Policy brief 2008/06

Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century

Tashkent 2008

This report reflects opinions and views of the working group, which may not coincide with the official point of Center for Economic Research. Center for Economic Research, 2008 All rights reserved. Reproduction, copying and distribution of this report and/or its parts in any form shall be allowed with mandatory reference to Policy brief Towards KnowledgeBased Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century.

Working group members:

Research coordinator: Research assistant: International consultant: National experts: B. Ergashev Z. Davidova Dr. Larry Wong Chee Yoong R. Makhmudova T. Kirpa R. Yunusov M. Mukhitdinova V. Muhtarova . Khudaynazarov

Acknowledgements

The team would like to express our gratitude to our colleagues, members of the CER Problem Council for their useful comments. We would like to thank Dr. B. Eshonov for his supervision and guidance for the duration of this activity. We would like to express deep appreciation and gratitude to doctor Larry Chee Yoong Wong, whose knowledge, experience and readiness for cooperation have ensured successful realization of the research.

Summary
Uzbekistan need to embark on the transformation from a production-centric, input and supply-driven growth strategy that has served it well in the past, to a supply chain oriented, demand-driven and increasingly value innovation and knowledge-driven one, in order to achieve sustainable rapid growth and development into the 21st Century. In the long run, Uzbekistan have to rethink and act simultaneously on its education base, its innovation system, and its information and communication technology infrastructure while building a high quality or world-class economic and institutional regime in a gradual manner. The Policy Brief offers the analysis of preconditions and barriers for establishment of Knowledge-Based Economy in Uzbekistan. Strategic recommendations are also provided to drive Knowledge-Based Economy initiative and transform Uzbekistan and ensure sustainable growth into the 21st Century. At the same time, the Policy Brief is preliminary in many respects and there is much to be done. Provided Road Map and Action Plan needs to be further deliberated on and fine-tuned and implemented with full commitment of all stakeholders.

Table of Contents:
Introduction.............................................................................................................................6 Section I. Background.............................................................................................................8 Section II. SWOT and situational analyses & benchmarking............................................14 Section III. The cases of cotton and tourism.....................................................................19 Section IV. The way forward...............................................................................................21 Conclusion...............................................................................................................................26 Appendices.............................................................................................................................28 Appendix 1. KAM - Uzbekistan Benchmarking...........................................................................................28 Bibliography..........................................................................................................................32

Figures
1. 2. The Four Foundations of the Knowledge-Based Economy Concept of Value Added Chain in the K-based economy 9 10 11 12 13 17

3. Agri-Food Supply Chain The Big Picture 3b. Economic Activities at Each Level of Supply Chain 4. 5. The Promise of Biotechnology KAM Basic Scorecard Mapping 2007 - Uzbekistan

Tables
1. 2. 3. 4. SWOT Analysis Welfare Improvement Strategy of Uzbekistan (2008-2010) Relevant Reforms/ Programmes Road Map towards Knowledge-Based Economy in Uzbekistan Summary and Sequencing of Recommendations Action Plan 14 15 22 23

Abbreviation
CER EurAsEC FDI FRDU GDP ICT IFC IPR JV KAM KBE MNCs MTBF OECD PPP R&D S&T SCM SEZs UNDP USA WIS WTO Center for Economic Research The Eurasian Economic Community Foreign direct investment Fund for Reconstruction & Development of the Republic of Uzbekistan Gross domestic product Information and Communications Technology International Finance Corporation Intellectual Property Rights Joint venture Knowledge Assessment Methodology Knowledge-Based Economy Multinational Corporations Medium Term Budget Framework Organization for Economic Cooperation and Development Public-Private Partnership Research and Development Science and Technology Supply Chain Management Special Economic Zones United Nations Development Programme The United States of America Welfare Improvement Strategy of Uzbekistan World Trade Organization

Introduction

Introduction
Knowledge-Based Economy (KBE) has attracted the attention of international organisations, development agencies, policy analysts, researchers and governments alike since the early 1990s. It has generated a pool of knowledge in agencies like UNDP, The World Bank, and OECD. It has spawned dedicated websites like Knowledge for Development of the World Bank Institute as well as National Master Plans as in the case of Malaysia. The World Bank Institute has even developed a Knowledge Assessment Methodology (KAM) and it currently provides a ranking of 137 countries and inter-active web-based analyses and cross-country comparisons. Not surprisingly KBE has, over time, become fashionable with a growing school of strong proponents, judging from the continuing stream of studies and policy related work which have contributed to a growing pool of literature. A review of country experiences, however, reveals that there are crucial lessons to be learnt, especially for those who are on the threshold of exploring ways and means of adopting this development strategy and internalising it into their development agenda and policy. Countries where KBE initiatives have worked, or seem to be working, are invariably those who have spent sufficient time to rationalise and subsequently craft a working policy and strategies suited to their country and ensure that it is dovetailed to and consistent with their long term vision and mission. These initiatives are usually widely disseminated to generate awareness and garner support from the key segments or stakeholders of the respective countries. They have also adroitly moulded and integrated these KBE initiatives with other on-going or planned policy reforms and structural transformations under some higher order overarching national goals. Conversely, amongst adopting countries that have floundered are those that have rushed into embracing it with a lot of rhetoric, often merely transplanting successful models from other countries and treating it as a panacea. They, unfortunately often find themselves ending up as prisoners of their own rhetoric. It is within this context and orientation of developing and implementing Uzbekistans own version of Knowledge-Based Economy that this Policy Brief is developed and presented. This Policy Brief is organised such that after this introduction, Section I provides the backdrop by considering and reiterating why KBE is important to Uzbekistan and provides a working definition of Uzbekistans Way to KBE.

Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century

Section II comprises a SWOT analysis to arrive at a first-cut plan of action as well as a Situational Analysis focusing on the various on-going and proposed reform measures contained in the recently released key MediumTerm Planning document, the Welfare Improvement Strategy Paper (WISP) that have a bearing on or supportive of KBE initiative. It also examines Uzbekistans current KBE readiness and benchmarks it against a selected group of countries. Subsequently, the supply chain and KBE relating to cotton and tourism are considered in Section III. Section IV presents the Way Forward, comprising the recommended Strategic Thrusts and an outline of a Road Map towards KBE for Uzbekistan before the Conclusion in the Final Section.

Chapter I. Background

Section I. Background
What is a Knowledge-Based Economy? There are many definitions of KBE, all revolving around the notion of an economy based on the production, distribution and utilisation of knowledge1, which increasingly constitutes the main engine of growth and wealth creation in the country. For Uzbekistans purpose it is proposed that KBE be defined as an economy in which knowledge, creativity and innovation play an everincreasing and important role in generating and sustaining growth. In the course of preparing this Policy Brief, it was found that at the operational level in Uzbekistan, there appears to be some underlying disagreement that has inevitably given rise to some confusion and different schools of thought. These range from those who are very gung ho about KBE and contends that it would enable the country to focus on high technology industries (like aerospace, biotechnology, ICT, nanotechnology, and composites) and operate at the frontiers of Science and Technology (S&T) at one end of the spectrum to those who argue that as an economy in transition we are not ready, so better to focus and complete on-going transition first, then KBE later, maybe at the other. However, between these two extremities, there is a discernible growing consensus2 amongst a cross section of policy makers, academicians, researchers and private sector for adopting a more pragmatic approach, which takes into account key emerging trends and Uzbekistans stage and efforts in development, transition and reforms. They agree that the time to act and move in a more integrated and coordinated manner is NOW, as required reforms are expected to take time. For example, they argue, efforts in Education will require one to two decades before its full impact can be felt. They also concur that despite high literacy rates and a long tradition in R&D and S&T, innovation remains weak; and prioritisation and commercialisation of R&D questionable. Consequently, they concur that a lot needs to be done especially the integrated and coordinated planning, investment and funding of a National Innovation System as well as the other foundations of KBE, namely Economic and Institutional Environment, Education, and Information Infrastructure. There is also a need for the increasing involvement of the private sector in the planning, investing, funding and driving of the overall
1 Which can be divided into codified (organized, systematized that is stored and transferred as hard and soft copies) and tacit (more intangible, person incorporated skills, stored in the minds of individuals) knowledge, with the former comprising the know what (relates with facts) and know why (relates to rules functioning in nature, society, organizations) while the latter comprising the know how (relates to abilities of doing something possessed by individuals, companies) and know who (relates to combination of information and relations and privileged access). 2 As evidenced in a Round-Table organized at the Center of Economic Research on 6th December 2007 where a presentation of a draft of this Policy Brief was made.

