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Can Uzbekistan Economy Retain Its High Growth Rates? Scenarios of Economic Development in 2015-30

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  • Popov, Vladimir

Abstract

Uzbekistan in recent 10 years is an extremely successful economy – high growth (8%), low domestic and international debt, undervalued exchange rate, relatively even distribution of income, creation from scratch competitive export oriented auto industry. It is important though to avoid “dizziness from success” and to envisage possible growth traps in the future. This paper discusses two unfavourable scenarios – negative terms of trade shock due to the decline in cotton, gas and gold prices (a deterioration of the current account balance by 10 p.p. of GDP) and a decline in growth rates of total factor productivity (TFP), as well as possible government responses to these shocks, in particular, changes in industrial policy. In recent years Uzbekistan promotes heavy chemistry industries (production of synthetic fuel and polypropylene goods from natural gas). This is the next stage of industrial policy after reaching food and energy self-sufficiency and successful auto industry development. There are reservations, however, against this strategy. First, gas production is about to decline due to depletion of reserves. Second, the level and growth rates of TFP in heavy chemistry are by far not the highest (they are the highest in light and food industry and in machine building). The increased share of heavy chemistry in total industrial output will cause the decline in the level and the growth rates of TFP. Third, auto industry is already a success, it may be reasonable to continue to support machine building industries of medium level of technology sophistication, like auto industry. For the country of the average size, export specialization in two major areas (autos and heavy chemistry) may be excessive.

Suggested Citation

  • Popov, Vladimir, 2014. "Can Uzbekistan Economy Retain Its High Growth Rates? Scenarios of Economic Development in 2015-30," MPRA Paper 59735, University Library of Munich, Germany, revised 20 Oct 2014.
  • Handle: RePEc:pra:mprapa:59735
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    File URL: https://mpra.ub.uni-muenchen.de/59735/1/MPRA_paper_59735.pdf
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    References listed on IDEAS

    as
    1. Eden, Maya & Kraay, Aart, 2014. ""Crowding in"and the returns to government investment in low-income countries," Policy Research Working Paper Series 6781, The World Bank.
    2. Popov, Vladimir, 2006. "Life cycle of the centrally planned economy: Why Soviet growth rates peaked in the 1950s," MPRA Paper 28113, University Library of Munich, Germany.
    3. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    4. Dani Rodrik, 2006. "What's So Special about China's Exports?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(5), pages 1-19.
    5. Popov, V., 2014. "An Economic Miracle in the Post-Soviet Space: How Uzbekistan Managed to Achieve What No Other Post-Soviet State Has," Journal of the New Economic Association, New Economic Association, vol. 21(1), pages 136-159.
    6. Schmidt-Hebbel, Klaus & Serven, Luis & Solimano, Andres, 1996. "Saving and Investment: Paradigms, Puzzles, Policies," World Bank Research Observer, World Bank Group, vol. 11(1), pages 87-117, February.
    7. Lee,Keun, 2013. "Schumpeterian Analysis of Economic Catch-up," Cambridge Books, Cambridge University Press, number 9781107042681, October.
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    More about this item

    Keywords

    Uzbekistan; scenarios of economic development in 2015-30; industrial policy; reaction to shocks; terms of trade; total factor productivity;

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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