significant role in the national economy of the country. In addition, a significant support for the economy of the republic was the implementation of a policy of slower privatization compared to other CIS countries and more consistent abolition of state orders and subsidies.

Finally, the republican program of transition to the market was essential for stabilizing the economy and stimulating economic growth during the transition period. The Uzbek leadership has developed a reform program7 that takes into account many national characteristics and interests of various segments of the population. The program was not published as a single document, but its content can be judged from a number of speeches by President of Uzbekistan Islam Karimov8 and other leaders of the republic, decisions of the Supreme Council and practical measures implemented by the Government.

REFORM STRATEGY AND TACTICS

There are five main principles of implementing reforms in Uzbekistan.

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1. The priority of economics over politics. Deideologization of internal and external economic relations. The main criterion for solving any problems is the primacy of national and state interests of Uzbekistan.

2. Recognition of the state as the main reformer and guarantor of the implementation and irreversibility of economic reforms.

3. Creation of a new legislative and institutional framework for a State governed by the rule of law, in which the equality of all forms of ownership, human rights and the development of democracy are constitutionally guaranteed.

4. Social orientation of economic reforms with special attention to the social protection of the most vulnerable segments of the population.

5. Gradual and phased implementation of reforms with urgent resolution of issues as they "mature".

The model of transition to a market economy implemented in Uzbekistan has integrated the provisions of several models of economic transformation, including:

- the market transition program developed by the Union government in 1989-1990.;

- the Chinese reform model, which provides for the creation of a two-sector mixed economy model with a directive planning mechanism for managing the public sector and indicative regulation of the private and cooperative sectors;

- the Russian model of liberalization and denationalization of the economy with the rejection of centralized planning and emphasis on monetarist pricing, financial and credit and foreign economic policy;

- the Turkish model, which is manifested in active state support for the development of entrepreneurship and market relations.

At the same time, the methods of shock therapy, forced and abrupt transition to the market were categorically rejected. The transition to the market in Uzbekistan is carried out taking into account the real readiness of society to perceive market relations. The choice of such a path largely explains the more stable economic situation of Uzbekistan in comparison with the states that have chosen a different model of reform. Based on the basic principles of restructuring the economic system of Uzbekistan, its leadership put forward a number of strategic and tactical tasks. Tactical tasks include the following ⁹ :

1. Achieving grain independence. To achieve this goal, cotton and other industrial crops were reduced, while expanding the area for cereals, vegetables and fruits, as well as forage crops needed to strengthen the livestock production base. At the same time, it was decided that the reduction of cotton crops should not lead to a decrease in the total amount of product produced, which will be achieved by increasing the yield of cotton. Due to the expansion of raw cotton processing capacities, the revenue from cotton exports will be increased.

2. Strengthening the industrial base for processing mineral resources - non-ferrous and precious metals, raw materials for the chemical industry and others.

3. Development of its own fuel and energy base (increasing coal production, developing new gas and oil fields, creating capacities for the production of petroleum products). The solution of this problem will help to reduce the republic's dependence on imported fuel from Russia and Turkmenistan, as well as achieve oil independence in the future.

4. Creation of import-substituting industries to meet the needs of the republic in food, clothing, footwear and other mass-market goods.

5. Improvement of the ecological situation in the region, the deterioration of which was associated with the salinization of vast acreage under cotton and the use of chemical methods of crop processing.

The objectives of the strategic plan include the following ¹⁰ :

1. Elimination of mainly raw material specialization of the republic.

2. Access to world markets and priority development of export industries and industries that can not only provide a steady flow of convertible currency, but also produce competitive, high-tech, technically complex products on the world market.

3. Encourage the attraction of foreign capital to strengthen the export base.

4. Участие Узбекистана в создании общей транспортной системы, позволяющей подключить ее коммуникации к дорогам и магистралям, обеспечивающим новые выходы на ближневосточный и мировой рынки (программа восстановления "Великого шелкового пути" "TRACECA") ¹¹ .