For Uzbekistans purpose it is proposed that KBE be defined as an economy in which knowledge, creativity and innovation play an ever-increasing and important role in generating and sustaining growth

Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century Figure 1. The Four Foundations of the Knowledge-Based Economy

Education An educated and skilled population can use knowledge effectively

Innovation system A system of organizations that can tap into global knowledge to assimilate and adapt it, as well as create local knowledge

Information Infrastructure Facilitates the effective communication, processing and dissemination of information

Economic and institutional regime Provides incentives for the efficient creation, dissemination, and use of existing knowledge
Source: World Bank 2007.

KBE initiative, step by step. Key emerging trends that are relevant to KBE include the importance of moving up the value added chain; the increasing relevance of Supply Chain Management (SCM), and the promises of biotechnology and their impending convergence with ICT. Moving up the value-added chain: In the enduring search for higher profits and greater growth (which culminates in more rapid growth for the overall economy) Uzbekistan enterprises have to move up into the pre-production stage (product design and R&D) and post-production stage (marketing & distribution and branding) in order to realise higher value-added per employee. However, the pre- and post- production stages are also more knowledge intensive, the further we move away from the production stage. Overtime, the value-added curve will shift upwards but the value-added per employee at the pre- and post production stages will increase more or sharper through increasing skills, knowledge creation and diffusion in a KBE as shown in Figure 2. Increasing Relevance of Agri-food Supply Chain Management: Supply Chain Management (SCM) has, in recent years, attracted much attention and has spawned text books and even dedicated journals like Supply Chain Management, an International Journal. The development of the idea


Uzbekistan enterprises have to move up into the pre-production stage (product design and R&D) and post-production stage (marketing & distribution and branding) in order to realise higher value-added per employee

Chapter I. Background Figure 2. Concept of Value Added Chain in the K-based economy

Value adding by skills and K-creation and diffusion

Value adding by manual means and capital

Value adding by skills and K-creation and diffusion

(B)

Value Added Per Employee

Emphasis of P-based economy

(A)

R&D

Product Design

Assembly & Production

Branding & Distribution

Marketing

Source: Adapted from Malaysias Knowledge-Based Economy Industrial Master

A central tenet of SCM is that in future, competition will no longer be between firms but rather be between supply chains, comprising groups of companies intricately linked through a series of partnership and alliances at the various levels of the supply chain

of supply chain owes much to the emergence from the middle of the last century of systems theory and the associated notion of holism. It has been argued that the behaviour of a complex system cannot be understood completely by the segregated analysis of its constituent parts. It has been suggested that despite the undisputed importance of financial services, electronic communication and media industries, the economy still revolves around the production, processing, moving, buying and selling of stuff and that SCM is about mechanisms and processes by which these activities are organized. A central tenet of SCM is that in future, competition will no longer be between firms but rather be between supply chains, comprising groups of companies intricately linked through a series of partnership and alliances at the various levels of the supply chain. A cursory review of the literature indicates that SCM has been applied from the perspective of an individual firm; related to a particular product or item (such as the supply chain of rubber, or mobile phones, or cars); and from the perspective of industry group or sector (such as electronics and grains). As all components along the supply chain need not belong to one company or group, varying degrees of strategic alliances can be observed at the operational level: from loose structures (JV at the door) to dedicated/ designated suppliers (as in the case of supermarkets), through to cross investments. At the operational level, there is significant value-adding along the entire supply chain. Furthermore, supply chains can reduce asymmetry of information at interfaces with each subsequent level, thereby reducing

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Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century Figure 3a. Agri-Food Supply Chain The Big Picture

transaction costs as well as increasing feedback and improving response rate to changes in consumer preferences and tastes, thus enabling the capturing of premiums. Of course, this sharing of information will be greatly facilitated, enhanced and even revolutionised by continuing advances in ICT. Empirical evidence suggests that there can be amicable/sustainable sharing of margins along supply chains, including the transmission of prices back to farmers/enterprises. Consequently, an appealing strategy is to hook up (or integrate) small farmers/enterprises to increasingly sophisticated local supply chains and more lucrative overseas markets, especially niche markets. In most countries, supply chains can and will speedily exploit advances in biotechnology and its impending convergence with ICT and nanotechnology. Similarly, there will be exponential growth, if and when interconnectivity of supply chains is exploited, as is already happening with telcos and multimedia superhighways. From a policy and institutional standpoint, most government interventions and programmes in many developing countries are invariably overtly production-centric so much so that the farming/production subsystem is

Supply chains can reduce asymmetry of information at interfaces with each subsequent level, thereby reducing transaction costs as well as increasing feedback and improving response rate to changes in consumer preferences and tastes, thus enabling the capturing of premiums

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Chapter I. Background

Figure 3b. Economic Activities at Each Level of Supply Chain

Agri-food Supply Chain will offer the basis for agriculture to drive overall development by leveraging on inherent advantages and potential at the inputs, processing, wholesale and retail trade as well as international trade levels

not well linked or integrated (and often out-of-sync) with the post-harvest/ post-production subsystem. As can be gleaned from the Big Picture of a generalized Agri-food Supply Chain provided in Figures 3a and 3b, the power of supply chains is the value-adding potential for economic activities at each level of the chain when agriculture is viewed in its broader and more holistic, agribusiness perspective. This will offer the basis for agriculture (especially for countries like Uzbekistan where agriculture is still a dominant sector) to drive overall development by leveraging on inherent advantages and potential at the inputs, processing, wholesale and retail trade as well as international trade levels. In so doing, agriculture via its linkages in the supply chain, will also contribute to overall national economic growth from agro-based industries and value adding as well as agro-based services, including consultancies and business services, at all levels of the supply chain. By extension, the same will hold for other major sub-sectors like mining and energy in Uzbekistan. Promise of Biotechnology: The advances in biotechnology are nothing short of staggering and promise much. The 21st Century has been touted as the Biology Century and agri-biotechnology3 is expected to lead to New Agriculture where plants and animals are endowed with new value creation mechanism.
Biotech has been divided into agri- or green biotech, medical or pharma- (red) biotech and industrial (white) biotech.
3

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Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century Figure 4. The Promise of Biotechnology

It has been pointed out that the reported biotech R&D to date is just the tip of the iceberg. Consequently, there are great expectations that biotechnology will contribute greatly to innovations, cost reductions, productivity increases, new processes and new products that will benefit mankind in general (See Figure 4). Against this backdrop, we developed a working definition of Uzbekistans Way to KBE which is primarily aimed at preparing and enabling Uzbekistan to develop into a strong and resilient, vibrant and competitive economy in the 21st Century, strongly driven by a dramatic increase in the application of knowledge for value innovation in new inputs, new processes and new products within a supply chain management context as well as new ways of conducting business and the development of knowledge intensive industries, step by step. It should be buttressed in the believe that markets gradually open to trade and minds increasingly open to ideas and working together would provide Uzbekistan its cutting edge into the 21st Century.

