This chapter explores the linkages between trade, FDI and Global Value Chain (GVC) integration in Uzbekistan. Uzbekistan’s foreign investment remains concentrated in the primary sector, and FDI’s contribution to GVC integration remain limited. As Asia’s GVC integration is showing signs of becoming more regional, FDI policies that contribute to improve Uzbekistan’s GVC position and diversification are needed. Together with GVCs, other regional integration aspects are examined in the chapter, in particular those related to infrastructure and connectivity and logistics.
Roadmap for Sustainable Investment Policy Reforms in Uzbekistan
Abstract
Build on revealed comparative advantages by focusing on reinforcing strengths in metals, textiles and processed stone materials while enhancing competitiveness in other sectors through investment, value addition, and trade diversification strategies.
Encourage both foreign and domestic investment in downstream activities to reduce dependence on volatile commodities. This includes transforming extractives (e.g. refined copper into copper wire) or moving up the value chain in targeted manufacturing industries, such as finished garments and home textiles. It could also encompass investment in processing facilities (e.g. for dried fruits, juices, canned vegetables).
Invest in training of local producers, strengthen their linkages with foreign investors and secure internationally recognised certifications to boost export competitiveness and facilitate market entry.
Continue to forge deeper trade relationships through free trade agreements, such as the recent agreement with Türkiye which came into effect in 2023, to establish stable preferential rates and reduce the risk of sudden protectionist measures.
Strengthen trade linkages with countries whose import structures most closely align with Uzbekistan’s export structure. The Trade Complementarity Index suggests a focus on partners such as Switzerland, the UAE, Romania, Armenia, and Botswana.
Enhance cross-ministerial co-ordination on trade, building on the WTO accession process.
Review and simplify administrative procedures at the border. This includes customs, sanitary-phytosanitary checks and technical regulations, creating a “single window” where traders submit all documents electronically to one platform, harmonising border practices with international standards and publishing all relevant regulations and requirements online. It also includes capacity building for customs officers and improved inter-agency co-ordination, such as through the creation of a single, co-ordinated checkpoint with officials from different agencies.
Strengthen support for targeted services sectors to promote diversification and value added in exports. Trade in services sectors associated to higher productivity gains, such as ICT services, computer services and professional services, will grow through the provisioning of adequate digital infrastructure, an open regulatory framework and harmonisation with international standards. Targeted support in selected digitally deliverable services could support Uzbekistan’s long-term diversification and technological upgrading efforts.
Capitalise on Uzbekistan’s green energy potential to strengthen trade linkages with key partners. As Uzbekistan’s plans to become a green energy regional hub move forward, promoting regional energy co-operation and green energy trade can pave the way for building energy trade partnerships and green economy agreements, particularly with the EU.
Align synergies between investment and trade policy goals. Efforts in investment promotion, facilitation and responsible business conduct should be co-ordinated with initiatives in export promotion, trade facilitation and trade policy. Establishing stronger FDI-SME linkages, digitalising regulatory procedures in trade and incorporating labour and public interest provisions in trade agreements are areas where further co-ordination would be beneficial.
Enhance regional connectivity through the development of new transport corridor networks with trading partners in Europe, South Asia and East Asia. Further transport co-operation with neighbours to increase the flow of cargo as well as enhancing multimodal (rail and air) connectivity will also be important.
Uzbekistan is positioned in a vital location in Central Asia which emphasises its role as an important infrastructure connectivity hub in the region. It connects to the People’s Republic of China (hereafter ‘China’) in the east, Europe and the Russian Federation to the north, the Middle East to the west, and the Indian subcontinent southwards.
Uzbekistan’s regional integration efforts have deepened since 2006. The Asia-Pacific Regional Cooperation and Integration Index (ARCII) suggests Uzbekistan’s regional integration has been increasingly driven by technology and digital connectivity (Figure 3.1). Regional value chain and movement of people have also contributed to the country’s regional integration efforts, while trade and investment has been more volatile. The infrastructure and connectivity dimension, meanwhile, has remained relatively stable but remains low compared to other RCI drivers for Uzbekistan. Deeper regional integration between 2006 and 2022 is noted in the dimensions of infrastructure connectivity, digital connectivity, and environmental co-operation.
Note: ARCII estimates for Uzbekistan exclude Money and Finance dimension (Panels A and B).
Source: ADB’s estimates based on ADB’s ARCII Framework (ADB, n.d.[1]).
Uzbekistan tends to be more integrated regionally than other neighbouring economies, particularly in technology and digital connectivity (Figure 3.1, Panel C). Results for 2022 suggest that Uzbekistan is more regionally integrated in the technology dimension than neighbouring economies like Kazakhstan and Tajikistan. In infrastructure and connectivity, Uzbekistan ranks lower than Kazakhstan but above Tajikistan and the average Central Asian Regional Economic Cooperation (CAREC) member countries. Regional integration estimates for trade and investment, infrastructure connectivity, and social integration are ranked lower than the averaged estimates of all Asia-Pacific economies.
3.2.1. Export structure
Uzbekistan’s export structure has been traditionally dominated by commodities and agricultural products with a strong regional orientation and a fairly diverse range of tariff rates. The economy has traditionally been reliant on commodity exports like cotton and gold. The country also boasts considerable gold deposits which have provided a consistent source of revenue over the years.1
Gold and copper remain the most valuable exports while cotton-based products and textiles also feature significantly. Annex Table 3.A.1 reveals several defining features of Uzbekistan’s export profile. Primary commodities feature prominently with semi‐manufactured gold occupying nearly 30% of total exports, followed by refined copper and natural gas. These three account for a substantial share of the country’s overall outbound trade, underscoring Uzbekistan’s continued reliance on extractive industries and large‐scale natural resource endowments. Cotton yarn products are also significant and indicative of the vital role of agro‐industrial and textile exports.
Notably, gold exports are listed with “Unspecified” as a destination in the table. This suggests that either the ultimate buyers are not disclosed, or shipments move through international markets where immediate end‐users are not easily tracked. Refined copper is sold primarily to Türkiye (about 70%) and China (about 30%), with minimal tariffs (mostly 0% to 2%). Natural gas shipments are predominantly destined for China, followed by smaller shares to Russia, Tajikistan, and Kyrgyzstan, mostly at zero tariff, indicating intra‐regional energy co-operation (or pre‐existing pipeline agreements).
Exports face modest tariffs of 0%-11%. Cotton yarn sees varied tariffs, while natural resources and textiles are vital for Uzbekistan's export portfolio. A wide range of cotton yarn types go to third markets, e.g. Türkiye, the Russian Federation, China, and Pakistan, with tariffs typically in the 4%–11% range. For certain lines, trade linkages with Poland or Portugal indicate gradual expansion into the European market. Agricultural products like fresh grapes, dried beans, and dried grapes highlight Uzbekistan’s growing specialisation in high value produce for export. These are typically shipped to neighbouring countries (Russia, Kazakhstan) and selected global markets (China, Türkiye, the United Arab Emirates), reflecting efforts at diversification.
Exports of finished or semi‐finished goods, such as knitted fabrics, T‐shirts, and prefabricated copper products, indicate that Uzbekistan is gradually moving up value chains. Russia and Central Asian neighbours (Kazakhstan, Kyrgyz Republic) dominate as lead buyers for these more processed goods with moderate tariff barriers ranging from 3% to 8%. The high usage of zero‐tariff rates in some partner markets, particularly within the Eurasian Economic Union (EAEU) framework, can encourage further export growth with the assumption that Uzbekistan can maintain product competitiveness and address non‐tariff barriers (e.g. sanitary/phytosanitary standards).
Uzbekistan receives significant duty concessions under several Generalized System of Preferences (GSP) schemes. Table 3.1 lists all the schemes that have been utilised over the years for exports by Uzbekistan together with their year of entering into force. The preferences received from the United States expired in 2020. These schemes provide considerable benefits to Uzbekistan in market access and lower duties. Table 3.2 illustrates Uzbekistan's use of the GSP preferences that reduce or eliminate import duties on certain tariff lines. Uzbekistan has been effectively utilising GSP preferences in chemicals, metals, textiles, and plastics. Some of the chapters without any GSP usage might be due to other agreements or the conditions placed on GSP utilisation.
Source: UNCTAD (accessed in February 2025).
