4 1 Billion K Wh Electricity Imports example essay topic

Overview: Uzbekistan is a dry, landlocked country of which 11% consists of intensely cultivated, irrigated river valleys. More than 60% of its population lives in densely populated rural communities. Uzbekistan is now the world's second largest cotton exporter, a large producer of gold and oil, and a regionally significant producer of chemicals and machinery. The IMF suspended Uzbekistan's $185 million standby arrangement in late 1996 because of government steps to the negative external conditions generated by the Asian and Russian financial export and currency controls within its already largely closed economy.

Economic policies that have repelled foreign investment are a major factor in the economy's stagnation. A growing debt burden, persistent inflation, and a poor business climate led to disappointing growth in 2001. However, in December 2001 the government voiced a renewed interest in economic reform, seeking advice from the IMF and other financial institutions (World 7). After independence, Uzbekistan tried to support inefficient state enterprises and shield consumers from the shocks of rapid economic reform. These policies eventually led to severe inflation and an economic crisis. Reforms brought inflation down to manageable levels and small businesses began to grow.

Larger institutions are seeking joint ventures with international corporations. However, currency and trade restrictions remain too tight to encourage significant foreign investment. Falling global gold, copper, and cotton prices also hurt the economy. A privatization program is slowly being implemented with international support. Privatization is necessary to raise hard currency and promote economic development (Republic 4).

GDP: purchasing power parity-$62 billion (2001 est.) GDP-per capita: purchasing power parity-$2,500 (2001 est.) GDP-composition by sector: agriculture: 33% industry: 24% services: 43% (2001 est.) Inflation rate (consumer prices): 23% (2001 est.) Labor force: 11.9 million (1998 est.) Labor force-by occupation: agriculture 44%, industry 20%, services 36% (1995) Unemployment rate: 10% plus another 20% underemployed (1999 est.) Budget: revenues: $4 billion expenditures: $4.1 billion, including capital expenditures of $1.1 billion (1999 est.) Industries: textiles, food processing, machine building, metallurgy, natural gas, and chemicals Industrial production growth rate: 3.5% (2000) Electricity-production: 40.075 billion k Wh (2000) Electricity-production by source: fossil fuel: 86.95% hydro: 13.05% nuclear: 0% other: 0% (2000) Electricity-consumption: 4189 billion k Wh (2000) Electricity-exports: 4.1 billion k Wh (2000) Electricity-imports: 5 billion k Wh (2000) Agriculture-products: cotton, vegetables, fruits, grain; livestock Exports: $2.8 billion (2001 est.) Exports-commodities: cotton 41.5%, gold 9.6%, energy products 9.6%, mineral fertilizers, ferrous metals, textiles, food products, and automobiles (1998 est.) Exports-partners: Russia 16.7%, Switzerland 8.3%, UK 7.2%Ukraine, Eastern Europe, Western Europe Imports: $4.1 billion (1998) Imports-commodities: grain, machinery and parts, consumer durables, other foods Imports-partners: principally other FSU, Czech Republic, and Western Europe Debt-external: $2.6 billion (1997 est.) Economic aid-recipient: $276.6 million (1995) Currency: Uzbekistani som (UKS) Exchange rates: Uzbekistani some (UKS) per US$1-111.9 (February 1999), 110.95 (December 1998), 75.8 (September 1997), 41.1 (1996), 30.2 (1995), 11.4 (1994), 1.0 (1993) Fiscal year: calendar year (Uzbekistan Economy 4). Reform: With the collapse of the Soviet Union, Uzbekistan faced serious economic challenges: the breakdown of central planning from Moscow and the end of a reliable, if limited, system of inter-republican trade and payments mechanisms; production inefficiencies; the prevalence of monopolies; declining productivity; and loss of the significant subsidies and payments that had come from Moscow. All these changes signaled that fundamental reform would be necessary if the economy of Uzbekistan were to continue to be viable. Traditionally a raw materials supplier for the rest of the Soviet Union, Uzbekistan saw its economy hit hard by the breakdown of the highly integrated Soviet economy. Factories in Uzbekistan could not get the raw materials they needed to diversity the national economy, and the end of subsidies from Moscow was exacerbated by concurrent declines in world prices for Uzbekistan's two major export commodities, gold and cotton (Lubin 431).

