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THE IMPACT OF UZBEKISTAN'S WTO MEMBERSHIP ON ECONOMIC
DEVELOPMENT
Sadriddinov Ulugbek Jaloliddin ugli
MS, Teacher of the Department of Economics at Kimyo International University in
Tashkent, Samarkand branch
Phone number: +998 93 995 9189
https://doi.org/10.5281/zenodo.13928097
Annotation.
This research will give a succinct synopsis of the present economic situation
in Uzbekistan, emphasizing both its advantages and disadvantages. By doing this, the
framework for comprehending the possible effects of WTO membership will be established.
The research will next examine the main points of contention about Uzbekistan's economic
gains from WTO membership. Among the main topics that will be examined are improved
foreign direct investment, expanded market access for Uzbek exports, and the drive for internal
economic reforms. The research will not, however, downplay the possible difficulties that come
with being a member of the WTO. We'll take a close look at the possibility of job losses in some
industries as a result of growing import competition and the requirement for major changes to
domestic policy.
Keywords.
GDP per capita, Export, World Trade Organization (WTO), Foreign Direct
Investment (FDI).
It seeks to offer a thorough examination of the potential effects that WTO membership
may have on Uzbekistan's economic growth. Uzbekistan's membership in the World Trade
Organization is important for the economic development of our country and leads to the
strengthening of trade integration with the countries of the world. WTO membership expands
export opportunities for Uzbekistan and increases the flow of foreign investment to the
country. As a result, the sustainable economic growth of the country will accelerate and
strengthen its position in the world market
Uzbekistan was one of the earliest applicants from the FSU to join the World Trade
Organization. Uzbekistan's admission, however, stalled after four rounds of consultation with
WTO working groups in 2005. Uzbekistan and Turkmenistan are the only nations in Central
Asia that are not part of the WTO at the present time.
Figure II-3: Central Asian countries' accession status to the WTO.
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source: wto.org, compiled by the author.
Recent OECD, WTO, and World Bank Group analyses indicate that "gains from GVC
participation are not immediate." "The benefits of GVC participation differ depending on
whether a country operates at the top or bottom of the value chain." Consequently, the costs
and dangers of participation in GVCs might vary considerably across industrialized and poor
nations (Baldwin, Ito, and Sato 2014). Due to discrepancies in comparative advantage in GVC
participation, developed countries choose to engage in high-end and intangible production
activities such as research and development, design, and brand creation during the post-
manufacturing stages. The research of the effectiveness on participation in the global value
chain has made considerable use of additional data derived from a number of case studies.
These states' entrance to the WTO has had a direct impact on their participation in global value
chains and led to improved results (Choi Byung-il, 2020). The Ministry of Investment and
Foreign Trade is responsible for accelerating Uzbekistan's WTO membership. Additionally, it
should be noted that numerous organizations provide technical aid. Included are the United
Nations Development Program, the Asian Development Bank, the World Bank, the United States
Agency for International Development, the German Society for International Cooperation, and
the Korean International Cooperation Agency (KOICA).
This research aims to provide insights into the possible paths and challenges that
Uzbekistan may face on its road towards greater economic integration and growth by looking
at the experiences of other nations that have joined the WTO and analyzing the country's
particular economic environment.
Data source:
The data provided in this research covers a period of 22 years from 2001 to
2022, and the data was collected from World Bank Database
Figure 1. Correlation between log value of GDP per capita and WTO membership
Source: Done in Stata based on data from the World Bank
It may be observed the relationship between GDP per capita value and WTO enrollment
by looking at the scatter plot in Figure 1. In addition, this graph was also created by taking the
GDP per capita value of 90 nations and comparing it to their membership to WTO between the
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years 2001 and 2022. The log value of GDP per capita and WTO dummy variable are described
correspondingly on the y axis and the x axis in this graph. According to the graph, the red line
is demonstrating an increasing tendency, hence, we are able to state that when a country
becomes a member of the WTO, its GDP per capita value rises accordingly. The above
explanation leads us to believe that there is a connection between the WTO participation and
the value of the GDP per capita, and this is the conclusion that we may draw as a result.
Table I: Estimating Governance Index with time and country fixed effect models
Variables
Coefficients
Ln(Export)
0.740***
(0. 008)
Ln(FDI inflow)
0.002**
(0. 001)
WTO
0.283***
(0.028)
R-squared
0.832
Number of observations
1,980
Note: *** indicates significance at the 1% level. ** indicates significance at the 5% level. *
indicates significance at the 10% level. Robust standard errors are shown in parentheses.
Source: Done in Stata based on data from the World Bank
The explanatory variables account for more than 83 percent of the observed variation in
export in the data, as indicated by the model's R squared of 0.832. When we look at the Export
term, we can see that log GDP per capita is positively correlated with the log form of Export,
which is consistent with what we would anticipate given that a 1% increase in Export tends to
rise GDP per capita value by about 0.74 percent. Besides, FDI inflow is statistically significant
at the 5% level and has a positive coefficient too. For example, a 1% increase in FDI inflow will
result in a 0.001% increase in GDP per capita, which shows increasing macroeconomic stability
and population welfare. Here the most important one is having membership of WTO. As it can
be seen from a table that having WTO membership is statistically significant at the 1% level and
has a positive coefficient. It means, if a country is a member of WTO, it causes to grow GDP per
capital value about 0.283% additionally each year.
Recommendations for Uzbekistan to Achieve WTO Membership:
1.
Align Trade Policies with WTO Standards
2.
Enhance Legal and Institutional Frameworks
3.
Engage in Bilateral and Multilateral Negotiations
4.
Promote Economic Reforms and Liberalization
5.
Strengthen Trade Infrastructure and Capacity Building
6.
Enhance Transparency and Good Governance
7.
Foster Public and Private Sector Collaboration
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In conclusion, it can be said that Uzbekistan's membership in the World Trade
Organization not only increases the value of exports, but also increases the purchasing power
of the country's population and the creation of an environment of pure competition in
industries due to the introduction of cheap and high-quality imported products is also the
cause. In addition, I think that it will encourage the effective and efficient use of the resources
used by the country in an environment of pure competition.
Overall, the country's economy is expected to benefit from Uzbekistan's WTO entrance as
it would create new trade and investment possibilities and foster economic development.
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