«Yangi O‘zbekiston: Moliyaviy hisobotning xalqaro
standartlarini joriy etishda muvaffaqiyatli
xalqaro tajriba» 16 dekabr, 2022 yil.
106
Abstract:
the continuous change and dynamic rate of privatization, which especially
began in the second part of the XX century, are impacting today’s economic stability of
world countries. Therefore, the following article is going to outline the pros and cons of the
means of properties by analyzing the latest numbers about the condition of privatization,
in the case of Uzbekistan, and how was economy affected by this process during and after
the Pandemic.
Keywords:
privatization, governmental assets, governmental properties,
privatization,
private businesses, private properties, ownership, capitalism,
Introduction
After the first theories of Adam Smith about Capitalism, this term started to be
analyzed more by his other contemporaries and this was the initial step for the
introduction of privatization among all world countries.
Especially, in the second part of the XX century, many developed countries
started to elaborate their concepts for the process of privatization to create the
market economic system which was based on pure competition among private
enterprises according to the law of “Supply and Demand”.
Because the law mentioned above is the key to the success of the state economy
as it leads to the wealth of the folk by creating the cost list according to the supply
and demand of the nation. That is why many experts also tried to develop their
concepts of privatization of governmental assets, including buildings or businesses.
Therefore, privatization has a special place in the transition from the
administrative-command system of economic management to the economic
management system based on market relations. The experience of economically
developed countries confirms that it is private property that ensures economic
growth without allowing social upheavals.
And then the following paragraphs are going to demonstrate the process,
shortly indicated above, and analyze the positive as well as negative sides in the
case of Uzbekistan for making appropriate conclusions about the privatization of
property in countries.
AKHMADBEK BAKHTIYOROV
Tashkent State University of Economics
akhmadbekbakhtiyorov@gmail.com
THE CURRENT
ANALYTICAL SUMMARY
OF DYNAMIC CHANGE IN
PRIVATIZATION IN THE
CASE OF UZBEKISTAN
https://doi.org/10.47689/STARS.university-5-pp104-110
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Analyses of relevant literature
Adam Hayes, Economic Sociologist, Assistant Professor of Sociology and
Anthropology, The Hebrew University of Jerusalem considered that government
property includes land or assets owned by federal, state, or municipal governments,
together with government agencies or government-sponsored institutions such
as libraries or parks.
Furthermore, he said that residential, commercial, and industrial land, as well as
other tangible assets such as machinery, are examples of government property.
Property can become government-owned through routine purchases or if it is
foreclosed on due to nonpayment of taxes or other causes. Government-owned
property can also refer to federal government-managed property, such as
consulates and embassies.
[1]
Robert Kelly, PhD. and managing director of XTS Energy LLC also thought
that private property, which is held by people or businesses, contrasts with the
government-owned property.
Contemporary concepts of private property are based on the homesteading
thesis of 18th-century philosopher John Locke. According to this notion, humans
acquire ownership of a natural resource by original cultivation or appropriation.
Locke coined the phrase “labor mingling.”
[1]
Nathan Mahr taught English Literature, Business, Social Studies, History and
Writing for over five years and received B.A. Comparative History of Ideas from
the University of Washington also wrote about the effect of private property on
the state economy.
He said that private property is frequently described as ownership of tangible or
intangible property by an individual entity as opposed to the state or a common
owner and the legal framework that specifies what an owner may do with their
property, such as how it can be used and exchanged, is known as private property
rights. They may also impose restrictions on how others engage with the property.
Private property rights are inextricably tied to the concept of finite resources.
Property must be rare in order for someone to possess it, which means that there
is a restricted quantity. If everyone had unrestricted access to a resource, no one
would have the motivation to care for it or make the greatest use of it.
Private property rights may provide the owner with a sense of security. Owners
understand that as long as they retain ownership of the property, they are free to
utilize it as they see appropriate. This level of stability enables long-term planning
and investment, which can lead to economic development and efficiency.
[2]
Ivy Wigmore, a former content editor on WhatIs.com, also gave her insights
about the process of privatization and said that the public sector is the portion
of the economy that is managed by government agencies, and privatization may
entail either the sale of government-owned assets or the elimination of barriers
that hinder private persons and organizations from engaging in a certain industry.