Source: UNCTAD GSP Database (accessed in February 2024).
Uzbekistan’s export profile is dominated by low-complexity products, reflecting a strong reliance on commodities and agricultural goods. Table 3.3 shows the top 20 bilateral trading relationships for Uzbekistan, by partner and product, for 2022 and the export complexity of the product.2 A negative value indicates a relatively low level of product complexity, and a positive value indicates a high level of product complexity. Gold, for instance, constitutes a sizeable share of exports but carries a negative complexity rating. Similarly, agricultural and resource-based outputs such as cotton yarn, wheat flour, and unwrought metals are less complex but contribute more to the export basket. In contrast, manufactures and intermediate goods like polymers of ethylene, certain fertilizers, and vehicle bodies demonstrate the emergence of higher-complexity product lines. Their presence signals Uzbekistan’s initial steps toward diversifying beyond traditional commodity and agro-based exports.
Notes: *excluding gold ores and concentrates.
Source: “The Atlas of Economic Complexity”, Centre for International Development at Harvard University, https://atlas.hks.harvard.edu/.
Simpler commodity and mineral exports have driven much of Uzbekistan’s recent export growth and there are encouraging signs of a gradual shift into more advanced sectors. Precious metals and stones continue to register high volumes in exports but without substantial technological intensity, reflecting the continued strength of resource-focused industries. This is concurrent to expansions in high-complexity activities in vehicles, machinery and chemical goods. These industries are smaller in scale and slower in growth, but have the potential to generate more knowledge-intensive and value-added exports in the long run. The evolution of these product lines indicates that Uzbekistan could steadily reduce its dependence on low-complexity commodities by investing in technologies, skills, and production processes aligned with higher value creation.
Note: Values above 1 mean that a country has a revealed comparative advantage over the rest of the world in an industry and numbers highlighted in pink (for values between 0 and 1) mean that a country does not have a revealed comparative advantage over the rest of the world in an industry. The magnitude of the number reveals the size of the comparative (dis)advantage with a higher number above indicating higher comparative advantage and a lower number, between 0 and 1, indicating higher comparative disadvantage.
Source: WITS (accessed in February 2025).
Uzbekistan's revealed comparative advantage (RCA) data from 2017 to 2022 (Table 3.4) highlights the country's key export strengths and shifts in trade competitiveness with intermediate goods and product categories such as metals, stone and glass, and textiles and clothing, exhibiting a strong competitive advantage. The RCA index, which measures a country's relative advantage in an industry based on trade flows, indicates that Stone and Glass, Intermediate Goods, and Textiles and Clothing consistently exhibit strong comparative advantages, with values significantly above 1. Notably, Stone and Glass maintained extremely high RCA values at 10.59 in 2020 and 9.95 in 2022. Metals and Vegetable Products have shown steady RCA values above or near 1 demonstrating their importance in Uzbekistan’s export structure. Other sectors such as Fuels and Plastic or Rubber, have experienced fluctuations which suggest that global market dynamics and domestic production shifts may have influenced their relative competitiveness.
Uzbekistan faces a comparative disadvantage in several key sectors, as indicated by RCA values below 1 for Capital Goods, Machinery & Electronics, Consumer Goods, and Chemicals. Food Products, Footwear, and Wood exhibit consistently low values, reflecting limited export competitiveness. In another case, vegetable products had a strong RCA of 3.96 in 2018 which fell to 1.48 in 2022, signalling potential challenges in maintaining export momentum. These trends suggest Uzbekistan should focus on reinforcing its strengths in metals, textiles, and processed stone materials sectors while exploring opportunities to enhance competitiveness in less dynamic sectors through investment, value addition, and diversification.
Uzbekistan's export market penetration has steadily increased, reflecting its growing integration into regional and global trade networks (Table 3.5). The export market penetration index measures the ratio of countries importing a given product to the total number of countries a nation exports to, highlighting both trade diversification and economic integration. The scale is shown from 0 to 100. Uzbekistan’s index has shown a gradual upward trend from 2.2 in 2017 to 2.7 in 2022, signalling steady progress in reaching new markets, similar to Kazakhstan and Tajikistan. Uzbekistan’s stable growth suggests that trade liberalisation, infrastructure improvements, and regional agreements have facilitated broader market access. However, the country still lags highly integrated economies like Türkiye and India which benefit from well-established trade networks and greater global market reach.
Source: WITS (accessed in February 2025).
While Uzbekistan outperforms some smaller economies in export penetration, it still faces challenges in expanding its trade reach with limited progress in diversifying trade partners. The lower penetration index for Uzbekistan suggests that while progress has been made, further efforts are needed to enhance market diversification and trade facilitation. Regional connectivity, increasing participation in global value chains (GVCs), and securing more trade agreements could help Uzbekistan catch up with stronger economies in the region and establish itself as a pivotal player in Central Asian trade.
Uzbekistan’s trade remains moderately concentrated, indicating progress in diversification but with ongoing reliance on key partners. The Herfindahl-Hirschman (HH) market concentration index in Table 3.6 illustrates Uzbekistan’s trade dispersion compared to neighbouring economies, where a higher index value signifies stronger dependence on a limited number of markets. While Uzbekistan’s trade structure shows some diversification, its patterns remain shaped by regional factors such as reliance on natural resources, trade agreements, and infrastructure connectivity, similar to economies like Kazakhstan, Tajikistan, and Turkmenistan.
Source: WITS (accessed in February 2025).
Uzbekistan’s trade diversification remains inconsistent, leaving the economy vulnerable to external shocks. A declining HH index would indicate a broader export base and reduced dependence on dominant partners like Russia and China while a rising or persistently high index suggests heightened concentration risks. In comparison to economies such as Türkiye and India which exhibit lower market concentration due to their well-diversified trade portfolios, Uzbekistan lags in expanding trade agreements and sectoral development. Countries like Mongolia and Azerbaijan remain highly concentrated in their trade, whereas Kazakhstan and Pakistan show higher diversification. While Uzbekistan has made some progress in reducing its reliance on specific markets, maintaining and expanding trade diversification will be crucial to ensuring long-term economic resilience, particularly in uncertain global conditions.
Uzbekistan’s trade competitiveness and purchasing power have experienced significant fluctuations, as reflected in the Net Barter Terms of Trade Index (Table 3.7). The terms of trade index are the ratio of export prices to import prices. A higher index indicates an improvement in trade conditions, allowing a country to purchase more imports per unit of exports while a declining index suggests increasing import costs or weaker export prices. Given Uzbekistan’s reliance on key commodities such as cotton, gold, and natural gas, changes in global prices for these goods have a direct impact on trade performance and economic stability. Comparisons with regional economies help assess Uzbekistan’s trade position, highlighting both strengths and vulnerabilities arising from external market shifts while broader economic policies have a crucial role in shaping these trade dynamics.
Source: WITS (accessed in February 2025).
Uzbekistan’s terms of trade saw an increase between 2017 and 2021, going from 103.6 to 163.7. This reflects favourable shifts in export prices, influenced by global commodity price trends and increased demand for Uzbek exports in the wake of the COVID-19 pandemic. Among neighbouring economies, only Turkmenistan (184.9) and Azerbaijan (156.8) saw similarly large fluctuations, most likely due to their dependence on energy exports. In contrast, countries like China (90.2), India (90.7), and Türkiye (88.6) experienced declines, indicating rising import costs or weakened export pricing power. Other economies such as Kazakhstan (133.3) showed strong performances, though lower in magnitude than Uzbekistan’s. Meanwhile, Tajikistan (135.5) and the Kyrgyz Republic (124.6) maintained high but more stable indices, reflecting a less volatile trade environment. While Uzbekistan’s improvement signals a positive shift in trade conditions, sharp fluctuations in the index could point to external dependencies or market distortions that may pose challenges for relying solely on trade performance in the future.
3.2.2. Import structure
Uzbekistan’s imports are dominated by medicine, petroleum and transport equipment, showing a mix of intermediate and final goods. Annex Table 3.A.2 (in Appendix) showing Uzbekistan’s top 30 imports reveals a diverse set of products, ranging from essential commodities (petroleum, cereals) to high‐value manufactured items (vehicles, machinery) and critical inputs (medicaments, vaccines). Medicaments account for approximately USD 860 million and 3.60% of total imports, underscoring the importance of pharmaceutical products for Uzbekistan’s healthcare needs. Major suppliers include India, Ukraine, Germany, and the Russian Federation. Zero tariff rates reflect Uzbekistan’s effort to keep essential medical supplies affordable. Following close behind are petroleum products (USD 618 million), cereals (at USD 614 million), and vehicles (at USD 441 million). These items indicate the economy’s reliance on energy, staple foods, and transport equipment.
