2013 Index of Economic Freedom

Uzbekistan

overall score46.0
world rank162
Rule of Law

Property Rights15.0

Freedom From Corruption16.0

Limited Government

Government Spending67.8

Fiscal Freedom90.2

Regulatory Efficiency

Business Freedom71.2

Labor Freedom61.0

Monetary Freedom63.0

Open Markets

Trade Freedom66.1

Investment Freedom0.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 28.8 million
  • GDP (PPP):
    • $95.2 billion
    • 8.3% growth
    • 8.7% 5-year compound annual growth
    • $3,302 per capita
  • Unemployment:
    • 1.0%
  • Inflation (CPI):
    • 12.8%
  • FDI Inflow:
    • $1.4 billion
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Uzbekistan’s economic freedom score is 46, making its economy the 162nd freest in the 2013 Index. Its score is 0.2 point higher than last year, reflecting advancements in business freedom, control of government spending, and labor freedom. Uzbekistan is ranked 35th out of 41 countries in the Asia–Pacific region, and its overall score is much lower than the world average.

Uzbekistan’s record on economic reform has been dismal, and more broadly based development continues to be severely constrained by long-standing institutional weaknesses that undermine the foundations of economic freedom. The inefficient legal framework remains highly vulnerable to political interference, and corruption further undermines the already fragile rule of law.

In other key policy areas, heavy state involvement in the leading economic sectors has dampened private-sector dynamism and led to economic stagnation in non-energy sectors. The government restricts foreign investment to a few handpicked partners, while the state-controlled financial system limits credit access to political favorites. Burdensome and opaque regulatory systems further limit private-sector activity.

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Background

Authoritarian President Islam Karimov has been in power since the late 1980s. Relations with the United States and the European Union have improved due to cooperation in fighting Islamist terrorism. Uzbekistan has guaranteed the U.S. and Germany limited access to the Termez air base for operations in Afghanistan. Violations of human rights remain a serious concern. Uzbekistan has suspended its participation in the Russia-dominated Collective Security Treaty Organization. The economy depends heavily on natural gas, oil, gold, uranium, and cotton exports, and exports of gas to China are now in the range of 2 billion–4 billion cubic meters (BCM) annually. Uzbekistan has secured a $2.54 billion loan from a consortium of private banks to build the Ustyurt gas and chemical complex, which plans to produce 4.5 BCM of gas in 2016.

Rule of LawView Methodology

Property Rights 15.0 Create a Graph using this measurement

Freedom From Corruption 16.0 Create a Graph using this measurement

Property ownership is generally respected by local and central authorities, although it can be subverted by the government. The legal framework remains poor, and the executive influences the judiciary. There is no general system for registration of liens on chattel property. Court procedures fall short of international standards, and expropriation by powerful figures able to act with impunity is possible. Corruption is rampant.

Limited GovernmentView Methodology

The top income tax rate is 22 percent, and the top corporate tax rate is 9 percent. Other taxes include a value-added tax (VAT) and a property tax. The overall tax burden equals about 20.4 percent of total domestic income. Government spending has reached a level equivalent to 32.8 percent of GDP. The budget is in surplus, and debt is under 10 percent of GDP. Fiscal risks have grown due to fears of a decline in energy revenues from Europe and Russia.

Regulatory EfficiencyView Methodology

Despite some progress, the regulatory system lacks transparency and clarity, and inconsistent enforcement of regulations injects considerable uncertainty into business decision-making. The business start-up process has been streamlined, but completing licensing requirements remains time-consuming. The labor market lacks flexibility, and employment in the informal sector is substantial. Monetary stability has worsened as inflation has increased.

Open MarketsView Methodology

The trade-weighted average tariff rate is somewhat high at 6.9 percent, and non-tariff barriers interfere significantly with trade freedom. The investment regime, lacking transparency and efficiency, remains unfavorable to dynamic investment growth. The financial sector is subject to heavy state intervention. Along with the high costs of financing, the banking sector’s limited capacity for financial intermediation hurts the private sector.

Country's Score Over Time

Bar Graph of Uzbekistan Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Uzbekistan to other economic country groups

Regional Ranking

rank country overall change
1Hong Kong89.3-0.6
2Singapore880.5
3Australia82.6-0.5
4New Zealand81.4-0.7
5Taiwan72.70.8
6Japan71.80.2
7Macau71.7-0.1
8South Korea70.30.4
9Malaysia 66.1-0.3
10Thailand 64.1-0.8
11Kazakhstan63-0.6
12Mongolia61.70.2
13Sri Lanka60.72.4
14Azerbaijan59.70.8
15Kyrgyz Republic 59.6-0.6
16Cambodia58.50.9
17The Philippines58.21.1
18Fiji57.2-0.1
19Samoa57.1-3.4
20Indonesia56.90.5
21Vanuatu56.60.0
22Tonga56-1.0
23India55.20.6
24Pakistan 55.10.4
25Bhutan55-1.6
26Papua New Guinea53.6-0.2
27Tajikistan53.40.0
28Bangladesh 52.6-0.6
29China51.90.7
30Vietnam51-0.3
31Nepal50.40.2
32Micronesia50.1-0.6
33Laos50.10.1
34Maldives49-0.2
35Uzbekistan460.2
36Kiribati45.9-1.0
37Solomon Islands45-1.2
38Timor-Leste43.70.4
39Turkmenistan42.6-1.2
40Burma39.20.5
41North Korea1.50.5
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