Central Asia-Caucasus Institute
The Paul H. Nitze School of Advanced International Studies (SAIS)
Johns Hopkins University

"State of the Uzbek Economy Today "

Dr. Martin C. Spechler
Professor of Economics, Indiana University

Summary of Event:

This event on the present state of the Uzbek economy featured Mr. Martin C. Spechler, Professor of Economics at Indiana University. As a leading authority on economic development in Central Asia, Prof. Spechler has published numerous publications and is currently doing research for a book on the reasoning behind the differing economic strategies adopted by the various Central Asian states.

Prof. S. Frederick Starr, Chairman of the Institute, introduced Prof. Spechler, pointing to the relative neglect of economics in the current debate about Central Asia.

Prof. Spechler began his presentation by briefly commenting on the current perception of Uzbekistan in the United States. Compared to neighboring Kazakhstan, Uzbekistan has little to offer economically, given its few profitable business opportunities. Since political relations with the US have soured over recent years, it seems that Uzbekistan has been moving closer to Russia and China.
For their part, the United States, and the West in general, presently do not attribute much importance to Uzbekistan due to their overall preoccupation with Iraq and Iran. However, Prof. Spechler reminded the audience that this may change in the future, given the trend to a multivectoral foreign policy by Central Asia countries.

Moving towards the main part of his speech, Prof. Spechler next elaborated on some of the main reasons for our the patchy picture of Uzbekistan. He pointed out that Americans generally possess insufficient language capabilities. In particular, Prof. Spechler deplored the lack of true specialists at the US embassy in Tashkent, reflecting the low priority of Uzbekistan in US foreign policy.
Cultural particularities on the part of the Uzbeks represent another important factor. Few people in Uzbekistan are willing to voice their opinion in public, let alone have them recorded in questionnaires, which in turn makes research very difficult. In addition, Uzbek newspapers are generally very uninformative. Lastly, Prof. Spechler pointed to the small Uzbek diaspora in comparison to that of China, Russia or Armenia.

According to Prof. Spechler, obtaining a well-rounded picture of the Uzbek economy is complicated task. Official data is not necessarily reliable, particularly because only some of it is shared with the public. A secret law stipulates which details may be published and which are to be kept confidential. Since there are no independent parliamentary hearings, Prof. Spechler expressed his doubts that the deputies and other government officials have a clear understanding of the state of the Uzbek economy.

In terms of its population, Uzbekistan is almost as big as California. While urban centers are relatively prosperous, rural areas and especially the region around the Aral Sea are considerably less developed. This gap has widened sharply since the collapse of the Soviet Union. At the same time, regional divergence in Central Asia has increased markedly. As for Uzbekistan, the transition depression has been rather shallow, amounting to a contraction of 10% to 15% of GDP, which Prof. Spechler attributed to the country’s institutional continuity after independence. During that process, the country has tried to preserve some positive facets of the Soviet Union, like the emancipation of women and universal literacy.

Since 1994/95, the Uzbek economy has enjoyed stable, albeit modest, growth. During what Prof. Spechler called the seven lean years, from 1996 to 2003, Uzbekistan continued to rely on the sale of cotton, gold, metals and minerals to earn hard currency. Today, Uzbek GDP stands at about $2000 per capita. Ever since independence, the government has emphasized stability and equity over growth. Uzbekistan has therefore lagged behind other transition countries with regard to economic reforms and has implemented only small-scale privatization and price liberalization. Many prices as well as public sector wages remain state-controlled.

All of the country’s economic indicators are provided by the Uzbek statistics office and there is reason to believe that some numbers have been modified, especially those on inflation. While prices officially rose by 6% over the past years, the IMF estimates true inflation to be around 15%. The view is shared by Prof. Spechler, who added that future development will depend very much on world commodity prices.

A series of economic indices and social factors remain subject to mere speculation. In this regard, Prof. Spechler pointed to the informal protection of property rights, the extent and patterns of corruption, the causes and extent of migration, the size of the security apparatus, the size of gold reserves and gold output as well as the processes by which political decisions are reached and the public’s opinion on political matters.

The Central Asia-Caucasus Institute was founded in 1996 and has grown to be the primary institution in the Washington area for the study of the Caucasus, Central Asia and the Caspian Region. The Institute forms part of a Joint Center with the Silk Road Studies Program at the Institute for Security and Development, Stockholm. The Institute sponsors impartial research on the region, acts as a forum for policymakers both in Washington and abroad, shares information concerning the region and provides access for its sponsors in business to relevant expertise on the region. Additional information about the Institute is available at www.silkroadstudies.org.