Стратегические и тактические задачи логично соотносятся и не противоречат, как это может показаться на первый взгляд, друг другу. На начальном этапе перестройки экономики государства первостепенную роль играет решение тактических задач, в частности, модернизация и совершенствование добычи и переработки сырьевых ресурсов, а также увеличение их экспорта. Развитие этих отраслей национальной экономики должно способствовать созданию валютного запаса, необходимого для перехода к реализации стратегических задач. Постепенно наряду с опережающим развитием сырьевых отраслей начинают создаваться высокотехнологичные импортозамещающие производства.

О ЧЕМ ГОВОРИТ АНАЛИЗ МАКРОЭКОНОМИЧЕСКИХ ПОКАЗАТЕЛЕЙ

Для того, чтобы оценить результативность реализации программы реформирования узбекской экономики в период с 1991 по 2001 г., целесообразно проанализировать основные макроэкономические показатели за этот срок.

Один из основных показателей экономической активности государства - валовый внутренний продукт - ВВП (его объем в целом и уровень роста). Анализируя ВВП Узбекистана с 1992 по 2001 г., можно наблюдать определенное снижение объема ВВП, а также отрицательные темпы роста ВВП в период с 1993 по 1995 г. ¹² Самое серьезное падение ВВП наблюдалось в 1994 - 1995 гг., когда уровень ВВП составил 82% от уровня

стр. 16

In 1991, the GDP growth rate was negative - 4.2%. This decline in GDP is primarily caused by the complete collapse of the economic ties of the former Soviet Union, which were still active by inertia for some time (in 1992-1993), but completely disappeared by 1994, when the peak of the economic downturn in Uzbekistan falls.

Another reason why the period from 1994 to 1995 was the worst in a decade of Uzbekistan's development was the country's presence in the ruble zone, which did not allow the government to fully use the levers of monetary policy and currency regulation. In this regard, there is an urgent need to introduce its own currency.

This process took place in two stages. The first one covered the period from November 1993 to June 1994, when sum coupon ¹³ was introduced , which was traded alongside the Russian ruble. Temporary money - sum coupons-helped to accumulate some experience in conducting an independent monetary and pricing policy. Through the sum-coupon, the strategy and mechanism for introducing the national currency were studied, measures to combat inflation were developed and tested, the mechanism of mutual settlements was debugged, and conditions were created for the introduction of a full-fledged national currency.

On July 1, 1994 , the national currency of the Republic of Uzbekistan, SUM ¹⁴, was introduced into circulation, which smoothly and automatically replaced sum coupons in circulation. The multi-stage combination aimed at creating a national currency was completed, and the country received a full-fledged monetary unit that allows for an independent monetary and fiscal policy.

By the end of 1994, the transition to free market prices was largely completed, and consumer subsidies for goods and services were abolished ^.15 Even during this period, the policy of financial and macroeconomic stabilization and market transformation began to produce real results: in the second half of 1994, the rate of decline in production and price growth slowed down16 . Since 1995, the central objectives of macroeconomic policy have been to overcome the decline in production and further strengthen the national currency, and the main lever for economic recovery has been a tough financial policy.

To contain further price increases, the Government and the Central Bank of Uzbekistan have implemented a set of anti-inflationary measures, including various measures of coordinated fiscal and monetary policy. Thanks to the implementation of these measures, the growth rate of the money supply gradually decreased from year to year. Accordingly, the rate of inflation has been steadily declining since 1994; in 2000, it was only 28.2% ¹⁷ .

The first results of the economic policy aimed at macroeconomic stabilization were already evident in 1996. This year, the economy begins to recover-GDP growth was 1.7% in 1996 and 5.2% in 1997. However, the 1998 financial crisis in Russia, which indirectly affected Uzbekistan, slowed down GDP growth somewhat-to 4.4% in 1998 and 1999 years ¹⁸

It should be noted that Uzbekistan is the first state among the CIS countries to reach the level of 1991 in 2000 in terms of GDP at current prices ¹⁹ .

