Uzbekistan’s transition economy

Jul 21, 2019

Having been shut off from the global economy for decades, Uzbekistan is undergoing a transition from a closed, socialist economy to a free market orientated one.

The liberalisation of the currency in September 2017, when it was allowed to devalue 48% overnight, was the country’s “fall of the Berlin Wall” moment, signalling that the government is willing to spend political capital to reform and liberalise the economy

Since coming to power, President Mirziyoyev has implemented wide ranging and fundamental reforms, including tax reform, anti-corruption and improved relations with its neighbours and the international community

Similarly aggressive and far reaching reforms in Poland in the 1990s and Georgia in the early 2000s led to extended periods of economic growth, rapid expansion of the private sector and great improvements in the ease of doing business

Transition Case Studies

Poland
  • In 1989 the Balcerowicz Plan aimed to quickly transform a centrally planned communist economy into one with market allocation of resources and private ownership
  • The liberalisation of the economy provided opportunities for entrepreneurs, created hundreds
    of thousands of new private businesses, generated new jobs, created significant wealth, and provided value to a wide range of customers
  • Private businesses, rather than restructured or privatised state enterprises, emerged as the main engine of reform and economic renewal in Poland
  • Poland’s economy went from a 10%contraction in 1991 to 7% growth in 1995, and Poland’s growth rate between 1991 and 2000 was the highest of all former Soviet countries
Georgia
  • Since the “Rose Revolution” in 2003, Georgia’s GDP has increased more than two-fold; the volume of bank deposits has increased more than five times; and, after years of energy shortage, the whole country has a reliable electricity supply
  • Dramatic police and institutional reforms, including firing 40,000 policemen and replacing them with 15,000 new well trained personnel, has eradicated low-level corruption
  • Georgia is 6th in the World Bank’s 2018 Ease of Doing Business Index (above the Norway, the UK and the US), and the economy has grown at an average annual rate of 4.5%
  • Georgia has introduced visa free travel for a large number of countries, as well trade agreements with the EU and China
Vietnam
  • In 1986 Doi Moi aimed to replace the old-fashioned centrally-planned economy with a socialist-orientated market one, recognise private property rights, and open the door to international trade and investment
  • Reforms included decentralising the government, devaluing the dong, ending price controls, encouraging the establishment of private businesses and freeing markets
  • Macroeconomic stabilisation together with investor expectations of continuing reforms and improvements in the investor climate made Vietnam the largest FDI recipient among developing countries in proportion to the size of its economy in 1994
  • Within a decade, Vietnam became the second-largest exporter of rice in the world, cut inflation to single digits and tourism boomed: as a result, the economy grew at an average annual rate of 7.5% in the 1991-2000 period
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