KBE initiative is primarily aimed at preparing and enabling Uzbekistan to develop into a strong and resilient, vibrant and competitive economy in the 21st Century, strongly driven by a dramatic increase in the application of knowledge

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Chapter II. SWOt and SItuatIOnal analySeS & benChmarkIng

Section II. SWOT and situational analyses & benchmarking

SWOT Analysis In order to arrive at a first cut action plan, we conducted a SWOT analysis by considering Uzbekistans internal strengths and weaknesses and their interaction with Uzbekistans external opportunities and threats in relation to KBE. The results are summarised in Table 1 below.
Table 1. SWOT Analysis INTERNAL Strengths: Political stability and continuity Government support - WISP reforms Robust GDP growth Education infrastructure -high literacy rate Young population (average age -22.9) Health - ratio of doctors 8 other stats like scarce Opportunities: Government focus interest on Silk Roude Bilateral, regional and International multilateral trade arrangements EXTERNAL alliances -government, companies Threats: divide Digital and knowledge Bridge the digital, technology and knowledge Develop strategic alliances along supply chains Commitment Integrate and coordinate reforms to support Build on Education Infrastructure and high Regulatory -cumbersome, weak Infostructure (ICT) - poor, especially in Brain drain Strengthen R&D system and Weaknesses: Double land-locked Small population (27 million) S&T and innovation - R&D prioritization Quality of education & vocational Private enterprises, entrepreneurship

& commercialization weak trailing - weak, mismatch of skills

developed country (healthy bodies, healthy minds)

rural areas

of KBE initiative;

commercialization means; Upgrade infostructure (especially for Develop institutions to coordinate, reforms fast-track internet access); drive and manage

Weight of history -resurging literacy advantage -upgrade teachers, content and incorporate business studies, improve access; Develop selected Higher Education Institutes as centers of excellence and network with advanced

reforms in Special Economic Zones (SEZs): Emphasise Vocational training matching of skills. Develop strategic corridors in Central Enroll the support of international

strategic institutions globally.

divide (between countries and within Uzbekistan);

Asia to facilitate trade; Organizations (funding, technical assistance, store of knowledge); Establish strategic alliances to springboard into targeted markets (e.g. Turkey as springboard into Europe).

Strategies of competitors and international networks as well as bilateral, regional

(especially neighboring countries and multilateral trade arrangements. -double landlocked)

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Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century

Arising from the SWOT Analysis, we have an array of actions to facilitate the development of a KBE in Uzbekistan which are, as yet, not listed in any order of priority. This output will be considered together with that from the Situational Analysis so at to arrive at the strategic thrusts and subsequent Road Map plus Action Plan comprising a summary and sequencing of recommendations. Situational Analysis We note that Uzbekistan has successfully embarked on medium-term planning recently with the Welfare Improvement Strategy of Uzbekistan (WIS), Medium Term Budget Framework (MTBF) and rolling Medium Term Fiscal Framework. Consequently, we focused our situational analysis on examining on-going and planned reforms and programmes contained in the WISP4 that have a bearing on or supportive of a KBE initiative. Right from the outset, we were greatly encouraged as three out of the eight main factors indentified to contribute to economic growth up till 2015 in the WIS concerns KBE directly. These are summarised in Table 2 together with distilled out reforms and/or programmes which are (re)grouped under the Four Foundations of KBE, namely Education & Training; Economic & Institutional Environment; S&T and Innovation System; and ICT. Judging from the breadth and depth of the above reforms and programmes in the WIS that relates to or are in support of KBE directly and indirectly, it is blindingly clear that the WIS not only provides a perfect platform to build the proposed KBE initiative on but more importantly, the KBE initiative could well serve as a core overarching theme or strategy to integrate and coordinate the wide range of proposed WIS reforms and programmes.
Table 2. Welfare Improvement Strategy of Uzbekistan (2008-2010) Relevant Reforms/Programmes Relating to Knowledge-Based Economy (KBE) Suggested Reforms/ Programmes Remarks These are 3 out of the 8 main factors that are expected to contribute to economic growth up till 2015 (p7 of WIS). Current Educational Index is 0.996, as compared to world a vet age of 0.77 one key objective is to provide computer classes in all schools and provide internet access to at least 50% of schools by 2015. Targeted 651 new vocational colleges and lyceums for 380,000 students built and 64,000 teachers trained to drive this system between 2007 and 2009. Also integrated, collaborative human resource training for targeted industries - vocational colleges to train staff for oil & gas, chemical, power, metallurgy and railroad industries with capital shares from large holdings therein.

Three out of the eight main factors indentified to contribute to economic growth up till 2015 in the WIS concerns KBE directly

- Increasing investment in human capital to form a knowledge-based economy; - Ensuring an information rich society; - Establishment of innovation institutions. - Maintaining adult literacy rate in 99.3-100% band The School Education Development Program (20042009) - National Program on Personnel Training (1996-2009) Improve capacity and capability to meet needs of S&T development and matching skills requied by economic sectors - Higher education system will be expanded especially through opening branches of leading foreign universities for sectors spear heading S&T progress - Life-long learning

Education & Training

4 There were also a host of other relevant documents including Medium Term Budget Framework (MTBF), and rolling Medium Term Fiscal Framework, plus other Presidential Decree, Cabinet of Ministers Ruling/ Law relating to ICT, Education, Science & Technology, Innovation, Privatisation and Public-Private Partnership (PPP), and Institution of Self-Government of Citizens (Mahalla Law of 1999). But for purposes of exposition we decided to only focus on WISP.

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Chapter II. SWOt and SItuatIOnal analySeS & benChmarkIng Table 2. Welfare Improvement Strategy of Uzbekistan (2008-2010) Relevant Reforms/Programmes (contd) Relating to Economic & Institutional Regimes Suggested Reforms/ Programmes Remarks - Focus at macro level. - Encourage development of processing of agricultural products, especially food, chemicals, oil & gas, electronics and tourism. - Trade liberalisation through harmonising legislation and regulations within framework of EurAsEC process and subsequent accession to WTO; strengthening private property and ownership rights; and further privatisation. - Banking reform; micro-finance; and securities market (transition to the use of electronic document management). - Improving effectiveness of governance and civil service; facilitate development of Public-Private Partnership (PPP); and increase public awareness and transparency through media. - Distinct from other funds as aim to meet objectives of macroeconomic stabilisation, contribution to future generations through creation of new production potential, investment and the innovative development of the country. - Introducing computer-based methods for export-import transactions; improvement in areas of certification, standards, and licensing; in preparation for bilateral, regional and multilateral trade agreements, ensure compliance of domestic products with international health, safety and technical standards (metrology). - Forging partnership between R&D Centers, Universities and Private sector; providing assistance for creating and functioning of venture funds and investment companies to finance innovative investment projects; and strengthening the protection of IPR and valuation of intellectual property. - With technology transfer dimensions built in (starting from specific pilot locality such as Special Economic Zones (SEZs)) Especially in establishing integrated databases of all state statistics and services to facilitate introduction of distance-based government services (including electronic forms for income tax and customs declaration).

- Active restructuring of the economy; - Gradual re-orientation of export policies from export of commodities to exporting products with higher value-added; - Continued economic liberalisation; - Development of financial sector; - Comprehensive area-based development; - Better Governance strategy; - Fund for Reconstruction & Development of the Republic of Uzbekistan (FRDU); - Creation of favourable investment climate for promoting FDI and involving domestic enterprises in global value-chains established by MNCs

Science, Technology & Innovation System

- Encouraging Private investment for introduction of innovative technologies; - Attracting leading foreign companies (especially selected MNCs) in the production of high value-added technologically intensive products; - Providing incentives for innovation in small business sector; - Encouraging innovation driven energy efficiency and water efficiency projects. - Introduction of electronic governance - By 2015, electronic information will serve all areas and industries of economy (government agencies, business, general population) - Digital information, monitoring, management systems will receive priority - Internet access ratio of schools will reach 35% by y2010 and 50% by 2015

Information & Communication Technology (ICT)

Benchmarking For purposes of benchmarking and inter-country comparisons on Knowledge Economy, we elected to use World Bank Institutes Knowledge Assessment Methodology (KAM). It ranked Uzbekistan 92 out of 137 countries for 2007 based on computed Knowledge Economy Index. It was ranked behind Korea (27), Malaysia (40), Russian Federation (47), Turkey (53), Brazil (54), Kazakhstan (72) and China (75), but ahead of India (101). The 2007 KAM Basic Scorecard Charts indicating Uzbekistans KBE readiness and those comparing it with these selected countries are presented in Figures 5 and in Figures 1a and 1b
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Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century Figure 5. KAM Basic Scorecard Mapping 2007 - Uzbekistan

