Uzbekistan is the second largest economy in Central Asia, and the government aims to achieve upper-middle income status by 2030. Real GDP grew by 5.3% in 2022, down from 7.4% the previous year. For almost three decades, the country’s post-independence growth was driven chiefly by state-directed investment and industrialisation, with international trade and private sector development significantly limited. This has changed since the launch of a wide-ranging programme of reforms in 2017.

Since embarking on a wide-ranging reform programme in 2017, Uzbekistan has made considerable progress in creating the framework conditions for a competitive private sector. In the first decades of independence, Uzbekistan’s growth was primarily driven by a state-led model of industrialisation, state-owned enterprises predominated in most sectors of the economy, and the role of international trade and the private sector significantly limited. Whilst macroeconomic performance was relatively strong, this development model tended to hamper the reallocation of human and fixed capital needed to drive structural transformation. Since the reform process accelerated in 2017, the government has made considerable efforts to reduce the direct role of the state in the economy and enable the private sector to play a more expansive role in economic development.

Addressing barriers to private-sector development has been a long-standing ambition of the government of Uzbekistan, with an extensive programme of reforms that began in 2017 redoubling efforts to foster the growth of a more competitive and productive population of private-sector firms. Uzbekistan needs a more dynamic and innovative private sector if it is to meet the challenges and seize the opportunities of the green and digital transitions, which create a new impetus for accelerating these reforms. A survey of the private sector in Uzbekistan provided an opportunity to gather new insights into firm-level perceptions of the ongoing reform process and to refocus the attention of policymakers on some of the most pressing issues.

The government of Uzbekistan launched a wide-ranging programme of reforms in 2017 in order to accelerate the transition to an open, market-based economy. The country is now on a pathway to a sounder economic and fiscal footing, but the success of these strategic ambitions depends on the resolution of long-standing issues in the business climate. Addressing these issues is also critical to enabling the broader structural transformation of the country’s economy, which despite having started in the mid-1990s, remains at a relatively early stage.

The purpose of the OECD private sector survey of Uzbekistan, conducted by the OECD in 2022, was to collect new firm-level insights into the ongoing reform process to support the business climate in the country. The survey provides additional input for the OECD and the Government to consider when reflecting on the effectiveness and direction of the reform process. This chapter introduces the survey, its methodology, and a number of high-level observations that emerged from the process.

Respondents to the survey raised a number of concerns relating to the ease of trade in Uzbekistan. These concerns dovetail with a large body of work the OECD has conducted, in co-operation with the government, on issues around trade facilitation and connectivity. Despite the geographical connectivity penalties Uzbekistan faces due to its double landlocked status, the country has potential to be an attractive destination for market-seeking investment: a large and expanding population, nestled in the midst of a number of other small but potentially high-growth markets. Yet, for both domestic and international firms to harness potential market opportunities, there remains much to be done to lower the cost of trade and raise awareness of external opportunities for the domestic private sector. This chapter introduces a number of insights from the survey, before giving an overview of recent progress, opportunities, and challenges in trade facilitation and export promotion in Uzbekistan.

Responses to the survey suggest that firms consider ongoing legal and regulatory reforms to support the business climate in Uzbekistan to be moving in the right direction. At the same time, respondents note that there remains significant work to be done both on the implementation of these reforms, and on additional and complementary pro-competition reforms. These views are in line with OECD analysis on a number of areas highlighted by respondents, such as overall framework conditions for business, taxation, and competition policy. While the legal and regulatory environment for business in Uzbekistan has improved significantly developed since 2017, reducing many unnecessary fixed costs of doing business, the survey highlights a number of areas where more work is necessary to foster private sector development.

While survey respondents were positive about digital opportunities in the country, many expressed concerns regarding infrastructure and skills. The process of digitalisation will profoundly shape Uzbekistan’s economy and society in the years to come, just as it is doing across the OECD. Ensuring access to high-quality connectivity infrastructure and raising the level of digital skills in the workforce are essential for enabling the private sector to make the most of the opportunities of digitalisation.