Agriculture continues to play a leading role in the structure of Uzbekistan's GDP. The main trends in the development of this industry over the specified period are a decrease in the area of cotton crops and an increase in the area of grain crops. At the same time, cotton production was practically preserved at the same level (in 1994 - 3938 thousand tons, in 1997-3641, in 1998-3236 thousand tons), and the grain yield increased by one and a half times ²⁰ . This allowed Uzbekistan to solve the problem of grain independence and stop importing grain ^{in 200021 .} Production of rice, meat, milk ^and eggs22 fell slightly, but in principle this decline was insignificant.

ANDIJAN-AUTOMOBILE CITY

The share of industry in the GDP structure is 1.8 - 2 times lower than that of agriculture, which reflects the real "balance of forces" in the economy. The greatest decline in industrial production occurred in the period from 1993 to 1996, when the growth rate of industrial production as a whole was negative. However, since 1995, there has been a steady positive growth trend in all sectors. Refining of oil, gas, coal, and iron-containing metals, as well as the production of MA, grew especially rapidly.-

Table

Key economic indicators of Uzbekistan in 1992-2001 (in % to 1991 in constant prices)*

* According to the State Statistics Committee of the CIS (www.cisstat.ru)

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tires and equipment, textile, footwear, food products, as well as the production of building materials ²³ .

In 1996, a new industry appeared in the structure of industrial production in Uzbekistan-the production of passenger cars. The emergence of this industry is associated with the establishment of a joint venture "UzDEUavto" together with the South Korean firm "DAEWOO". The company unites ten factories in the Andijan region - one of the most densely populated in the country, and produces passenger cars of four brands: "Nexia", "Tico", "Damas", "Matiz". The full capacity of the enterprise is 200 thousand cars per year, but it is only used for a quarter. In 1998, there was a slight decline in production caused by the financial crisis in Russia, as most of the cars are exported to this country and neighboring countries. In 1996, together with the German company Mercedes, the assembly of trucks ²⁴ was started .

Along with achieving grain independence, the goal of achieving oil independence was put forward as one of the fundamental tasks. For its implementation, it was decided to increase the volume of production and exploration of raw materials. While in the early 1990s Uzbekistan imported about 10 million tons of petroleum products annually, by 1998 the production of crude oil and gas condensate increased significantly and reached 8.1 million tons ^per year25 . In 2001, for the first time, the republic not only fully met its own needs for petroleum products, but even started exporting oil26 . For this purpose, the capacities of oil refineries (refineries) were increased and equipment for oil purification from sulfur-containing elements was purchased, as well as a new refinery was built in the Bukhara region and the Ferghana refinery was reconstructed ^.27

Over the past decades, Uzbekistan has been one of the largest exporters of gas, which is delivered to the European part of the USSR via the Central Asia Center, Bukhara - Ural and Bukhara - Moscow pipelines, and from there it is sent to European countries via export pipelines. After the collapse of the Soviet Union, Uzbek gas supplies to Russia, as well as to Eastern and Western European countries, were stopped due to a sharp increase in the cost of transportation. By 1999, gas production had increased by 7.5 million cubic meters compared to 1994 ^.28 Currently, Uzbek gas is consumed in the republic itself and exported to Tajikistan, Kyrgyzstan, South Kazakhstan and Turkmenistan.

In 1994, the republic surpassed Turkmenistan and Ukraine in oil and gas condensate production (Uzbekistan produced 5.5 million tons, Ukraine - 4.2 million tons, Turkmenistan - 4.1 million tons), and Turkmenistan in natural gas production (Uzbekistan - 47.2 billion cubic meters, Turkmenistan - 34.8 billion cubic meters) ^.29 Uzbekistan has become the second largest gas producer in the CIS after Russia.