Uzbekistan
Annual GDP Grow th (%) 10 Internet Users per 1,000 People Human Development Index 8 Computers per 1,000 People 6 4 Total Telephones per 1,000 People 2 0 Gross Tertiary Enrollment Rate Rule of Law Regulatory Quality Tariff & Nontariff Barriers

Gross Secondary Enrollment Rate Adult Literacy Rate (% age 15 and above)

Royalty Payments and Receipts (US$/pop.) Technical Journal Articles / Mil. People

Patents Granted by USPTO / Mil. People

in Appendix 1. Here we find that Uzbekistan is: Relatively (as the chart plots normalised values of the 137 countries) strong for GDP Growth (though a not so strong Human Development Index) of the Overall Performance indicators (first 2 variables from 12 oclock in Chart); Relatively very weak Economic & Institutional Environment indicators (next 3 variables clockwise), especially for Regulatory Quality and Rule of Law; Relatively weak Innovation System indicators (next 3 variables), especially Royalty Payments & Receipts variable; Relatively very strong Education Indicators (next 3 variables), especially Adult Literacy Rate and Gross Secondary Enrolment Rate; and Relatively very weak ICT indicators (last 3 variables), in Total Telephones per 1,000 population, Computers per 1,000 population (especially), and Internet Users per 1,000 population. This snapshot of Uzbekistans KBE readiness and its relative strengths and weaknesses reinforces the ones we arrived at in the earlier SWOT analysis and hence suggest that we should sustain and exploit the strengths while overcoming the weak variables so as to balance out and develop a more rounded or fuller chart in future. So in relation to its KBE initiative Uzbekistan has to tend to its low Regulatory Quality (price control, currency convertibility, and excessive regulation on trade and business); poor Rule of Law (effectiveness and predictability of judiciary and enforceability of contracts); weak Innovation system; and poor ICT in terms of phones (especially fixed lines) and internet access.

Uzbekistan should sustain and exploit the strengths while overcoming the weak variables so as to balance out and develop a more rounded or fuller chart in future

1

Chapter II. SWOt and SItuatIOnal analySeS & benChmarkIng

Figures 1a and 1b in Appendix 1 show how Uzbekistans KAM compares with those of the countries it wishes to emulate, its competitors and neighbours. To a certain extent it helps to identify and highlight its opportunities and threats. It can also be seen that the fuller the scorecard, the better poised the country is to embrace the knowledge economy. Here again the inferences tend to support the opportunities and threats considered in our earlier SWOT Analysis.

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Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century

Section III. The cases of cotton and tourism

Cotton In many important ways, the cotton industry provides a good illustration of the need to adopt the suggestions made in this Policy Brief. Uzbekistan remains one of the Big Five producers in the world and the second largest exporter. However, more than 80% (some 800,000 tonnes) continues to be exported as raw cotton annually. Recalling Figures 3a and 3b on the generalized agri-food supply chain, we can see the amount of economic activities, value adding and employment that could be increased by developing and managing Uzbekistans cotton supply chain and international network as well as using it as a foundation to build and integrate the supply chains of other commodities. In this regard, there are obvious and potential areas where KBE is relevant and can contribute. To be fair, various proposals and efforts have been made in the past to increase value adding locally and develop the local textile industry. Such efforts include IFC Europe & Central Asia Textile Sector Survey of 20002001 and the more recent UNDP Policy Brief (No 5, 2006), Textile Industry in Uzbekistan: Problems and Prospects based on research conducted at the Center of Economic Research.

Value adding and employment could be increased by developing and managing Uzbekistans cotton supply chain and international However, it would be instructive to also consider what is happening in the network as well as using private sector to see various aspects of KBE and supply chains at work, often it as a foundation to build below the radar screen. Through our business network we are informed and integrate the supply that Bedeil Tradings (of Singapore Samarkand Singapore Ice-cream chains of other fame) Samcintex is a full-fledged knitted cotton manufacturing outfit using commodities
machinery and technology from Switzerland. They are supplying white and dyed T-shirts to Europe, Canada and USA as well as grey cotton fabric to India, Bangladesh, Pakistan, Taiwan, Indonesia and Malaysia. Yet another of its subsidiary, Silk Star operates a raw silk factory in Samarkand.

Secondly, Olam International, a seasoned player in international commodities trade endowed with an increasingly sophisticated cotton supply chain and international network, has created Tashkent as its logistics, quality control, management and coordination hub for the Central Asia region. This hub feeds into and integrates with Olams global network. Thirdly, and from a different perspective, we note that Turkey, a major knitted and woven apparel supplier to Europe (traditionally Germany and France and increasingly to Eastern Europe), has been enjoying such strong growth that it faces problems meeting its increasing demand for raw cotton and processing facilities. Now, given the extent of strategic trade and business relationship between Uzbekistan and Turkey, potential strategic alliances to interconnect
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Chapter III. the CaSeS Of COttOn and tOurISm

Steps must be taken within the KBE context to ensure the local private sector increases their participation in an orderly and coordinated manner perhaps starting from some form of Public-Private Partnership

the respective cotton supply chains and implement various aspects of KBE deserves much more attention. Fourthly, from yet another perspective, as the government rolls back its involvement in the cotton industry, steps must be taken within the KBE context to ensure the local private sector increases their participation in an orderly and coordinated manner perhaps starting from some form of PublicPrivate Partnership (PPP) and developing subsequently into a more elaborate Uzbekistan Incorporated (Inc.) platform. This listing is not exhaustive but is put together to illustrate the windows of opportunity and the role of creativity, entrepreneurship as well as know how and know who. Tourism To say that there is great potential for tourism in Uzbekistan is an understatement. However, to reap the potential benefits much needs to be done. For a start, we should identify and develop the supply chain for tourism and explore the areas where KBE will be relevant and can contribute greatly. There range from improving the access, costs and efficiency of ICT, more proactive development of economic activities as well as training of those involved in economic activities in the tourism supply chain and support services (guides, hotels, transportation, logistics, etc). Creativity is again a premium especially in developing new products and related businesses and new ways of doing business. An interesting aspect worth exploring is the observation that tourism can provide an excellent export platform. This can be developed for existing products or variants of it (such as silk carpets, handicrafts, cotton and silk apparels, honey, etc) as well as new products. As in the case of cotton, an important challenge is how to be creative and facilitate this through some form of PPP and eventually along the lines of Uzbekistan Inc. Again, there are many possibilities in increasing economic activities and generating employment and rapid growth as well as various windows of opportunities.

Creativity is again a premium especially in developing new products and related businesses and new ways of doing business in tourism, which can provide an excellent export platform

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Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century

Section IV. The way forward

The Strategic Thrusts The recommended strategic thrusts are: Cultivate and secure the necessary human resources; Establish the necessary institutions necessary to champion, mobilize and drive this transition; Ensure the incentives, infrastructure, regulatory environment, finance and economic foundations necessary to drive this initiative; Increase the capacity and capability for acquisition and application of innovative technologies, especially involving ICT, biotechnology and new ways of conducting business at all levels of the supply chain; Facilitate the increasing participation of the private sector, including various forms of Public-Private Partnership which leads to a sustainable Uzbekistan Incorporated (Uzbekistan Inc) platform ultimately; and Bridge the technology and knowledge divide (between Uzbekistan and other countries, more importantly within Uzbekistan) and balance the interests of the stakeholders at the various levels with that of the nation. Each strategic thrust is expected to complement the others and hence all of them should be implemented in tandem. However, the most important one is to secure and cultivate the most crucial asset in a knowledge-based economy: human capital. And the most immediate is the establishment of the institutional drivers. Outline of Road Map towards Knowledge-Based Economy The various recommendations made in the earlier sections are reordered and presented in Table 3 as the Road Map towards KBE in Uzbekistan comprising the recommendations for the four foundations of Economic and Institutional Environment, Education and Training, ICT, and Innovation System for 20082010, 2011-2015, and 2015 onwards periods so as to coincide with the periods adopted by WIS.