Natural Resources: Only 10.8% of the land in Uzbekistan is arable. The richest farmland is found in the river valleys and the alluvial plains at mountain bases. Uzbekistan contains significant mineral wealth. Deposits of gold, uranium, silver, copper, zinc, coal, and lead are mined. Uzbekistan also harbors large and as yet mostly undeveloped reserves of oil and natural gas (Uzbekistan 3). Agriculture: Agriculture remains the mainstay of the economy.

It accounted for 35% of the GDP in 2000, among the highest rates of the former Soviet republics. Cotton is the primary crop; Uzbekistan is among the world's largest producers and exporters of seed cotton. However, such production has come at a high price. Cotton requires large amounts of water to thrive, and economic planners in the 1960's the system has diverted so much water from rivers feeding the Aral Sea that the sea is drying up. Years of chemical saturation, intended to enhance the cotton harvest, has also damaged the fertility of farmland. While a focus on growing cotton remains, the government has encouraged a shift to grain production.

Wheat, rice, and barley harvests are rising. The country also is a significant producer of fruits and vegetables. Still, much of the food consumed in Uzbekistan must be imported. The republic is also the largest producer of silk and Karakul pelts in the former USSR. Agriculture employs 46% of the workforce (Uzbekistan 2). Industry and Services: Uzbekistan's industrial sector accounted for 33% of its NMP in 1991.

Despite some efforts to diversify its industrial base, industry remains dominated by raw materials extraction and processing, most of which is connected with cotton production and minerals. Uzbekistan is a large importer of many industrial products. Under the difficult economic conditions caused by the collapse of the Soviet Union's system of allocations and interdependence of republics, this situation has worsened. In 1993, total manufacturing had decreased by 1% from its 1990 level, and mining output had decreased by more than 8% (Lubin 429). Manufacturing focuses on cotton processors; irrigation, farming, and textile machinery, and fertilizers. Other industries are not well developed (Republic 4).

Trading Partners: Before the breakup of the Soviet Union, foreign trade was heavily dependent on the Russian Republic. In the 1980's, more than 80% of Uzbekistan's foreign trade was within the Soviet Union, with Russia accounting for half of imports and almost 60% of exports. The other Central Asian republics accounted for another quarter of Uzbekistan's total foreign trade. Even inter-republican trade was directed through Moscow and organized in the interests of centralized planning goals. In the early 1990's, the Soviet-era pattern of exported and imported products remained approximately the same: nearly all ferrous metals and machinery, except that relating to the cotton industry, plus about 40% of consumer goods and processed foods, were imported. A significant aspect of the trade balance was that a single item, grain, accounted for 45% of imports in the early 1990's, as the republic imported about 75% of the grain it consumed.

Traditionally strong exports are basic metals, cotton-related machinery, textiles, , agricultural and aviation equipment, fertilizers, and cotton. In 1993, about 80% of foreign trade, with both former Soviet and other partners, was on the basis of bilateral agreements. In the early 1990's, quotas, licenses, and distribution controls heavily regulated such agreements. In 1993 and 1994, however, the list of commodities requiring export licenses was cut in half, import licensing virtually ended, and the use of fixed quotas was cut by two-thirds. Plans called for adoption of a unified system of licenses and quotas in 1995. Private barter agreements with partners in the former Soviet Union became illegal in 1993; they were replaced by agreements based on international prices.

In 1994 the government eliminated its tax on foreign-currency earnings. In 1993 Uzbekistan's current accounts foreign trade deficit rose to 9.4% of gross domestic product, increasing from 3.1% in 1992; at that point, the deficit was financed mainly through transactions backed by the country's gold supply and by bilateral trade credits - measures not sustainable over the long term. Since independence, Uzbekistan has made aggressive efforts to expand foreign trade and to diversify its trading partners. Expansion of trade relations beyond the contiguous states of the former Soviet Union has been hindered, however, by Uzbekistan's landlocked position and the complexity of moving goods overland through several countries to reach customers (Uzbekistan 16).

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Lubin, Nancy. Uzbekistan. Ed. Glenn E. Curtis. Ser. Country Studies. Washington, D.C. : Library of Congress Cataloging-in-Publications Data, 1997.
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