Privatization is a growing trend in many areas of the developed and developing
worlds, with supporters claiming that competition in the private sector develops
more efficient processes, resulting in better service and goods, cheaper pricing,
and less corruption.
«Yangi O‘zbekiston: Moliyaviy hisobotning xalqaro
standartlarini joriy etishda muvaffaqiyatli
xalqaro tajriba» 16 dekabr, 2022 yil.
108
Critics of privatization, on the other hand, believe that some services, such as
health care, utilities, education, and law enforcement, should be in the public sector
to allow for more control and more fair access.
[5]
Research Methodology
The research is conducted on the topic of the privatization of government assets
to boost the economic prosperity of developing countries by its superiority in the
rapid beneficial effect on the creation of stable pure competition among suppliers
which organizes more choices for customers.
Wealth is created as a result of privatization as profits are maximized while
production costs are decreased. It is unquestionably a positive move if the
government believes that opening up a specific industry to competition would
help both the market and the customer.
The article contains theoretical and practical observations based on the most
recent statistics from professional experts and institutions, and it formulates ideas
and recommendations on fundamental remedies to difficulties addressed by many
writers of valuable articles above.
The produced scientific and practical advice can be utilized to improve the
situation in this region and to help for finding the quicker opportunity for the
right process of privatization according to successful prior methods of developed
countries that are incredibly enormous for today’s economic circumstance of
the world which is full of high competition among states for the stable economic
growth.
Analyses and results
The term “Capitalism” was broadly outlined by Adam Smith in especially 18
th
century and then many other scientists also started to pay attention to this topic.
Because the profit of governmental organizations from state properties was not
high and required much attention from government to control. That were the initial
steps for the beginning of creating private properties.
Therefore, the scarcity and low rate of governmental assets led to turning state
assets to own, and this was considered an appropriate way of solution at that time
as private property is essential to capitalism, an economic system centered on the
private ownership and operation of means of production for profitability.
First difference between state and private properties should be vividly examined
in order to clarify the vision of today’s distribution of properties among world
countries:
Governmental property
Private property
land or assets owned by governmental
agencies
tangible or intangible property by an
individual entity
may or may not permit open public access
limits on how other people can engage with
the property according to the decision of the
owner
STARS International University
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not taxed
taxed
can be sold through auctions for attractive
prices
can be sold for any price and not only
through auctions
Private property, which is held by people or businesses, contrasts with the
government-owned property. Contemporary concepts of private property are
based on the homesteading thesis of 18th-century philosopher John Locke.
According to this notion, humans acquire ownership of a natural resource by
original cultivation or appropriation. Locke coined the phrase “labor mingling.”
Rights to private property are a fundamental tenet of capitalist economies, as
well as many legal systems and moral philosophies. Individuals under a private
property rights regime must be able to exclude others from the uses and advantages
of their property.
While private property rights are crucial for economic progress, others argue
that they may also contribute to particular sorts of inequality. Those who own
property have greater power and influence than those who do not. This might lead
to actions that favor the property owners at the expense of others. Inequality can
also result from how private property rights are developed.
For example, if someone inherits property, it was not always acquired by their
own hard work or effort. This can result in intergenerational inequality, where
those born into money have a large advantage over those who are not.
In this case, the rights of owners also should be secured by state policies which
play a key role in the attraction of investment to these countries as well. Many
governments have eliminated most obstacles to cross-border financial flows and
have eliminated exceptions to national treatment for foreigners who acquire, own,
or operate assets. This openness has offered economic possibilities for both the
home and host economies, as well as for businesses.
Privatization reduces the government’s position in the economy, making it less
likely for the government to have a negative influence on the economy. Privatization
can improve a country’s budgetary status in the long run.
However, the positive effects of privatization can be seen in the case of a
developing country, namely Uzbekistan over the past several years. Therefore, the
latest statistics about the acceleration of economic growth and GDP rise stability
of Uzbekistan were the main factor in choosing this country as a case for the
model of privatization.
Last year Uzbekistan attained a 7,4 GDP growth which was better than many
world-leading countries, including the USA, France, Italy Russian Federation, and
others.
[7]
A high volume of effort is being made on the implementation of the privatization
process in Uzbekistan as it is considered the main factor of the quicker economic
prosperity of the country and special attention is paid to it by President Shavkat
Mirziyoyev as well.