The most important Thrust is to secure and cultivate the most crucial asset in a knowledge-based economy: human capital. And the most immediate is the establishment of the institutional drivers

21

Chapter IV. the Way fOrWard Table 3. Road Map towards Knowledge-Based Economy in Uzbekistan Time Line 2008 - 2010 Economic and Institutional - Coordinate, integrate, and sequence WIS and other reforms to support KBE initiative; - Develop capacity and mechanism to facilitate private sectors involvement in planning, investment and funding in the other 3 foundations; - Develop SEZs to fast-track reforms and pilot incentives in special designated areas; Strengthen basic institutions of governance, administration, finance; - Encourage strategic FDI; - Strengthen financial and labour markets to improve business environment; Education and Training - Enhance quality of teachers and curriculum and expand access to basic education ; - Enhance quality and expand access to secondary and vocational education & training focussing on matching of skills; - Strengthen key secondary and vocational education as well as higher education institutions to build a core nucleus of advanced strategic competencies. ICT -Extend radio, television and telephone (with fixed-line service for internet connection) with focus on expanding access to rural areas. - Expand the use of the Internet to improve governance, logistics, business services and delivery of public 01 social services; - Encourage development of economic activities -software development, and solution providers and e-business. Innovation System -Strengthen R&D prioritization, commercialization, innovation and means; - Develop supply chains and international networks for hack bone industries (cotton, mining, oil & gas. tourism) while identifying new areas of growth; - Strengthen capacity to scan, acquire, and adapt global knowledge to local needs; - Blend global with indigenous knowledge for relevant applications; - Develop basic infrastructure for certification, standards and quality control; - Strengthen existing public R&D institutions and encourage private R&D, emphasising technical and managerial competence.

2011 - 2015

- Extend SEZs across the economy; - Encourage more strategic FDIs especially involving MNCs and transfer of technology; - Strengthen finance and equity markets including development of venture capital; - Improve the efficiency of government expenditure, tax collection and governance; - Expand IPR protection;

- Continue to improve secondary and vocational education; - Expand access to and quality of higher education; - Strengthen key higher education institutions by linking up with and integrating into networks of advanced institutions globally; - Develop lifelong learning systems - multiple pathways and providers.

- Develop and diversify the application and use of internetbased technologies to reduce transaction costs and improve overall efficiency. - Encourage the development of ICT related businesses and services

- Encourage development of domestic innovative capacity with appropriate incentives; - Manage strategic supply chains and international networks and develop supply chains for new areas of growth. - Intensify global scanning to find, acquire and import relevant technologies; - Encourage private sector R&D and innovation; - Develop strategic international alliances for R&D and innovation;

2015 onwards

- Ensure the pro-activeness and responsiveness of government institutions; - Strategic IPR enforcement: - Strengthen investments in intangibles: R&D. education, software, marketing and distribution, and high-value knowledge services.

- Strengthen higher education sector as part of a seamless lifelong education system, where a large percentage of tertiary students are adults returning for specialised training or qualification

- Use ICTs strategically as key infrastructure with development of special applications and media convergence.

- Strengthen strategic international alliances for R&D and innovation and supply chains; - Orchestrate and interconnect strategic supply chains; Target support towards specific supply chains and industrial clusters.

22

Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century

For the sake of completeness, Table 4 presents a summary and sequencing of recommendations constituting an Action Plan for the proposed KBE initiative.
Table 4 . Summary and Sequencing of Recommendations Action Plan EConoMIC And InSTITUTIonAl EnvIRonMEnT 1 Phase1 (2008 - 2010) Coordinate, integrate, and sequence WIS and other reforms to support KBE initiative Develop capacity & capability to enable private sector to be increasingly involved in planning, investment and funding in other foundations, step by step Strengthen basic institutions of governance, administration, finance Strengthen financial and labour markets to improve business environment Develop SEZs to fast-track reforms and incentives in localized areas Phase2 (2011 2015) Phase3 (2015 onwards) Remarks Form KBE Council to guide and drive KBE initiative Initially focus on R&D and Innovation system via jointly sponsored Round Table and Conferences, under auspices of KBE Council Especially relaxing currency convertibility and enforcement of contracts Get feedback from private sector via more dialogue including through Business Forum KBE Council to coordinate identification and terms of engagement and subsequent monitoring and evaluation of SEZs. Extend by building on success of pilot SEZs Especially MNCs in SEZs & with built in technology transfer intension and mechanism To facilitate investing and funding of Innovation Improve public sector delivery system to support KBE Strategic IPR enforcement Ensure the pro-activeness and responsiveness of government institutions Strengthen investments in intangibles: R&D, education, software, marketing and distribution, and high-value knowledge services InnovATIon SySTEM Phase1 (2008 - 2010) Phase2 (2011 2015) Phase3 (2015 onwards) Remarks Rationalise and reform R&D and innovation system involving Academy of Science, Universities and private sector Encourage investments in innovation and R&D via IPR Increasingly pro-business, along lines of Uzbekistan Incorporated

Extend SEZs across the economy

Encourage strategic FDIs

Encourage more strategic FDIs especially involving MNCs and transfer of technology Strengthen finance and equity markets including development of venture capital Improve the efficiency of government expenditure, tax collection and governance Expand IPR protection

10

11

Sustain competitiveness in a maturing KBE

Strengthen R&D prioritisation, commercialisation, innovation and means

23

Chapter IV. the Way fOrWard Table 4 . Summary and Sequencing of Recommendations Action Plan (contd) InnovATIon SySTEM Phase1 (2008 - 2010) Develop supply chains and international networks for back-bone industries (cotton, mining, oil & gas, tourism) while identifying new areas of growth Strengthen capacity to scan, acquire, and adapt global knowledge to local needs Blend global with indigenous knowledge for relevant applications Develop basic infrastructure for certification, standards and quality control Strengthen existing public R&D institutions and encourage priEncourage private sector R&D vate R&D, emphasising technical and innovation. and managerial competence Encourage development of domestic innovative capacity with appropriate incentives Develop strategic international alliances for R&D, innovation and supply chains Target support towards specific supply chains and industrial clusters EdUCATIon And TRAInInG 1 Phase1 (2008 - 2010) Enhance quality of teachers and curriculum and expand access to basic education Enhance quality and expand access to secondary and vocational education & training focusing on matching of skills Strengthen key secondary and vocational education as well as higher education institutions to build a core nucleus of advanced strategic competencies Continue to improve secondary and vocational education Phase2 (2011 2015) Phase3 (2015 onwards) Remarks Start with basics to ensure a strong foundation for change and reform Progressive improvement to entire education & training system matching of skills Build on natural inherent education and literacy advantage in support of KBE initiative Strengthen strategic international alliances for R&D and innovation Phase2 (2011 2015) Manage strategic supply chains and international networks and develop supply chains for new areas of growth Intensify global scanning to find, acquire and import relevant technologies and knowledge. Phase3 (2015 onwards) Remarks Mechanism and responsible agencies to be identified and coordinated by KBE Council leveraging on supply chain management to maximize benefits to nation Ability to prospect and acquire relevant technology and knowledge to ensure sustained development of KBE Technology blending synergism and appropriate technology To gain consumer confidence and recognition both at home and abroad Develop functional, productive and dynamic R&D with increasing private sector participation Further development of National Innovation System Continuous strengthening of international networks for R&D, innovations and supply chains Increasingly diversify from backbone industries to new areas of growth

Orchestrate and interconnect strategic supply chains.

