Building capacity in Central Asia to utilize trade policy for human development (Uzbekistan report) Dilshod Akbarov Research Coordinator, UNDP Uzbekistan

Trade policy and human development: analysis of interrelation Analysis shows there is a two-way relationship between foreign trade and human development, at the same time directions and dynamics of this interrelation depend on great number of different factors. Study of international experience of trade policy reforms shows that increase in the level of openness of foreign trade in most of the cases has served as a result, but not the initial factor of achievement of economic development. At the same time at certain stages of development, liberalization of foreign trade is a necessary condition for ensuring sustainability of high rates of economic growth. As international experience suggests, trade policy’s strategy for economic and human development should not only include issues of gradual liberalization and achievement of higher foreign trade flows but also such important tasks as institutional development, achieving comprehensive development strategy, ensuring long-term growth and high rates of human development.

Uzbekistan: Soviet heritage and its impact on the well-being and human development. Major problem: monoculture of the economy and dependence on the import of primary foodstuffs, including essential commodities and strategic goods. Consequences: А) Dependence of primary foodstuffs’ prices on unstable world market prices, which is also a threat to social stability; B) Macroeconomic situation’s vulnerability, deriving from the unstable world market prices for primary raw commodities, especially cotton and oil; C) High rate of hidden unemployment and low level of population’s income as a result of economy’s specialization on cotton.

Stages of economic reforms: aims and main tasks. Influence of economic policy at different stages of the reforms on human development. Since becoming independent in 1991, Uzbekistan’s foreign trade policy has undergone significant changes on each stage of economic reforms. At the same time trade policy has never been all-sufficient, and has been considered as an important tool for achieving objectives of macroeconomic, industrial and social policies of the government. At the first stage of reforms ( ) foreign trade policy served mainly as a tool for social stabilization and provision of the home market with consumer goods by means of import liberalization and export restriction. At the second stage ( ) trade policy was used, first of all, for ensuring macroeconomic stability and stimulation of investment activity of the economy’s real sector. At this stage, the government implemented currency control mechanism (which also lead to number of negative consequences), that allowed to attract large-scale investments into number of strategically important branches of the economy. Liberalization of the currency market and introduction of protectionist policy at the third stage of economic reforms (after 2001) became one of the most important factors of achieving high rates of export and economic growth of the country, and also improving human development indicators.

At the current stage, foreign trade regime of Uzbekistan is characterized: - with the high level of import protectionism, not always justified even from the local producers’ protection viewpoint, - number of administrative and regulatory barriers to foreign economic activity Main directions of improving trade policy for human development Improving export policy - stimulating export production by creating favorable environment for wider use of instruments of export financing, crediting and insurance (e.g. exim banks, etc.); - creating favorable environment for increasing private sector’s share in export; - decreasing existing export bans; - introducing trade facilitation measures (decreasing transaction costs, and improving customs administration) Liberalization of import regime - decreasing level of protectionism for certain types of commodities (on step by step basis); - cancellation of individual import preferences (leading to distortions on markets); - simplification of import procedures (including customs administration); - creating free-economic zones.

Building capacity for human development Improving the system of foreign-economic activity governance and implementing modern ICTs - «Single Window» mechanism - Pre-arrival declaration and e-declaration of goods - Risk management systems and post-clearance audit in customs administration Improving foreign trade infrastructure - Providing exporters with information on foreign markets (prices, legal regulations, etc.) - Creating favorable conditions for implementing Quality management systems Improving business-climate - Improving administrative procedures (licensing, certification, control, etc.) - Lowering the tax burden, improving tax administration - Ownership protection issues - Crediting system Improving the systems of higher and special secondary education, leading to improvement in labor force quality - Creating favorable conditions for private education - Ensuring higher education institutes and colleges’ prompt response to labor market’s requirements by means of expansion of their powers in academic field, human resource policy, admittance procedures, and financing issues

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