In the structure of Uzbekistan's GDP, macro-sectors such as transport and communications (1.4-fold growth), trade and catering (1.8-fold growth), and services (1.3-fold growth) began to play a much more significant role than in 1993 ^.30

The other two most important macro indicators, in addition to GDP volume and growth, are the consumer price index and the producer price index. A comparison of the dynamics of changes in these indicators in 1994-1998 shows that the consumer price index increased 1.4-1.8 times slower than the producer price index31 . This is a particular feature of Uzbekistan, where the state, while implementing economic reforms, seeks to regulate retail prices and maintain social guarantees for the population in the form of free education, health care, a system of benefits for large families, etc.

DON'T REPEAT THE MISTAKES OF RUSSIAN REFORMERS

Another important macroeconomic indicator is the exchange rate of the national currency - the soum, introduced in Uzbekistan in 1994. In 1996, the exchange rate of the Uzbek soum to the American dollar was established.-

page 18

In the period from 1996 to 1999, the appreciation of the dollar was stable and amounted to 30 soums per year. In 2000 and 2001, the dollar exchange rate rose sharply. The growth rate of this exchange rate was 230% in 2000; it was the same in 200132 Recall that the exchange rate in Uzbekistan is not free and is regulated by the Central Bank of Uzbekistan 33. The sharp appreciation of the dollar in 2000-2001 is most likely due to the desire of the country's leadership to try to gradually bring the exchange rate closer to its actual market value. The motivation for the government's actions is understandable, since, on the one hand, Uzbekistan is learning from the Russian financial crisis of 1998 and is trying not to repeat Russia's mistakes, realizing that building a market economy is impossible without a real market exchange rate. On the other hand, following the principle of gradual reforms, the leadership of Uzbekistan cannot go for a complete and instantaneous "release" of the exchange rate.

Analysis of the total volume of exports and imports of Uzbekistan for the period from 1995 to 1999 allows us to trace the following trend. If in 1995 - 1997 the volume of imports slightly exceeded exports (by $ 200 million per year), with a mutual tendency to increase the volume of exports and imports, then in 1998 the situation on the foreign market changed: exports began to exceed imports in 1998-by $ 240 million, in 1999-by 127 millions of dollars) ³⁴ . Cotton continues to play a major role in the export structure, although its share has decreased from 48% in 1995 to 27.3% in 1999. Exports of services, food, machinery and equipment, and chemical products increased ³⁵ .

Almost half of Uzbekistan's imports (44.8% in 1999) came from machinery and equipment. In general, the general trend towards a decrease in imports was manifested in such areas as food and chemicals. Imports increased slightly in the metals, energy and services sectors ³⁶ .

The demographic situation in Uzbekistan is specific, manifested in two factors: a significant annual population growth and a significant proportion of the population living in rural areas. These features determine the structure of employment of the working-age population of Uzbekistan in various industries. The highest level of employment is in agriculture, but it is also quite high in industrial production, education, culture, science and art. The general trend for all industries is almost constant number of employees in the period from 1995 to 2000. The unemployment rate in Uzbekistan is also constant and amounts to 0.3-0.5% of the total number of employed ³⁷ . This is about 45 thousand people. From this we can conclude that the majority of emigrants from Uzbekistan are unemployed.

The main reasons for emigration are the lack of jobs and low wages. Moreover, in agriculture, where most of the population of Uzbekistan is employed, wages are particularly low. In January 1999. it was 2.7 thousand soums at a dollar exchange rate of 110.7 soums (this is $ 24). Work in industrial enterprises, in construction and in the transport system is paid better - in 1998, the average salary in these industries was about 10 thousand soums. The average salary level of 4-4.5 thousand soums was maintained in the same year in trade, education and medicine ³⁸ .

An analysis of the macroeconomic indicators of Uzbekistan in the period from 1992 to 2001 shows that the country enters the market economy with minimal losses. Although the pace of economic transformation in the republic, according to international economic organizations, is not high enough. But it was precisely this pace that saved the country from political and socio-economic shocks, on the one hand, and on the other - provided and continue to provide solutions to the tactical and strategic tasks of the transition period.