Expand access to and quality of higher education Strengthen key higher education institutions by linking up with and integrating into networks of advanced institutions globally Strengthen higher education sector as part of a seamless lifelong education system, where a large percentage of tertiary students are adults returning for specialised training or qualification

Establishing global network to enhance education and access to and sharing of knowledge

Develop lifelong learning systems multiple pathways and providers

Entrench life-long learning as a way of life to reap maximum benefit for a young population honing human capital for KBE initiative

24

Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century Table 4 . Summary and Sequencing of Recommendations Action Plan (contd) InfoRMATIon & CoMMUnICATIon TEChnoloGy Phase1 (2008 - 2010) Extend radio, television and telephone (especially with fixedline service for internet connection) with focus on expanding access to rural areas Expand the use of the Internet to improve governance, logistics, business services and delivery of public or social services Encourage development of economic activities software development, and solution providers and e-business Encourage the development of ICT related businesses and services Develop and diversify the application and use of internetbased technologies to reduce transaction costs and improve overall efficiency Use ICTs strategically as key infrastructure with development of special applications and media convergence. Phase2 (2011 2015) Phase3 (2015 onwards) Remarks

Address and strengthen weak ICT infrastructure

Encourage utilization of ICT

Moving beyond a mere facilitator role to one of a business sub-sector in itself

Exploit inherent advantages and promise of ICT

Sustain and build on on-going progress and relative strengths within KBE context

25

Conclusion

Conclusion
The above discussion provides compelling reasons for using KBE initiative to drive and transform Uzbekistan and ensure sustainable growth into the 21st Century. However, theres much to be done. Towards this end, we have provided a Road Map and Action Plan which needs to be further deliberated on and fine-tuned and implemented with full commitment of all concerned. Basically, Uzbekistan need to embark on the transformation from a production-centric, input and supply-driven growth strategy that has served it well in the past, to a supply chain oriented, demand-driven and increasingly value innovation and knowledge-driven one, in order to achieve sustainable rapid growth and development into the 21st Century. Towards becoming a successful knowledge economy in the 21st Century, Uzbekistan have to rethink and act simultaneously on its education base, its innovation system, and its information and communication technology infrastructure while building a high quality or world-class economic and institutional regime in a gradual manner and through a combination of topdown reforms and bottom-up initiatives, as outlined in the Road Map and Action Plan. Specific steps and windows of opportunities have been provided for the cases of Cotton and Tourism. The urgent need to effect a coordinated development of a National Innovation System, increasingly integrated with Education, ICT, and Academy of Sciences operation was also highlighted. As was the urgent need to identify and develop Special Economic Zones (SEZs) to fast-track and test out comprehensive packages of reforms, incentives and other confidence building and actualising of Public-Private Partnership in a focused and more localised environment. Subsequent initiatives replicating these SEZs can feed off and build on their initial successes as well as learn from any inadequacies. Stemming from this Policy Brief, it is hoped that KBE is adopted as a central plank/component of the overarching long term Vision of Uzbekistan. It should be articulated and disseminated widely so as to promote trust, societal cohesion and support for the initiative and any on-course corrections, The dynamism inherent in KBE initiative dictates constant evolution based on periodic reviews and fine tuning for it to remain relevant. Because of its overarching and trans-sectoral and dynamic nature, it is also recommended that a Knowledge-Based Economy Council be established. It should work in tandem with the Interagency Council for the Coordination of WIS development and implementation. In view of the degree of involvement of the Center for Economic Research (CER) in the preparation
2

Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century

and implementation of WIS as well as this Policy Brief, CER offers itself as the natural choice to act as the Secretariat of both these Councils so as to facilitate coordination and synergism. Once established, amongst the first task of the KBE Council is to oversee the formulation of a KBE Master Plan for Uzbekistan which fleshes out the key points raised in this Policy Brief and spell out a more detailed roll out plan, complete with responsible implementing mechanism and agencies/bodies. This will help guide the implementation of this key strategic initiative of the 21st Century for Uzbekistan.

2

Appendix

Appendix1. KAM - Uzbekistan Benchmarking

Figure 1a. KAM - Uzbekistan Benchmarking against Korea, Malaysia, Russia and Turkey

Uzbekistan - Korea
Internet Users per 1,000 People Computers per 1,000 People Annual GDP Grow th (%) 10 8 6 4 Total Telephones per 1,000 People 2 0 Gross Tertiary Enrollment Rate Rule of Law Regulatory Quality Human Development Index Tariff & Nontariff Barriers

Gross Secondary Enrollment Rate Adult Literacy Rate (% age 15 and above)

Royalty Payments and Receipts (US$/pop.) Technical Journal Articles / Mil. People

Patents Granted by USPTO / Mil. People

Uzbekistan - Malaysia
Internet Users per 1,000 People Computers per 1,000 People Annual GDP Grow th (%) 10 8 6 4 Total Telephones per 1,000 People 2 0 Gross Tertiary Enrollment Rate Rule of Law Regulatory Quality Human Development Index Tariff & Nontariff Barriers

Gross Secondary Enrollment Rate Adult Literacy Rate (% age 15 and above)

Royalty Payments and Receipts (US$/pop.) Technical Journal Articles / Mil. People

Patents Granted by USPTO / Mil. People

2

Appendix

Figure 1a. KAM - Uzbekistan Benchmarking against Korea, Malaysia, Russia and Turkey

Uzbekistan - Russia
Internet Users per 1,000 People Computers per 1,000 People Annual GDP Grow th (%) 10 8 6 4 Total Telephones per 1,000 People 2 0 Gross Tertiary Enrollment Rate Rule of Law Regulatory Quality Human Development Index Tariff & Nontariff Barriers

Gross Secondary Enrollment Rate Adult Literacy Rate (% age 15 and above)

Royalty Payments and Receipts (US$/pop.) Technical Journal Articles / Mil. People

Patents Granted by USPTO / Mil. People

Uzbekistan - Turkey
Internet Users per 1,000 People Computers per 1,000 People Annual GDP Grow th (%) 10 8 6 4 Total Telephones per 1,000 People 2 0 Gross Tertiary Enrollment Rate Rule of Law Regulatory Quality Tariff & Nontariff Barriers Human Development Index

Gross Secondary Enrollment Rate Adult Literacy Rate (% age 15 and above)

Royalty Payments and Receipts (US$/pop.) Technical Journal Articles / Mil. People

Patents Granted by USPTO / Mil. People

2

Appendix

Figure 1b. KAM - Uzbekistan Benchmarking against Brazil, China and India

Uzbekistan - Brazil
Internet Users per 1,000 People Computers per 1,000 People Annual GDP Grow th (%) 10 8 6 4 Total Telephones per 1,000 People 2 0 Gross Tertiary Enrollment Rate Rule of Law Regulatory Quality Tariff & Nontariff Barriers Human Development Index

Gross Secondary Enrollment Rate Adult Literacy Rate (% age 15 and above)

Royalty Payments and Receipts (US$/pop.) Technical Journal Articles / Mil. People

Patents Granted by USPTO / Mil. People

Uzbekistan - China
Internet Users per 1,000 People Computers per 1,000 People Annual GDP Grow th (%) 10 8 6 4 Total Telephones per 1,000 People 2 0 Gross Tertiary Enrollment Rate Rule of Law Regulatory Quality Tariff & Nontariff Barriers Human Development Index

Gross Secondary Enrollment Rate Adult Literacy Rate (% age 15 and above)

Royalty Payments and Receipts (US$/pop.) Technical Journal Articles / Mil. People

Patents Granted by USPTO / Mil. People

30

Appendix

Figure 1b. KAM - Uzbekistan Benchmarking against Brazil, China and India

Uzbekistan - India
Internet Users per 1,000 People Computers per 1,000 People Annual GDP Grow th (%) 10 8 6 4 Total Telephones per 1,000 People 2 0 Gross Tertiary Enrollment Rate Rule of Law Regulatory Quality Tariff & Nontariff Barriers Human Development Index

Gross Secondary Enrollment Rate Adult Literacy Rate (% age 15 and above)