«Yangi O‘zbekiston: Moliyaviy hisobotning xalqaro
standartlarini joriy etishda muvaffaqiyatli
xalqaro tajriba» 16 dekabr, 2022 yil.
110
On March 18, 2022, Presidential Decree No. PP-168 “On additional measures to
further reduce state participation in the economy and accelerate privatization”
(the Resolution) was adopted.
[3]
According to it:
According to the Decree, the Ministry of Finance is instructed to ensure that the
following have been realized:
·the main aim is directed to the privatization of the banking sector in Uzbekistan;
[3]
The main changes and reforms in the field of banking system are outlined above
according to the decree of the President and ultimately, 109 commercial banks
and financial service organizations are going to be turned to the private assets
and properties of non-governmental organizations until the finish of 2023.
Another type of privatization is the outsourcing of state-provided services to
non-state agencies. This may be regarded as a change in the state’s role from
providing public goods to procurement.
Privatization may also refer to a shift in the state’s regulatory activities away
from state control of markets and toward dependence on and faith in freely
running markets as the most efficient and equitable ways of allocating resources
and revenue.
STARS International University
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The fourth form of privatization is characterized by a broad movement in mindset
away from collective methods to social organization, which often involve a primary
role for the state, and toward more personalized roles and responsibilities.
The next part of the decree is about the privatization of various state shares and
reals estate and is going to be examined with real numbers:
·As part of the Decree, a decision was made to privatize the following through
public auction:
[3]
The dramatic number of assets and shares are going to be privatized in Uzbekistan
to unlock myriads of opportunities for businessmen and improve entrepreneurship
by developing little businesses as well. These are, therefore, the main factors why
Uzbekistan is attaining high results in the global rank of developing speed among
other states.
[4]
In the structure of privatized state property, the largest share falls on the objects
of local authorities – 456 objects (72.2 % of the total number of objects privatized
«Yangi O‘zbekiston: Moliyaviy hisobotning xalqaro
standartlarini joriy etishda muvaffaqiyatli
xalqaro tajriba» 16 dekabr, 2022 yil.
112
in the Republic), the Agency for state assets management-92 objects (14.6 %), the
Ministry of Transport – 23 objects (3.6%), the Ministry of Housing and Communal
services-23 objects (3.6%), the Ministry of Public Health – 11 objects (1.7%), the
State Committee of the Republic of Uzbekistan on Geology and mineral resources
– 6 objects (0.9%).
[4]
Conclusion
Privatization plays an important role in the transition from the administrative-
command system of economic management to the market-based economic
management system. The history of economically successful countries
demonstrates that private property enables economic expansion while preventing
social upheavals.
Profits are also maximized while manufacturing expenses are reduced, resulting
in the creation of wealth. If the government feels that opening up a certain industry
to competition would benefit both the market and the customer, it is clearly a
desirable move.
Therefore, the privatization process is incredibly beneficial for state economic
stability and some following insights would be profitable during the process of
turning governmental assets into ownership for developing countries that are
planning to take some models from prior successful steps in this step:
·Selling governmental assets to non-governmental organizations at appropriate
prices to create a chance for further development;
·Creating the opportunity for pure competition among non-governmental
enterprises for better-supplying action for customers at nicer prices;
·Developed state policy for the safety of ownership rights;
·Effective state regulation of monopoly;
·Contributing better atmosphere of digitalization for the easier globalization
procedure;
·Free distribution of shares.
References:
https://www.investopedia.com/terms/g/government-owned-property.asp
https://study.com/academy/lesson/private-property-economics-overview-
rights-examples.html
https://www.dentons.com/en/insights/articles/2022/april/27/uzbekistan-
accelerating-the-privatization-of-state-assets
https://stat.uz/uz/?preview=1&option=com_dropfiles&format=&task=frontfile.
download&catid=299&id=1167&Itemid=1000000000000
https://www.techtarget.com/whatis/definition/privatization
https://www.oecd.org/investment/OECD-Acquisition-ownership-policies-
security-May2020.pdf
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2021&locatio
ns=UZ&most_recent_value_desc=true&start=1999
https://www.investopedia.com/terms/p/privatization.asp