The imports of petroleum and food are mainly from regional partners, minimising supply chain risks related to distance. Petroleum oils primarily come from the Russian Federation (about 54%), with secondary reliance on Turkmenistan and Kazakhstan. Wheat and meslin are almost exclusively supplied by Kazakhstan (over 99%), which emphasises a single‐supplier vulnerability for such a critical food commodity. Mid‐sized passenger vehicles come notably from the Republic of Korea (about 32%) and Kazakhstan (23%), with additional significant shares from China and Russia.
A broad range of intermediate goods utilised by Uzbekistan’s industries are imported and they include vehicle parts, copper ores, and iron/steel products. These items highlight both the breadth of Uzbekistan’s domestic requirements (ranging from automotive assembly components to raw materials for steel production) and the regional interdependence with neighbours in Central Asia (Kazakhstan, Turkmenistan) and major global players like Russia, China, and South Korea.
Necessities and critical inputs facing lower rates than consumer goods and specialised machinery, with some tariffs also strategically placed to support domestic manufacturing. Many show 0% or low tariffs (5–10%), especially in categories where Uzbekistan needs a stable supply of critical inputs, e.g. copper and petroleum products, to support local industries or essential services. Higher tariff levels for certain specialised machinery or off‐highway vehicles (30% rate) indicate protective measures for specific domestic manufacturing sectors or revenue generation from high‐value industrial equipment. The data also illustrates heavy dependence on a few key suppliers for certain strategic goods (e.g. Kazakhstan for wheat, Russia for petroleum and wood, Turkmenistan for various fuels). While this reliance can leverage geographic proximity and historical trade links, it also poses risks related to price volatility and potential supply disruptions. A similar dynamic is evident in high‐value manufactured imports (vehicles, machinery), where large portions are sourced from a small set of primary suppliers in Asia or Europe.
3.2.3. GVC trade
Uzbekistan's production networks have mainly been oriented towards domestic output. Figure 3.2 highlights the composition of Uzbekistan’s output between 1990 and 2015, revealing distinct roles for domestic production, traditional trade, and participation in global value chains. Purely Domestic Output is the largest component during this period, climbing especially rapidly after the early 2000s and underscoring the strong growth of domestic production. Traditional Trade Output, reflecting exports with minimal global value chain integration, follows a similar but more modest upward path. Meanwhile, GVC Output, which tracks Uzbekistan’s engagement in international production networks, remains comparatively low yet shows a steady expansion from the mid-2000s onward. These trends suggest that while Uzbekistan’s economy has historically been driven by domestic activities, its increasing GVC participation signals a gradual move toward more diversified trade and industrial development. The trends suggest that while Uzbekistan’s economy remains largely domestically driven, its involvement in global value chains has been increasing, indicating potential for further trade diversification and industrial development.
Source: WITS (accessed in February 2025).
Uzbekistan’s engagement in global value chains is predominantly driven by manufacturing and services, with agriculture, mining, and energy sectors also playing vital roles. Manufacturing is the largest contributor to GVC-related output in 2015, with significant subsectors including textiles and wearing apparel, metal products, food and beverages, petroleum and chemicals, and electrical machinery. The services sector, while smaller than manufacturing, also has a noteworthy share, particularly in financial intermediation, transport, and retail trade, highlighting the importance of business services and logistics. Agriculture, forestry, and fishing feature prominently, reflecting Uzbekistan’s historical strength in cotton production. Meanwhile, mining and quarrying reinforce the country’s status as a resource exporter. Lastly, the presence of electricity, gas, and water as a separate category underscores the significance of energy production in supporting both industrial output and overall economic activity.
Uzbekistan’s backward participation in GVCs demonstrates a strong reliance on imported inputs to support export-oriented production, particularly in its manufacturing sector. Textiles, food & beverages, and petroleum-based products dominate the country’s import of raw materials, machinery, and intermediate goods for re-export. Services, construction, and agriculture also draw upon foreign expertise, technology, and capital, enhancing productivity and efficiency. However, the relatively smaller role of agriculture and mining suggests that these sectors largely rely on domestically sourced inputs. Overall, this pattern aligns with Uzbekistan’s industrial strategy of importing vital inputs to bolster manufacturing, especially in apparel and processed foods, which rank among the country’s major export industries.
Uzbekistan’s forward participation in global value chains underscores its role as a provider of domestic value added to global exports. Financial intermediation, retail trade, transport, and education services feature prominently in this regard, illustrating how Uzbekistan extends its reach beyond physical goods to include business and support services. Manufacturing, especially in metal products, textiles, and petroleum-based items, also show a substantial presence, confirming the country’s importance as a supplier of semi-finished industrial goods. Additionally, agriculture, forestry, and fishing remain significant, reflecting Uzbekistan’s traditional strength in exporting agricultural commodities.
Uzbekistan’s GVC trade has a regional focus with many of its largest partners, for overall, backwards and forwards trade, consisting of other regional economies. Table 3.8 presents Uzbekistan’s top trading partners in Global Value Chain (GVC) participation, distinguishing between total GVC trade, backward GVC trade (importing foreign inputs for exports), and forward GVC trade (exporting inputs for foreign production). Russia is the largest partner across all three categories, accounting for 35.2% of total GVC trade, 50.4% of backward GVC trade, and 31.7% of forward GVC trade, underscoring its important role in Uzbekistan’s trade network. Germany and Türkiye are also key partners, with Germany contributing 8.2% of total GVC trade and 9.6% of forward GVC trade, while Türkiye plays a balanced role across both forward (5.9%) and total GVC (5.4%) trade. Kyrgyzstan, Turkmenistan, and Kazakhstan play smaller but notable roles, particularly in backward GVC trade, indicating Uzbekistan’s reliance on these countries for intermediate goods and supply chain inputs. Conversely, Belgium and Italy are more relevant in forward GVC trade, showing their role as destinations for Uzbekistan’s exported inputs. This structure suggests Uzbekistan’s strong dependence on Russia, while also engaging with a diverse set of regional and European partners in global production networks.
Source: EORA.
Global trade fragmentation is reshaping opportunities and risks for Uzbekistan’s integration into world markets. Rising reciprocal tariffs, increasing protectionism, and the re-routing of trade among major economies have heightened uncertainty and volatility in global trade patterns. For Uzbekistan, these shifts may pose challenges to export growth and investment flows, particularly given its reliance on a narrow range of commodities and markets. At the same time, diversification of global value chains could create selective opportunities if Uzbekistan succeeds in strengthening its industrial base, logistics connectivity, and regulatory transparency. Advancing trade facilitation reforms and WTO accession will be essential to safeguard market access, attract efficiency-seeking investment, and sustain integration into a predictable, rules-based multilateral trading system.
3.2.4. Recommendations
There is significant scope to diversify and expand the range of products exported by Uzbekistan. Uzbekistan’s exports remain heavily concentrated in gold which accounts for nearly 30% of the total at roughly USD 4.1 billion, and other primary resources such as refined copper and natural gas. This commodity‐focused strategy leaves the economy vulnerable to global market price swings. Investments in downstream activities could reduce reliance on commodities and increase the margins available to producers. In textiles, where cotton yarn already contributes significantly to export revenue, moving further up the value chain to branded finished garments and home textiles would command higher prices and diversify revenue sources beyond raw yarn sales.
Further diversify market access and strengthen the predictability of preferential trade conditions. Acknowledging Uzbekistan’s recent progress in expanding its network of trade agreements—through duty-free access under the CIS framework, GSP+ preferences with the European Union and the United Kingdom, and new preferential arrangements with Türkiye, Pakistan, Iran, and Afghanistan—there remains scope to deepen, modernize, and expand these partnerships. While the CIS Free Trade Area provides an important regional foundation, Uzbekistan continues to apply the 1993 CIS rules of origin, which do not reflect current production structures or value-chain dynamics, potentially limiting their effectiveness for firms engaged in multi-country processing. Broadening Uzbekistan’s network of trade agreements with partners with strong or potential demand in manufacturing and processed products would help secure predictable market access, promote trade creation, and reduce exposure to unilateral preference withdrawal or sudden protectionist measures.