Royalty Payments and Receipts (US$/pop.) Technical Journal Articles / Mil. People

Patents Granted by USPTO / Mil. People

31

Bibliography

Bibliography
1. Machlup, F. (1962), The Production and Distribution of Knowledge in the United States, Princeton University Press, Princeton, NJ. 2. OECD 1996, The Knowledge-based Economy, Paris 3. APEC Economic Committee 2000, Towards Knowledge-based Economies in APEC, APEC Secretariat, Singapore, http://www.apecsec.org.sg/ 4. Neef, D. 1998The Knowledge Economy: An Introduction, in The Knowledge Economy, Ed. D. Neef, ButterworthHeinemann, Boston 5. Landes, D. S. 1998,Homo Faber, Homo Sapiens: Knowledge, Technology, Growth, and Development, in The Knowledge Economy, Ed. D. Neef, Butterworth-Heinemann, Boston 6. OECD 2001a, The New Economy: Beyond the Hype, Final Report on the OECD Growth Project, Executive Summary, Paris 7. .. . : . .: . 73 5 . 450 (2003) 8. European Innovation Scoreboard, European Commission (2000) 9. Porters Index of Innovative Activity. (1999) 10. Science, Technology and Industry Scoreboard: Towards a Knowledge-based Economy, OECD (2001) 11. Science and Technology Statistical Compendium 2004. OECD, 2004 - www.oecd.org 12. // - . 49 (628), 23 - 29 2006 . http://www.zerkalo-nedeli.com/nn/show/628/55423/ 13. Gould D.&Gruben W. The Role of Intellectual Property Rights in Economic Growth - Journal of Development Economics, vol. 48, 1996. p. 323-350. 14. . : , 2006 15. . : , 2006 16. . Policy Brief. .: UNDP, 2005

32

Information on Center for Economic Research

Center for Economic Research (CER) was established in 1999 with assistance of government of the Republic of Uzbekistan and the United Nations Development Program. Center provides political recommendations to the government Uzbekistan, and carries out researches on wide spectrum of development issues. Within the framework of its mandate, CER makes powerful contribution to increase national potential and public awareness on key issues of social and economic development. CER has prepared over 100 reports (policy papers) in the field of social and economic development. CER reports cover broad spectrum of problems in spheres like macroeconomic, monetary, fiscal and social policies, state control, ICT development, economy of knowledge, administrative reform, economic integration, gender, etc. More than half recommendations of the Center find reflection in corresponding decisions of the government, and changes in the legislation. The Center actively cooperates with such international technical assistance organizations as the United Nations Development Program, the World Bank, ADB, EuropeAid, USAID, JICA, DFID, Eurasia Fund, and other organizations and funds through participation in joint projects and initiatives. CER also supports scientific contacts with local research institutes and a number of foreign think tanks, and has also created network of national and international experts, involved in participating in various initiatives. Among CER publications National Human Development Report, prepared and published by the Center with UNDP support for 1995 - 2000, and 2005, is of special rank. Within the framework of the program on maintaining active public dialogue, the Center publishes monthly magazine Economic Review, which, according to experts, is recognized as the best analytical edition in the country. CER also issues digest of foreign press, which is an effective source of information on modern trends in the world economy, and serves as a tool on increasing importance of future research subjects of the Center. More detailed information on Center for Economic Research and its activities you can find on the CER corporate website: www.cer.uz

The list of reports of Center for Economic Research

- 96/1 Labor market of Uzbekistan, 1991-1995. - 96/2 Inflation and transition in market economy in Uzbekistan, 1991-1995. - 96/3 State budget of Republic of Uzbekistan, 1991-1995. - 96/4 Foreign trade in Uzbekistan, 1991-1995.* - 96/5 Hard currency policy in Uzbekistan in condition of transition process.* - 97/1 Income, consumption and savings of Republic of Uzbekistan.* - 97/2 Formation of commodity market in Republic of Uzbekistan in the transition period. - 97/3 Policy and institutional measures in production and marketing of cotton in Uzbekistan, 1990 1996.* - 97/4 Methodological approach in poverty analyses in Uzbekistan. - 97/5 Evolution of tax system over years of independence of Republic of Uzbekistan, and its impact in production activity. * - 97/6 Construction of macroeconomic model for the analyses of transition period policy. - 97/7 Emergence and development of financial system of Republic of Uzbekistan. - 97/8 Current situation with commercial banks and policy, directed for its improvement.* - 97/9 Problems of formation and development of securities market.* - 98/1 Statistic study of inflation in Uzbekistan. - 98/2 Impact of foreign currency market liberalization in state budget of Republic of Uzbekistan. * - 98/3 Effectiveness of tax privileges. * - 98/4 World Bank model RMSM-X: chances for adaptation in transition economy of Uzbekistan. * - 98/5 Financial programming: principles, methodology and chances for application in Republic of Uzbekistan.* - 98/6 Analyses of basic results of privatization in Republic of Uzbekistan. - 98/7 Analyses of financial flows in the economy of Republic of Uzbekistan. * - 98/8 Study of evaluation opportunities of implicit employment and income. * - 98/9 Social aspects of economic security. * - 98/10 Approaches for forecasting budget parameters on the bases of econometric analyses.* - 98/11 Price and income disparity between agriculture and industry.* - 98/12 Banking sector reform in interrelation with real sector reform.* - 98/13 Impact of hard currency policy of Uzbekistan for the activity of exporters and importers.* - 98/14 Impact of hard currency policy in investment activity in economy of Republic of Uzbekistan. - 98/15 Analyses and mid-term forecast of economic development of Republic of Uzbekistan on financial programming bases.* - 98/16 Forecast of macroeconomic indicators on the bases of RMSM-X model.* - 98/17 Food security problems in Republic of Uzbekistan. * - 98/18 Role of tax policy in solving problems of internal investments. * - 98/19 Consumer market and solvency requirements. - 98/20 Savings and internal investments. * - 98/21 Budget costs and its optimization. * - 98/22 Problems of default and ways of overcoming.* - 98/23 Concept of developing education and analyses of financing education in Uzbekistan. - 98/24 Post-privatization problems in enterprise management. - 98/25 Scenario of economic development of Uzbekistan in mid-term perspective.*

- 98/26 Analyses of financial resources of Republic of Uzbekistan for 1995-1996, and opportunities of forecasting.* - 98/27 Econometric analyses of some macroeconomic and financial indicators. -98/28 Construction of 5-sector macroeconomic model of SAM for Uzbekistan. - 99/1 Methodology problems of calculating consumer price index of Republic of Uzbekistan.* - 99/2 Methodology issues in drawing balance of payments of Republic of Uzbekistan. - 99/3 Macroeconomic analyses and forecasting on the bases of 8-sector model of SAM. - 99/4 Export and import functions of Republic of Uzbekistan. - 99/5 Budget deficit assessment of Republic of Uzbekistan (Methodology approach).* - 99/6 Central Bank policy in the sphere of regulating the banking system.* - 99/7 Analyses of financial condition of enterprises of Republic of Uzbekistan in 1996-98 on the bases of indicators of integral efficiency. - 99/8 Developing system of monitoring and management of external debt. * - 99/9 Optimizing indirect taxation. * - 99/10 Structural policy and developing competitive environment in non-strategic sectors.* - 99/11 Developing measures on reducing inflation and stabilizing consumer market under foreign currency liberalization.* - 99/12 Developing and regulating financial sector: international experience and lessons for Uzbekistan.* - 99/13 Coordination of monetary and fiscal policy. * - 99/14 Policy of import substitution and export expansion, including issues of strengthening balance of payments. - 99/15 Industrial policy and experience of application in Uzbekistan.* - 99/16 Employment in Uzbekistan. * - 99/17 Development and adaptation of small-scale macroeconomic equilibrium models into the conditions of transition economy of Uzbekistan. - 99/18 Modeling external debt formation in RMSM-X. * - 2000/01 Measures in perfecting conditions of small and medium-sized enterprises in Republic of Uzbekistan.* - 2000/02 Analyses of current tendencies and mid-term forecasts in developing the economy of Uzbekistan on the bases of financial programming.* - 2000/03 Regulation of external trade of Uzbekistan in condition of economic liberalization. - 2000/04 Transition to indirect tools of fiscal-credit regulation in condition of economic liberalization.* - 2000/05 Tax system in liberalization conditions. * - 2000/06 Debt restructuring of commercial banks. * - 2000/07 Problems of budget interrelationship in different levels. * - 2000/08 Basic prerequisites of developing micro-crediting in Uzbekistan. - 2000/09 Econometric analyses of macroeconomic equilibrium in transition economy of Uzbekistan. * - 2000/10 Industrial and exchange rate policy in Republic of Uzbekistan. * - 2000/11 Scenario of forecast development of economy of Uzbekistan for 2000-2005 on the bases of SAM RMSM-X models. * - 2000/12 Attracting and using foreign direct investments in Uzbekistan. * - 2001/01 Tax impact on economic activity of small businesses. * - 2001/02 Stimulating private savings and enhancing investment activity. * - 2001/03 Studying legal regulations and practice of conducting payments for services by foreign citizens in the territory of Republic of Uzbekistan. - 2001/04 Improving market mechanisms in rural areas: comprehensive analyses of policy in production of cotton, grain and motivation system in rural areas. * - 2001/05 Development and application of small-scale econometric model for Uzbekistan for macroeconomic analyses and forecasts.* - 2001/06 Development of monetary markets in Uzbekistan. * - 2001/07 Optimizing taxation of resources and property. * - 2001/08 Transaction costs in taxation. * - 2001/09 Analyses of national accounts and tendencies of SNA in Uzbekistan. *