-----

^{Plyshevsky B. P.} 1 Reformirovanie ekonomik gosudarstv CIS: Uzbekistan [Reforming the economies of the CIS states: Uzbekistan]. Rossiiskiy ekonomicheskiy zhurnal, 1993, N10, p. 31.

^{Islamov B.} 2 Ekonomicheskie transformatsii v Respublike Uzbekistan i ee integratsiya v mirovoe obshchestvo [Economic transformations in the Republic of Uzbekistan and its integration into the world community].

³ Ibid., p. 93.

^{Yusupov A.} 4 Achieving macroeconomic stabilization and implementing structural transformations / / "Society and Economy", 1998, N3, p. 73.

⁵ Data from the Ministry of Macroeconomics and Statistics of Uzbekistan (www.gov.uz).

⁶ Ibid.

⁷ The main ideas of the reform program are presented in the works of the President of Uzbekistan I. A. Karimov (see reference 8).

⁸ (1) Karimov I. A. To think and work in a new way - a requirement of time. Tashkent: Uzbekiston Publ., 1997.

Uzbekistan on the threshold of the XXI century: security threats, conditions and guarantees of progress. Tashkent: Uzbekiston Publ., 1997.

(3) Karimov and I. Uzbekistan on the path of deepening economic reforms, Tashkent: Uzbekiston, 1995.

⁹ See reference 8: (1)pp. 37-49, (2) pp. 46-57, (3) pp. 45-68. ¹⁰ Ibid.

^{Sadykov N. N.} [Interaction of Uzbekistan with international organizations in the revival of the "Great Silk Road"]. Central Asia and the Caucasus, 1999, No. 3. www.ca-c.org.

Chernyavsky S. I. "The Great Silk Road" and the interests of Russia / / "World Economy and International Relations", 1999, N 6.

¹² Data from the State Statistics Committee of the CIS (www.cisstat.ru).

¹³ Materials provided by the Ministry of Finance of Uzbekistan (www.gov.uz).

¹⁴ Ibid.

¹⁵ Ibid.

¹⁶ Goskomstat CIS data (www.cisstat.ru).

¹⁷ Data from the Ministry of Macroeconomics and Statistics of Uzbekistan (www.gov.uz).

¹⁸ Goskomstat CIS data (www.cisstat.ru).

¹⁹ Data from the Ministry of Macroeconomics and Statistics of Uzbekistan (www.gov.uz).

²⁰ Ibid.

²¹ Uzbekistan: 10 years on the way to forming a market economy. Tashkent: Uzbekistan, p. 127.

²² Data from the Ministry of Macroeconomics and Statistics of Uzbekistan (www.gov.uz).

²³ Ibid.

²⁴ Uzbekistan: 10 years on the road to economic reform. - Tashkent: Uzbekiston, p. 103.

²⁵ Data from the Ministry of Macroeconomics and Statistics of Uzbekistan (www.gov.uz).

^{Grachev S.} 26 Rising Star: Uzbekistan Emerges as Oil and Gas Investment Opportunity. - www.rusenergy.com.

²⁷ Ibid.

²⁸ Data from the Ministry of Macroeconomics and Statistics of Uzbekistan (www.gov.uz).

²⁹ Goskomstat CIS data (www.cisstat.ru).

³⁰ Data from the Ministry of Macroeconomics and Statistics of Uzbekistan (www.gov.uz).

³¹ Ibid.

³² Ibid.

³³ Materials of the Ministry of Finance of Uzbekistan (www. gov.uz).

³⁴ Data from the Ministry of Macroeconomics and Statistics of Uzbekistan (www.gov.uz).

³⁵ Ibid.

³⁶ Ibid.

³⁷ Ibid.

³⁸ Ibid.

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