There is untapped potential in upgradation of quality and safety standards to expand the range of exporting markets. An expansion into high‐income markets like the EU or advanced Asian economies requires strict adherence to product quality, safety, and origin requirements. Currently, China absorbs over USD 300 million worth of Uzbek cotton yarn, suggesting that Uzbekistan can produce at scale, but penetrating mature markets in Europe or East Asia demands certifications, testing, and sanitary/phytosanitary compliance. Agricultural products such as graphs and vegetables would also require international quality seals and traceability systems to increase the value-added captured by producers.
The trade infrastructure provides a substantial hindrance to trade flows and its improvement could yield significant commercial benefits. Streamlining the transport corridors to regional partners, coupled with reliable power supplies and modernised border facilities, would reduce lead times and transaction costs for Uzbekistan’s exporters. For instance, improving logistics to handle bulk shipments of ethylene polymers could help maintain consistency of supply and keep Uzbekistan competitive. Moreover, developing rail and road connectivity along strategic routes could encourage product diversification, particularly for high‐value textiles and processed agricultural goods that require timely, lower‐cost shipping to remain profitable.
The significant focus on agriculture means that agro-processing industries remain one of the activities with the highest potential for promoting exports. Several agricultural exports in the table show increasing demand from regional buyers (China, Russia, Kazakhstan). By investing in processing facilities (e.g. for dried fruits, juices, canned vegetables) and encouraging public‐private partnerships, Uzbekistan could broaden its export basket to include higher‐value, branded goods. This strategy increases profitability for farmers and helps rural communities move beyond raw commodity sales. Over the long term, the government could further support SMEs in agro‐processing, promoting diversification and brand building so that items like dried grapes or flour become recognised Uzbek specialty exports globally.
Uzbekistan’s top GSP-eligible products exhibit strong utilisation rates and are globally competitive, suggesting opportunities to expand export revenues under preferential market access (Table 3.9) The revealed comparative advantage indicator provides a measure of the global competitiveness of a country in a particular product by comparing the share of exports to the global share of exports. An index score of above 1 indicates that the country has a comparative advantage whereas a score of below 1 indicates comparative disadvantage. High GSP Utilization Rates for goods such as polyethylene (99.11%), copper wire (100.00%), and various cotton yarns (above 96%) confirm that Uzbek exporters are efficiently utilising available tariff concessions for these goods. The particularly high RCA figures in molybdenum (369.48) and refined copper wire (86.11) further underscore Uzbekistan’s specialised edge in these products which would be useful for expansion in other markets. Encouraging investment in modern production facilities and ensuring consistent compliance with international quality and safety standards could further solidify market share and enhance the ability of these sectors to diversify into higher-value segments, such as downstream chemical processing and sophisticated textile products.
Source: UNCTAD for GSP utilisation data and World Bank for Revealed Comparative Advantage data.
Uzbekistan should build on the export strength of these products by prioritising technological upgrades and supply chain efficiency to maximise the benefits of its GSP privileges. Investment in training for local producers, streamlining customs procedures, and securing internationally recognised certifications will help boost product competitiveness and facilitate entry into new markets. Additionally, nurturing innovative capacities, e.g. through research collaborations in fertilizer composition or advanced fiber manufacturing, can help sustain any long-term advantages. Targeted policy support, such as incentives for SMEs to adopt modern processes and access finance for product development, would also widen the base of exporters able to leverage GSP. By combining these strategies with ongoing efforts to align with global trade practices, Uzbekistan can ensure continued export growth and stronger economic resilience.
Uzbekistan should strengthen its trading partnership with countries whose import structure aligns with its export structure. The Trade Complementarity Index (TCI) shown in Table 3.10 compares a country’s export structure with the import profile of its partner and assigns a matching score with a higher score indicate a closer match, implying that the exporting country produces the basket of goods the importing country is likely to buy. For Uzbekistan, a higher TCI with a partner such as Switzerland (57.0) suggests strong potential for both immediate and future exports, given that Swiss imports closely align with Uzbekistan’s export offerings. Using this criteria, the top 5 economies for Uzbekistan to focus on enhancing its exports would be Switzerland, UAE, Romania, Armenia and Botswana.
Source: World Integrated Trade Solution (WITS).
In the broader list of trading partners, Uzbekistan can utilise opportunities for exporting with a diverse range of partners from Europe (e.g. Switzerland, Romania), the Middle East (United Arab Emirates, Saudi Arabia), and Asia (Armenia, India), and for both resource commodities and specialised higher value-added goods. Notably, Switzerland and UAE's lead highlights an alignment between Uzbekistan’s resource-driven exports and Switzerland’s demand for raw materials and specialised commodities. Meanwhile, the presence of emerging economies like Romania, Armenia, and Botswana in the top rankings underlines the growing diversification of Uzbekistan’s export potential. These markets could be ripe for expanded partnerships if Uzbekistan refines its product mix and export procedures to meet quality and regulatory standards of these markets.
The strengthening of trading ties could take the form of prioritising efforts to negotiate trade agreements, attracting targeted investments, improving product fits to destination partners, and strengthening regional ties for neighboring economies with high potential. Given Switzerland’s strong TCI score, Uzbekistan should prioritise efforts to negotiate more favourable trade agreements or investment promotions with Switzerland. Similarly, the United Arab Emirates offers a dynamic market for re-export activities, logistics, and financial services that could benefit Uzbekistan’s exporters. For partners such as India, Türkiye, and Saudi Arabia, where TCI values fall between 33 and 36, Uzbekistan should consider tailoring specific export products to better fit each market’s import needs. This could be done by conduct industry-specific research to determine potential niches, e.g. textiles in Türkiye or agricultural goods in India, that could elevate Uzbekistan’s competitiveness. Uzbekistan may also gain from strengthening cultural and regional ties with neighbors like Armenia. Other measures such as the harmonisation of customs processes, setting up joint business forums, and facilitating knowledge exchange can help spur bilateral trade where logistical hurdles are comparatively lower.
Uzbekistan’s horticultural sector exhibits strong potential for export growth and promotion on both the intensive (increasing trade volume) and the extensive margin (increasing trade partners). Table 3.11 shows the main products in the sector decomposed into their local and export shares. Products such as apples, pears, apricots, tomatoes, and melons are primarily consumed domestically, with over 85% of their production serving local demand. Other products such as plums (95% exported), persimmons (95% exported), peppers (43% exported), and lettuce (57% exported), demonstrate a strong export orientation. Table grapes (40% exported), Meyer lemons (60% exported), and green peas (62% exported) also hold substantial export shares, highlighting Uzbekistan’s competitive edge in these commodities. Despite the large-scale production of staple vegetables like potatoes and carrots, their exports remain negligible, indicating potential untapped opportunities. Overall, Uzbekistan’s horticultural trade patterns suggest a well-established domestic market for most crops, alongside a strategic focus on exports for select high-demand fruits and vegetables.
Source: FAO and UN Comtrade.
To enhance export growth in the horticulture sector, Uzbekistan should expand its international market presence for both domestically consumed and export-oriented horticultural products. While many crops, such as apples, pears, apricots, tomatoes, and melons, primarily serve the domestic market, there is potential to boost exports by improving quality standards, strengthening supply chains, and exploring new trade agreements. Other products like plums, persimmons, peppers, and lettuce already have a strong export orientation, indicating a competitive edge that could be further leveraged through better market access, branding, and infrastructure improvements. Table grapes (40% exported), Meyer lemons (60% exported), and green peas (62% exported) demonstrate Uzbekistan’s ability to meet international demand, but their growth could be reinforced by expanding cold storage and transportation networks to preserve freshness and extend reach. Additionally, staple crops such as potatoes and carrots, which are produced in large quantities but have minimal exports, represent untapped opportunities that could be explored with better regional trade integration. By addressing logistical bottlenecks, investing in value-added processing, and aligning production with international quality standards, Uzbekistan can enhance its position in global horticultural trade while maintaining adequate provisions for its domestic market.