- 2001/10 Methodology of assessment of living standards in Uzbekistan. * - 2001/11 Assessment of readiness of Uzbekistan to information world. - 2001/12 Problems of further development and liberalization of currency market. * -2001/13 Concept of reforming system of organization and financing of researches in applied economic sciences. -2001/14 Strategy of developing information and communication technologies in Republic of Uzbekistan. - 2002/01 Transaction costs of licensing entrepreneurial activity. - 2002/02 Optimization of government expenditures for education. * - 2002/03 International experience of guaranteeing bank deposits. - 2002/04 Analyses of existing methods of developing and implementing forecasts of social-economic development of the Republic of Uzbekistan. * - 2002/05 Improving pension system and analyses of opportunities of establishing non-government accumulating pension funds of Uzbekistan. - 2002/06 Optimization of government expenditures for financing economy of Republic of Uzbekistan (case of water resources). - 2002/07 Anti-inflation policy in economic liberalization conditions. * - 2002/08 International experience in indicative planning and opportunities of its application in Uzbekistan. - 2003/01 Efficiency of readjustments and peculiarities of bankruptcy procedures in agricultural enterprises. * - 2003/02 Volume and structure of solvent demand of population of Uzbekistan. * - 2003/03 Analyses of reasons and consequences of shadow economy expansion and non-bank circulation. * - 2003/04 Local budgets in conditions of liberalization: strengthening income base and improving relations with central budget.* - 2003/05 Approaches to organization and methodology of developing indicative mid-term plans of social-economic development of Uzbekistan. * - 2003/06 Main directions and mechanisms of developing competitive environment and anti-monopoly policy. - 2003/07 Modern conditions and main directions of reforming central bodies of executive power of Republic of Uzbekistan. - 2003/08 Raising level of financial intermediation in Uzbekistan. * - 2004/01 Reform of agriculture financing system in Uzbekistan. * - 2004/02 Restructuring cooperative (shirkat) agricultural enterprises into farm businesses. - 2004/03 Joining of Uzbekistan in WTO: possible challenges for the sector of financial services. - 2004/04 Developing market infrastructure in farm businesses. - 2004/05 Main directions of reforming local authorities in Uzbekistan. - 2004/06 E-government introduction and administrative reform in Uzbekistan interaction and inter-influence. - 2005/01 Microfinance development in Uzbekistan. - 2005/02 Problems and prospects of textile industry development in Uzbekistan. - 2005/03 Facilitating export development in Uzbekistan: creating favorable environment and effective institutions. - 2005/04 Developing and increasing competitiveness of tourism industry of Uzbekistan. - 2006/01 Problems of corporate management introduction in Uzbekistan. - 2006/02 Assessment of outcomes and main priorities of deepening reforms in construction. - 2006/03 Export promotion in Uzbekistan: ways of motivating trade-intermediary firms activities. - 2007/01 Financial sector impacts in economic growth of Uzbekistan. * - 2007/02 Main directions of deepening reforms in higher education system. -2007/03 Civil service in Uzbekistan: status, problems and main directions of reform.* -2007/04 Improving taxation system of natural reserve users (case of oil sector).* -2007/05 Provision of mechanisms for the Fund for Reconstruction and Development of Uzbekistan to function as an instrument of macroeconomic stabilization and economic growth. -2007/06 Private-public partnership in Uzbekistan: problems, opportunities and ways of introduction. * Reports for internal use only

The list of Policy Briefs of Center for Economic Research

- 2005/01 System development of government regulation of mass-media in Uzbekistan.* - 2005/02 System of the government regulation at a local level and reorganization of shirkats: political and social consequences.* - 2006/01 Optimization of public expenditures for healthcare. - 2006/02 Perfection of system of tax administration in Republic Uzbekistan. - 2006/03 Anticorription expertise of draft of Customs Codex.* - 2006/04 Formation of stimulation mechanisms of innovations implementation in business. - 2006/05 Options for Continuing Energy Reforms in Uzbekistan. - 2006/06 Solar Energy: a viable area of specialization for Uzbekistan? - 2006/07 Creating institutional environment for protection of property rights. - 2006/08 Export financing in Uzbekistan. - 2006/09 Real estate market and property rights for non-agricultural land. - 2006/10 Influence of customs policy on a monopolization level of economy in certain commodity markets. - 2006/11 Administrative reform and decentralization in Uzbekistan: increase in institutional and financial opportunities of self-government institutions of citizens. - 2006/12 Enhancement of legal base regulating trading-intermediary activity in a local market of Uzbekistan (with use of methods of anticorruption expertise).* - 2006/13 The analysis legal base of the Republic Uzbekistan regulating the process of decentralisation and privatization (with use of methods of anticorruption expertise).* - 2007/01 Influence of remittances on economy of Uzbekistan. - 2007/02 Opportunities and prospects of establishment of Eximbank in Uzbekistan. - 2007/03 Enhancement of the legal base regulating export-import transactions in Uzbekistan (with use of methods of anticorruption expertise).* - 2007/04 Enhancement of the legal base regulating procedures of crediting and banking services for enterprises (with use of methods of anticorruption expertise) .* - 2007/05 Development and increase of competitiveness of fruit-and-vegetable production. - 2007/06 Key elements of effective investment policy in developing countries: possible reference points for Uzbekistan. - 2007/07 The analysis of legal base regulating procedures of standardization and obligatory certification of goods (works, services) of enterprises (with use of methods of anticorruption expertise)* - 2007/08 Prospects of introduction of risk-analysis into the system of tax control in Uzbekistan. -2008/01 Formation of positive external image of Uzbekistan: a modern state, problems and perspectives.* -2008/02 Stimulation of production and export of fresh fruit-and-vegetable production in Republic Uzbekistan. -2008/03 Towards Knowledge-Based Economy in Uzbekistan: Ensuring Sustainable Rapid Growth in the 21st Century (rus). -2008/04 About approaches to realization of industrial policy in Uzbekistan.* -2008/05 About the state of affairs on development and introduction of innovative products, know-how and financing, necessary measures on expansion of innovative activity in branches of the economy.* * Policy Briefs for internal use only

Center for Economic Research 5, tupik 1, Usman Nosir Str., Tashkent, 100070, Uzbekistan www.cer.uz