The Economic Prospects of the CIS

The Economic Prospects of the CIS

Sources of Long Term Growth

Edited by Gur Ofer and Richard Pomfret

This book brings together ten original studies on the transition and growth experience and the foundations for long-term growth of the newly independent states created by the dissolution of the Soviet Union.

Chapter 8: The Uzbek paradox: progress without neo-liberal reform

Martin Spechler, Kuatbay Bektemirov and Sergei Chepel

Extract

Martin Spechler, Kuatbay Bektemirov, Sergei Chepel’ and Farrukh Suvankulov The ‘Uzbek paradox’ which this chapter sets out to explore is this: although Uzbekistan has been very reluctant and slow to adopt the neoliberal economic reforms recommended by the ‘Washington Consensus’, particularly the International Monetary Fund, its measured economic growth has been rapid and robust. By contrast, neighbouring Kazakhstan and Kyrgyzstan have not achieved the economic rebound envisioned by IMF models and advice. Uzbekistan’s comparatively mild transition depression1 can perhaps be traced to its lack of industrialization and lesser need for structural change, yet this very absence of structural change should have led to reduced growth, as has been repeatedly predicted by the IMF, the Economist Intelligence Unit, and other outsider observers.2 Eppur si muove! And yet it grows! As Galileo insisted, such movement requires fundamental re-examination of conventional models of the universe. We believe inclusion of ‘institutional capital’, especially the role of the state in Uzbekistan’s semi-developed and remote situation, is the key omitted variable. While certain policies, including state investment and support of the industrial sector with direct subsidies and credits, may have failed in most other transition countries, they have succeeded better so far in Uzbekistan’s relatively confined setting. What is more, the availability of energy and raw materials, when exported to world markets and taxed effectively, relaxed the financial constraints other countries faced. The ability to do this is evidence of institutional effectiveness. The diversified and dynamic agricultural restructuring in Uzbekistan is another...

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