Uzbekistan’s accession to the WTO could enhance trade by streamlining customs procedures, harmonising tariff schedules and reducing non-tariff barriers, thereby increasing the attractiveness and access of Uzbek products in foreign markets under transparent and consistent rules.3 The accession would also allow Uzbekistan to align its domestic legislation with relevant WTO disciplines and facilitate the negotiation of bilateral market access with WTO member states while also receiving technical assistance in areas such as sanitary and phytosanitary (SPS) and technical barriers to trade (TBT). This would help Uzbekistan strengthen its trade institutional capacity, assist its exporters in meeting international standards, and simplifying licensing requirements for its traders. The accession is also likely to enhance the confidence of foreign investors and improve the ease of doing business in Uzbekistan. This would ultimately tie Uzbekistan to the rules-based multilateral trading system and facilitate a more robust presence in global goods markets.
Uzbekistan’s accession process provides the ideal opportunity to enhance cross-ministerial co-ordination to streamline negotiations. The siloed approach by various ministries are likely to limit the benefits of WTO accession and make the domestic alignment of rules and regulations with WTO Agreements challenging. Some of the institutions which have participated in the Accession process and could collaborate more closely would be the Ministry of Investments and Foreign Trade (MIFT), Ministry of Economy and Poverty Reduction, Central Bank, Ministry of Finance, Ministry of Justice, Competition Promotion Committee, State Customs Committee, Sanitary-Epidemiological Welfare and Public Health Service, State Committee for Veterinary and Livestock Development, Agency for Quarantine and Plant Protection, and Agency for Technical Regulation. The negotiating groups can ensure that greater participation by all these institutions not only optimising the negotiations but also the subsequent implementation of WTO rules and obligations.
The approach to regulatory reforms required to align domestic laws with WTO rules and regulations should follow a phased approach. The process should involve important stakeholders such as the civil society and business community and provide clear roadmaps for reforms, delineating the responsibilities of the Ministries participating in these reforms.
The enhancement of institutional capacity and transparency is critical for leveraging the Accession process for sustained economic growth. This could be done through specialised training for officials from the MIFT and by publishing draft laws and regulations for public review and comment. This will also have the effect of enhancing public trust in the Accession process.
The establishment of the National Committee on Trade Facilitation is an important step in enhancing Uzbekistan’s readiness for compliance with WTO laws and regulations. The work of the committee should be accelerated to involve both public and private sector stakeholders to review gaps in customs laws and regulations, compared to TFA standards. These gaps should be addressed through reform while the accession process is ongoing to enable Uzbekistan to optimise the use of WTO agreements for economic growth and prosperity. The success of this process is also likely to enhance Uzbekistan’s attractiveness to international investors by signalling a commitment to efficient, transparent and predictable trade practises.
Uzbekistan should continue efforts on the “soft” dimension of trade facilitation—streamlining procedures and integrating transparency mechanisms—to make its cross-border processes more predictable. Drawing on international best practices, Uzbek authorities should pursue efforts to simplify administrative processes at borders, including customs, sanitary-phytosanitary checks, and technical regulations. Uzbekistan has already made notable progress in streamlining cross-border trade procedures through the implementation of the “Single Window” customs information system. Operational since January 1, 2020, under Presidential Resolution No. PP-4297, the system allows foreign trade participants to apply for and receive permits and certificates electronically via www.singlewindow.uz. As of 2025, over 55 000 users are registered, and more than 3 million permits have been issued. The system integrates the automated information systems of 12 key ministries and agencies—including technical regulation, plant quarantine, veterinary services, and environmental protection—facilitating co-ordinated and efficient border processing.
Uzbekistan should also continue harmonising its border practices with international standards and improving the transparency of regulations. This ensures that businesses have readily available information, cutting down on delays and instances of non-compliance caused by unclear or inaccessible rules. Since September 2020, the system has been implemented at border posts in accordance with Presidential Decree No. UP-6005, with automated tracking of permit issuance times to enhance performance monitoring and transparency. Further improvements were introduced by Decree No. DP-6310 (2021), including the digitisation of veterinary and phytosanitary document checks and the elimination of physical stamping requirements at automobile checkpoints. These developments mark a substantial shift toward international best practices in trade facilitation. Continued investments in capacity-building, e.g. by offering specialised training for customs officers and improving inter-agency co-ordination, and digital infrastructure will help consolidate these gains, reduce transaction costs and border delays, and enhance the competitiveness of Uzbekistan’s trade regime.
Uzbekistan should invest in the “hard” dimension of trade facilitation by upgrading infrastructure that supports freight movement and logistics. Targeted improvements to roads, railways, and border crossings—combined with the modernisation of cargo tracking systems—could alleviate bottlenecks that disproportionately burden a double landlocked country. Considering that both the OECD (Moïsé, Orliac and Minor, 2011[2]) and APEC (2007[3]) emphasise rationalising customs procedures and optimising cargo flows, Uzbekistan would benefit from adopting integrated border management practices, e.g. situating customs officials from different agencies in a single, co-ordinated checkpoint can reduce the number of stops needed for inspection. Engaging with regional partners to establish cross-border agreements and promote mutual recognition of standards would further improve transit efficiency, a necessity for a country as geographically constrained as Uzbekistan. By systematically developing both the technological (e.g., digital systems) and physical (e.g. border infrastructure) foundations of trade facilitation, Uzbekistan can establish a transparent, harmonised, and competitive trade environment that attracts investment and supports sustainable economic growth.
A broader range of strategic goods can be explored for local production to reduce the impact of shocks, e.g. such as COVID-19. Uzbekistan’s heavy reliance on single suppliers for staples like wheat (Kazakhstan) or petroleum products (Russia) can increase its vulnerability to external shocks. Investments in local agro‐industries (e.g. improving wheat yields and supporting modern milling facilities) can reduce vulnerability in food security. Similarly, diversifying energy sources, e.g. by expanding domestic refining capacity or renewing contracts with multiple petroleum suppliers, would mitigate supply chain risks.
There is the opportunity for significant returns for domestic manufacturers partnering with foreign firms in the case of certain imports such as automotive parts or machinery. By encouraging joint ventures with firms from South Korea, China, or Türkiye, Uzbekistan could develop local production clusters that gradually replace certain imported components with domestically manufactured ones. This strategy could create jobs and increase the value-added content of production, and the complexity of exports, in the long run.
The import of raw materials could be further utilised by domestic industries. Copper ores, zinc ores, and iron/steel semi‐finished products are widely imported at 0% tariff, and Uzbekistan can integrate these inputs into domestic manufacturing chains (e.g. metals processing, machinery building, automotive components). Investment in industrial clusters (metallurgy hubs, specialised processing zones) near transportation corridors could attract more foreign direct investment (FDI) and lead to higher value‐added exports in metals and metal‐based products.
The gaps in infrastructure remain a constraint for the optimal utilisation of imports. Reliable logistics, warehousing, and distribution networks are crucial to handle the large volumes of imports from neighboring countries and beyond. The improvement of rail and road infrastructure can reduce transit bottlenecks and manage import flows more efficiently. Upgrading storage facilities (particularly for fuels and perishable goods) would help stabilise domestic markets against short‐term supply disruptions or seasonal price spikes.
The high imports of certain goods such as medicines provides the opportunity for Uzbekistan to invest in safety and compliance facilities which could encourage the export of certain goods to trading partners with stricter standards. Uzbekistan imports vaccines, medicaments, and other sensitive goods that require robust regulatory oversight and modern laboratory testing facilities to ensure safety and compliance with international standards. This not only protects consumers but also facilitates the potential re‐export of certain processed or repackaged products under strict quality conditions, especially relevant if Uzbekistan seeks to become a distribution hub for Central Asia.
Services trade might be one pillar of Uzbekistan’s strategy for diversification and market integration. Trade in services represents a small but increasingly important share of Uzbekistan’s overall trade activities. The country has undertaken some reforms over the past decade to enhance the competitiveness of the services sector and liberalise services industries. Sectors include tourism, financial services, telecommunications, transport and education. In comparison to neighbouring economies such as Armenia, Azerbaijan, Kyrgyz Republic and the average for Central Asia, services trade represents a smaller share for Uzbekistan’s output than for these economies (Figure 3.3, Panel A). However, in comparison to Developing Asia, the trend has been reversed since the pandemic, with Uzbekistan’s services trade recovering significantly in the past five years.
Source: ADB calculations based on WTO-UNCTAD Services Trade Statistics.
