New Issue of Development Focus on Structural Transformation


New Issue of Development Focus on Structural Transformation

This brief outlines key challenges for the success of the ambitious program of the Government of Uzbekistan aimed at structural reforms and technological modernization:

- Prevalence of energy and transport in the structure of investment. Directing most of investment to capital intensive industries restrains resources of growth in manufacturing and hi-tech industries.

- Declining returns from investment as a consequence of the development of capital-intensive industries and diminishing returns due to higher growth rates of capital compared with other factors of production.

- Low Degree of Innovative Activity reveals the importance to create incentives for innovations, promoting R&D, investing in human capital, harmonizing reforms in education (particularly in vocational and higher education) with its industrial policy agenda.

- Lagging Institutional Transformation. While the volume of investment tripled from 2000 for 2009, the quality of institutions and public administration might become a major bottleneck for the modernization agenda.

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