Uzbekistan, a landlocked Central Asian country (Fig. 1), is strategically located as a regional trade and economic center. As of 2021, Uzbekistan is defined as a two-access, low- to middle-income country with an area of about 448,978 square kilometers and a population of about 36.1 million [30].
Uzbekistan has maintained a cautious approach to economic transformation since its independence in 1991, with extensive state control, state ownership of assets, and robust social policies. This “Uzbek Model” has saved the country from the catastrophic economic downturns experienced by some post-Soviet governments (e.g., [18], [12]). The economy is primarily dependent on exports of natural resources such as gas, uranium, gold, and agricultural products, especially cotton.
Uzbekistan has acknowledged the importance of agriculture, which accounts for about half of agricultural GDP, and has taken initiatives to modernize and improve it. Livestock, which accounts for 13 percent of the total GDP, is vital to providing food security and income in rural regions [22]. Since 2015, the government has implemented extensive reforms to open up the economy and encourage private sector development [19]. Foreign exchange, investment, and trade restrictions have been lifted, foreign exchange has been liberalized [7], and pricing controls have been removed [15]. Although these reforms generate opportunities in the medium term, they also pose concerns in the immediate term due to increasing competition, structural changes, and the pandemic’s macroeconomic impact (Figure S1).
Since 2016, Uzbekistan has boarded a more ambitious reform path focused on innovation and private sector participation to accelerate the transition to a market economy [5]. To promote startups and entrepreneurship, the country has established the Ministry of Innovative Development and adopted legislation and support systems [26]. With the goal of joining the World Trade Organization, Uzbekistan has also increased its participation in international trade and investment. Nevertheless, the country still faces problems, as its ranking in the Doing Business Index shows, especially in areas such as international trade, issuing construction licenses, and handling bankruptcy cases [30].
While the reforms have provided Uzbekistan with certain benefits, they have also brought unexpected short-term problems. The country's dependence on exports of agricultural products and natural resources has had a significant impact on economic progress [17]. Despite the difficulties caused by the COVID–19 pandemic, these exports have helped the country achieve steady prosperity since independence. With FDI accounting for 3.14 percent of GDP in 2022, FDI has contributed significantly to Uzbekistan’s economic expansion [27]. There has been an increase in investment due to dramatic changes and economic liberalization in the country, which have attracted foreign companies in a wide range of industries [1]. The role of the state in promoting economic growth is evident in the rapid increase in credit available to businesses [26]. To overcome the obstacles posed by the productivity gap and market competitiveness, Uzbekistan is focusing on sustainable development and diversification. The government’s emphasis on innovation, private sector growth, and international participation reflects its commitment to promoting rapid economic growth.