3.3.1. Trade in services by mode of supply
Uzbekistan's services trade is dominated by transport services, tourism and business travel, other business services, and trade-related services (Figure 3.4). In terms of services exports, Mode 1 (cross-border supply) accounts for the largest share in most sectors. Meanwhile, for services imports, transport and tourism are the largest components under Mode 1, reflecting Uzbekistan’s reliance on cross-border transport and inbound travel. Other sectors such as telecommunications, insurance and financial services, and construction also show various degrees of engagement across the four modes, illustrating a broadening of Uzbekistan’s services trade portfolio beyond the traditional pillars of transport and tourism. The employment share of services sectors in Uzbekistan has gradually increased from 37% in 1990 to more than 50% in 2022. However, many of these remain concentrated in consumer services, which tend to be less productive (World Bank, 2024[4]).
Source: WTO.
Source: WTO, Trade in Services by Mode in Supply (TISMOS) Database.
3.3.2. Digital services trade
While digital services trade is a small part of Uzbekistan’s trade basket, it has the potential to grow. Digitally delivered services (DDS) encompass those services for which the “delivery”, i.e. the supply of the service’s essential element, is performed online, typically over computer networks. These services include offerings such as computer and information services, telecommunications, and various business‐to‐business solutions that rely on internet connectivity for completion (IMF et al., 2023[5]).4 Digital services trade represented on average less than 1% of Uzbekistan’s GDP from 2006 to 2023, a considerably lower share than Georgia (3%), Kazakhstan (3%), Developing Asia (4%) or the OECD (6%). However, growth remains significant in certain sectors. Importantly, these services can bring large productivity gains and reduce barriers to small and mediums firms (Shinozaki, 2023[6]).
The sectoral breakdown of Uzbekistan’s digitally delivered services for 2023, points to strong specialisation in computer and telecom exports alongside a notable reliance on imported insurance services (Figure 3.5). At 34% of total DDS exports, computer services lead Uzbekistan’s outbound digital offerings, followed by telecommunications (24%) and other business services (19%). These sectors have benefitted from increased digital connectivity and government’s incentives to foreign investment in the sector to improve quality and coverage. In contrast, insurance services dominate on the import side, making up 40% of all inbound DDS, highlighting an area where domestic provision appears less robust. Meanwhile, financial services and information services constitute moderate shares of both exports and imports.
Source: WTO
As in the rest of the region, Uzbekistan’s digital services trade may grow, but remains vulnerable to global shocks. The country has exhibited both impressive growth periods and notable downturns over the past two decades, reflecting broader economic transitions and policy shifts. Exports in this category reached 1.65 USD billion in 2022 before declining by 45% to USD 903 million in 2023. Meanwhile, imports have steadily climbed from just USD 136 million in 2005 to over USD 800 million by 2023, suggesting that local businesses and consumers increasingly rely on foreign‐provided digital solutions, whether in areas such as software, information services, or online platforms. This underscores Uzbekistan’s potential to tap into expanding digital markets worldwide, while also acknowledging the importance of external shocks and changes in global demand.
To leverage the digital services sector, improving digital connectivity and implementing regulatory reforms may bring significant benefits. Uzbekistan should continue efforts to enhance digital infrastructure and connectivity, which remain low by regional standards. At the same time, restrictions to services trade are high, particularly in professional services and other sectors dominated by State Owned Enterprises (SOEs). Regulatory reforms will be important to reduce trade costs, enhance market access and strengthen competition. Enhancing digital regulatory co-operation, harmonising digital trade rules will be important for Uzbekistan to capitalise on its digital services exports.
Uzbekistan can leverage on the complementarities between trade and investment flows. Depending on their trade structure and investment profile, economies have been able to identify complementarities to reach structural change, promote diversification and enhance resilience to external shocks. Investment policy instruments can be critical in outlining a country’s export structure. The complementarities between trade and investment can be also institutional. Indeed, trade agreements can be important for attracting certain forms of investment. For example, FTAs have been found to favour platform (or market-seeking) FDI in developing countries (Chala and Lee, 2015[7]). Bilateral investment treaties (BITs) can reduce service trade exports from developed FDI source countries to developing countries by decreasing operational costs of foreign affiliates (Xiong and Sun, 2022[8]). International investment agreements (IIAs) also contribute to enhancing trade and economic integration. On the one hand, IIAs can promote regulatory alignment in investment-related and serve as steppingstones to negotiating trade agreements. IIAs are associated to higher imports in the recipient economy, whereas provisions related to investment protection are also associated with positive trade effects. The effect of bilateral investment treaties on trade can indeed be higher than RTAs without an investment chapter (Heid and Vozzo, 2020[9]).
The link between investment and trade is more evident in services sectors (Figure 3.6). The contribution of FDI to the internationalisation of services in Asia has been important for the region’s expansion in trade in services. Regional trends in FDI also reflect a shift from export-oriented manufacturing growth strategies toward servicification (Mercer-Blackman and Ablaza, 2018[10]) and structural transformation (Gibson, 2024[11]). Higher services FDI is correlated with both exports of goods and services, highlighting the potential multiplier effect of a robust services sector. Countries with greater volumes of services FDI register higher exports which suggests that the influx of foreign capital bolsters service-based output as well as tradability of goods (Figure 3.6). The right panel illustrates on services exports showing that greater FDI in the services sector is correlated with stronger export performance.
Sources: ADB calculations using data from Financial Times. fDi Markets; and Bureau van Dijk. Zephyr M&A Database; WTO and WDI.
However, Uzbekistan’s FDI is concentrated in the primary sector. Extractive industries remain dominant with smaller-scale activity in manufacturing and tertiary industries. The average greenfield FDI in Uzbekistan has exhibited notable increases in the extractive and resource-based sectors, surpassing developing Asia benchmarks for certain years. M&As, measured by value, reveal a similarly disproportionate share of primary sector transactions, albeit on a smaller scale. This underscores that Uzbekistan’s natural resource endowments remain a primary draw for foreign investors.
3.4.1. FDI concentration
Uzbekistan has a well-diversified investor base but remains concentrated on a small basket of products. Concentration of inward FDI flows by source (or investor) and by economic sector may be an indicator of diversification opportunities but also external vulnerabilities. The distribution of FDI sources and sector destination is generally associated with diversification of the economic base (Odusola, 2018[12]). FDI source diversification is also linked with export market diversification (Shin, 2010[13]) and is deemed to promote resilience to external shocks (Sanghi and Johnson, 2016[14]; Shin, 2010[13]) much like the effect of cross-border bank lending source diversification. Interestingly, Uzbekistan’s investor base has remained relatively diverse and less volatile since 2017 than other benchmark economies like Viet Nam and Czechia, indicating lower concentration. However, when considering sectoral allocation, Uzbekistan’s FDI presents a relatively high level of concentration in recent years, closer to economies such as Mongolia and Azerbaijan. This also suggests that FDI sectoral concentration may be associated to commodity price fluctuations. All in all, Uzbekistan’s FDI is well diversified by source economy while sectoral allocation still shows room for improvement.
Note: The FDI concentration index was computed using the Herfindahl–Hirschman market concentration index. Values range from 0 to 1, with 0 indicating no concentration and 1 indicating high concentration. Values larger than 0.25 indicate a high concentration. Regional values are computed using the arithmetic mean of economies in each region.
Source: ADB calculations using data from Bureau van Dijk. Zephyr M&A Database; Financial Times. fDi Markets; and Lapid, Mercado, and Rosenkranz (2021).
While Uzbekistan’s FDI concentration remains high, gradual investments from traditional sectors towards capital-intensive industries indicate potential for targeting other sectors (Figure 3.8, Panel A). These include for example chemicals, electricity, vehicles and pharmaceuticals. Investments in the electricity sector increased from 0 to 6.3 billion USD between 2005 and 2023 whereas the chemicals sector rose above 1 billion USD. Traditional sectors such as food and textiles have retained their relevance for MNE investments but have been eclipsed by sectors such as warehousing, IT and financial services, which indicate MNE’s shifting investments towards higher value and more technologically sophisticated sectors. There has also been a broadening of the export base with established industries (e.g. textiles) and emerging sectors (e.g. electronics and pharmaceuticals) increasing their export quantities. This may indicate a shift towards a more diverse and resilient industries base evolving alongside investor interests and expanding global market opportunities. This strategy could also help Uzbekistan bring more efficiency-seeking (vertical) investments than it currently does. Indeed, efficiency-seeking investments have declined in recent years in contrast to market-seeking investments (Figure 3.8, Panel B).
Note: AMNE classification used for economic sectors. Efficiency-seeking sectors are defined as those with a higher proportion of exports from foreign firms (relative to gross output), while market-seeking sectors are defined as those with a higher proportion of household final consumption expenditure from foreign firms (relative to gross output).
Source: ADB calculations using data from Bureau van Dijk. Zephyr M&A Database; Financial Times. fDi Markets; and Comtrade.
Targeting efficiency-seeking investments in some sectors may allow Uzbekistan to strengthen its industrial base and tap other export markets. Efficiency-seeking (or vertical) FDI has allowed economies in developing Asia to consolidate their position in export markets and better integrate regional and global value chains. While in commodity-related sectors, such as chemicals and metals, the link between inward FDI and exports is relatively weak (Figure 3.9), MNE investments in sectors such as textiles and motor vehicles indicate a higher export potential in Uzbekistan. The underlying link between FDI investments and exports is particularly important in some sectors depending on the presence and importance of foreign firms.5 Uzbekistan’s strategy towards diversification and higher value-added should therefore be complemented by investment policies aligned with these objectives. Stimulating or favouring investments in these sectors will be an important step towards a more diversified industrial base in Uzbekistan.
ADB calculations, based on Financial Times. fDi Markets; and Bureau van Dijk. Zephyr M&A Database; WTO.
Aligning investment policy instruments with long-term trade goals can bring complementarities to Uzbekistan’s internationalisation strategy. To stimulate foreign investment in critical sectors, national and international instruments need to be better tailored to reflect Uzbekistan’s. In the case of tax incentives, primarily a domestic policy instrument, the country has adopted actions broadly in line with regional trends (Figure 3.10, Panel A). In recent years, CIT-based measures account for nearly half of the tax-related investment incentives introduced, with tax holidays and reduced CIT rates forming the core of these schemes (see also Chapter on Tax Incentives).6 Likewise, sectoral incentives in Uzbekistan emphasise the industrial, hospitality, pharmaceuticals, and natural resource sectors, complemented by special economic zones (SEZs). Looking forward, consistent, well-designed (i.e. expenditure-based) incentives in sectors where Uzbekistan aims to develop trade capacities could be considered. Likewise, Uzbekistan’s treaty network should ensure that investment provisions are aligned with efforts to liberalise trade-policies (Figure 3.10, Panel B). Uzbekistan’s BITs grant more extensive rights for investors in areas such as access to arbitration and national treatment, while other provisions are comparatively more restrictive. A more balanced approach to both FDI and trade-related measures could strengthen the country’s integration into global supply chains and enhance its attractiveness to international investors.
Note: Provisions are scored depending on whether they grant circumscribed rights (score=1) or extensive rights (score=2) to the investor. The higher the score the more favourable to the investor. FTAs include ASEAN and AANZFTA.
Source: Panel A. ADB calculations using data from UNCTAD. Panel B. ADB calculations based on ADB International Investment Agreement Tool Kit and UNCTAD IIA Navigator.
FDI policies can further support Uzbekistan’s considerable potential for GVC participation. Investing in diversified and higher-value segments of regional and global production networks remains crucial. As Asia’s GVCs are increasingly regionalised, Uzbekistan stands to benefit from enhanced FDI policies and sectoral diversification strategies that target manufacturing and services. General lessons from analyses using ADB’s Multiregional Input–Output frameworks for other economics in the region suggest that Uzbekistan’s GVC position could be bolstered by both direct policy measures, e.g. improved legal and institutional infrastructure, and complementary efforts to upgrade trade logistics, infrastructure connectivity, and technology adoption. Building stronger links between multinational enterprises and domestic small and medium-sized firms will be critical to expanding local value addition, while better alignment of ADB’s support for infrastructure development with FDI objectives can further accelerate Uzbekistan’s integration into these evolving regional networks.
Uzbekistan recognises the potential of digital transformation in fostering economic growth and expanding market competitiveness. Under the Digital Uzbekistan 2030 Strategy, the government aims to improve its ICT infrastructure specifically by expanding their fiber-optic network to 250 000 km and attaining 100% high-speed internet coverage by 2030. As of 2022, the total length of fiber-optic communication lines in Uzbekistan has already reached 170 000 km, bandwidth internet speed has risen to 3 200 Gbps, mobile communication coverage was increased to 54 200 units, and mobile broadband internet coverage has reached 98% (Ministry of Digital Technologies of the Republic of Uzbekistan, n.d.[15]). Half of Uzbekistan’s ICT goods imports in 2022 were sourced from East Asia (Figure 3.11), wherein ICT goods coming from China take up 43% of the country’s total ICT goods imports. This emphasises the role of China’s market in supporting critical infrastructure industries in Uzbekistan including digital technology.
Source: ADB estimates based on UN Comtrade and ARCII framework.
Given Uzbekistan’s strategic location, prime importance is given to bettering infrastructure connectivity. This includes mobilising investments towards critical infrastructure such as transport systems and regional corridors for moving goods, services, and people. The logistical performance of Uzbekistan, under the Logistical Performance Index (LPI) of the World Bank, has improved between 2007 and 2023. The country’s performance is mostly driven by the timeliness scorecard which captures the timeliness of shipments in reaching its destination within the scheduled or expected delivery time (Figure 3.12). Uzbekistan has also improved the efficiency of its customs clearance processes and arrangement of international shipments from 2018 to 2023, while the quality of infrastructure and logistics services has slightly dipped. Uzbekistan’s LPI score in 2023 is higher than the regional average of Central Asian countries (Figure 3.13), close with the overall logistical performances of Kazakhstan and Georgia. Recent road modernisation projects and reconstruction projects have allowed the country to improve its logistic performance under national initiatives such as the National Road Development Project, which intend to reduce the country’s physical barriers to cross-border freight traffic and thereby enhance regional connectivity (ADB, 2022[16]).
Source: World Bank (n.d.[17]), Logistical Performance Index (LPI) database.
Note: 1/ Central Asia in the graph is limited to Armenia, Georgia, Kazakhstan, Kyrgyz Republic, Tajikistan, and Uzbekistan based on availability of LPI scores. 2/ Member countries belonging to the Central Asia Regional Economic Cooperation (CAREC) programme include Afghanistan, Azerbaijan, People’s Republic of China, Georgia, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan and Uzbekistan. However, the aggregated LPI score as shown in the graph does not include Azerbaijan, Pakistan and Turkmenistan due to unavailability of data.
Source: World Bank (n.d.[17]), Logistical Performance Index (LPI) database.
Trends in Uzbekistan’s bilateral trade costs with neighbouring countries also highlight considerable variation in connectivity with partners. Uzbekistan incurs the lowest average bilateral trade cost with Kazakhstan and the Russian Federation from 2006 to 2020 (Figure 3.14). Average trade costs with these economies amounted to 83% and 91%, respectively, of the value of goods as compared to when the countries trade such goods within their borders. Meanwhile, trade costs between Uzbekistan and Pakistan have significantly declined since 2014, signalling stronger relations between the two who are both CAREC member countries.
Source: Author’s estimates based on World Bank/ESCAP.
3.6.1. Road and railway system
Uzbekistan relies on its road and railway system for transporting goods, services, and people. As the country continues to industrialise and regional trade ramps up, traffic volume along Uzbekistan’s transport networks has expanded as well. Figure 3.15 depicts the volume of goods (Figure 3.15, Panel A) and people (Figure 3.15, Panel B) transported through the country’s road and railway systems. The road system in Uzbekistan comprises of 42 500 km of major highways and 183 000 km of other roads, mainly used for short-haul freight movements which have increased by 75% from 2010 to 2020 and accounted for 41% of total transport services in 2020 (Logistics Cluster, 2024[18]). Meanwhile, 98% of total passenger transport takes place through Uzbekistan’s road transport system and has increased by 66% from 2010 levels to 2019 (ADB, 2025[19]). Railway network in Uzbekistan totalled to 4 732 km in 2021 (World Bank, n.d.[20]). In 2020, rail transport was responsible for 5% of total freight movements which mostly took place over long-haul and cross-border distances. Less than 2% of total passenger transport are mobilised via railways, as road networks are more preferred for mobility (ADB, 2025[19]).
Source: OECD (n.d.[21]), Transport statistics, https://data-explorer.oecd.org/s/34d (accessed 19 February 2025).
3.6.2. Air transport
Air transportation plays an important role for Uzbekistan’s international trade, tourism, and infrastructure connectivity. There are currently 11 airports operating in the country, six of which permit international flights. Passenger traffic via air transport have grown in Uzbekistan since 2006 until the onslaught of the COVID-19 pandemic which limited the movement of people and halted much of the tourism industry (Figure 3.16, Panel A). The transportation of goods via Uzbekistan’s airways was also affected by the pandemic and geopolitical tensions in the region (Figure 3.16, Panel B).
Source: World Bank database (accessed 19 February 2025).
A vast majority of outbound and inbound passenger seats for Uzbekistan are connected to the Russian Federation, signifying strong relations between the two countries on air connectivity (Figure 3.17). Meanwhile, passenger seats to/from China are catching up with those of Kazakhstan as closer social and economic ties are pursued by the Uzbek government.
Source: Authors’ estimates based on ICAO database and ARCII framework.
3.6.3. Regional corridors
Uzbekistan has embarked on initiatives that aim to boost its regional connectivity through transport corridors. In 2019, the Uzbek government created the Ministry of Transport by expanding the functions of the National Automobile Transportation Agency. The Ministry was then tasked to oversee national development policies across transportation modules, the development of logistics facilities, and expansion of transport corridor networks. These objectives were further supported by the implementation of the “Comprehensive Program for Improving Transport Infrastructure and Diversifying Foreign Trade Routes for the Transportation of Goods for 2018 to 2022” and the “Strategy for the Development of the Transport System of the Republic of Uzbekistan until 2035”.
Based on the Transport Strategy 2035, Uzbekistan prioritises the development of the Middle Corridor or the Transport Corridor Europe-Caucasus-Asia (TRACECA) Corridor. The TRACECA corridor is a multimodal operation traversing 4 256 km of railways and 508 km of sea transit, extending from the China–Kazakhstan border to Eastern Europe (ADB, 2022[22]). The importance of the Middle Corridor as an alternative route to the overland Northern Route grew due to the impact of the COVID-19 pandemic and the Russian invasion of Ukraine. These developments favoured the demand for more sustainable corridors connecting Europe and Asia. Accordingly, the Uzbek government intends to develop its transport co-operation with Kazakhstan and Turkmenistan to increase the flow of cargo passing through the Middle Corridor.
As a member country of the CAREC Program, Uzbekistan also receives support to help address its logistical challenges. As of 2023, a total of around USD 13 billion has been mobilised by the CAREC program to Uzbekistan in the form of investments, loans, and technical assistance.7 Part of this support includes upgrading the country’s domestic transport infrastructure and expanding transportation systems to neighbouring countries, allowing for better interregional connectivity.
The CAREC Program has identified three transport corridors that traverses Uzbekistan: Corridor 2 connecting Europe-Mediterranean-East Asia8, Corridor 3 connecting Russian Federation-Middle East-South Asia9, and Corridor 6 connecting Europe-Middle East-South Asia (ADB, 2024[23]).10 These regional transportation networks will increase Uzbekistan’s access to Eurasia and other global markets, thereby allowing greater economic opportunities and benefits to reach the landlocked country. These corridors will also enable the country to derive greater benefit from its resources including gold, copper, uranium, natural gas, and oil.
Uzbekistan also aims to diversify its transport options and connectivity with the People’s Republic of China to further maximise the economic benefits of participating in the Chinese market. As Uzbekistan’s largest trading partner, China is seen as a vital hub for Uzbekistan and other Central Asian countries to reach other economic partners in South Asia and Southeast Asia. The China-Pakistan Economic Corridor (CPEC), for instance, is projected to have economic spillovers benefitting Central Asia. Relatedly, a railway line connecting Uzbekistan to Kyrgyzstan and China is in the pipeline, covering a total of 523 km and estimated to accommodate an annual cargo capacity of 15 million tons upon operation (Daryo Uzbekistan, 2024[24]). This new line is expected to shorten transit between China and Europe by 900 km or approximately eight days.
The Uzbekistan government also aims to expand its infrastructure connectivity with South Asia primarily through Pakistan and Afghanistan – the latter of which they share common borders with. In 2021, the Uzbekistan and Pakistan on Transit Trade (AUPTT) agreement was signed giving Uzbekistan access to use seaports of Pakistan and, vice versa, opening the doors for Pakistani exports to reach the Central Asian market (Ghumman, 2021[25]). One feature of the AUPTT was permitting Uzbek carriers to reach Pakistan ports via Afghanistan without reloading cargo onto Pakistan carriers at the Afghanistan-Pakistan border checkpoints. This resulted in an increase in the volume of cargoes transported through the Uzbekistan-Afghanistan-Pakistan route to 330 000 tons for the first half of 2022.
References
[19] ADB (2025), Accelerating Private Sector and Green Transformation in Uzbekistan, Asian Development Bank, https://doi.org/10.22617/tcs240578-2.
[23] ADB (2024), Uzbekistan Country Partnership Strategy 2024–2028 —Fostering Deep Reforms for a Sustainable Transformation to a Green and Inclusive Economy, Asian Development Bank, https://www.adb.org/sites/default/files/institutional-document/986901/cps-uzb-2024-2028.pdf.
[22] ADB (2022), CAREC Middle Corridor Assessment: Transport connectivity on the Eurasian transit routes, Asian Development Bank, https://www.carecprogram.org/uploads/19th_TSSC_CAREC-Middle-Corridor-Assessment-Report.pdf.
[16] ADB (2022), Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grant to the Republic of Uzbekistan for the National Road Development Project, Asian Development Bank, https://www.adb.org/sites/default/files/project-documents/53312/53312-001-rrp-en.pdf.
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Source: UN Comtrade (accessed in February 2025).
Source: UN Comtrade (accessed in February 2025).
Source: UN Comtrade (accessed in February 2025).
← 1. Annex Table 3.A.1 and Annex Table 3.A.2 in the Appendix shows the top 30 exports/imports for Uzbekistan for 2021 with the top export/import partner for each item.
← 2. The Product Complexity Index (PCI) ranks the diversity and sophistication of the productive know-how required to manufacture a product. It is calculated based on how many countries can produce the product and the economic complexity of those countries, effectively capturing the level of specialised knowledge and capabilities involved. More complex products, such as sophisticated machinery, electronics, and chemicals, are produced by only a few highly advanced economies, whereas less complex products, like raw materials and basic agricultural goods, are widely produced by many countries, including those with lower economic complexity. Further details of the measure are available here - https://atlas.hks.harvard.edu/
← 3. Uzbekistan is currently in the process of negotiating its accession to the WTO with the accession negotiations expected to conclude by 2026.
← 4. In practice, DDS measurement involves capturing transactions where the service is ordered and delivered via digital means, distinguishing them from more traditional, in‐person or physical channels. This classification allows for a clearer view of how ICT technologies facilitate cross‐border exchanges, enabling to better track and analyse international digital trade flows. The complete list of sectors included and the measurement details are available here - https://www.wto.org/english/res_e/booksp_e/digital_trade_2023_e.pdf
← 5. In this methodology, efficiency-seeking sectors are defined as those with a higher proportion of exports from foreign firms (relative to gross output), while market-seeking sectors are defined as those with a higher proportion of household final consumption expenditure from foreign firms (relative to gross output). For details, see in ADB (2024[23]).
← 6. Uzbekistan’s approach similarly centres on tax relief to attract foreign firms in both CIT and indirect taxes. These include tax holidays, tax reductions, tax exemptions, tax allowances, tax credits, preferential rates, and investment tax allowances, alongside a more limited use of incentives targeting indirect taxes or import duties.
← 7. CAREC Programme. CAREC Countries: Uzbekistan.
← 8. CAREC Corridor 2 traverses Afghanistan, Azerbaijan, Georgia, Kazakhstan, Tajikistan, and Uzbekistan.
← 9. CAREC Corridor 3 traverses Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.
← 10. CAREC Corridor 6 traverses Afghanistan, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, and Uzbekistan.