One_pager_Uzbekistan Auto Industry: Sources of Growth Outside the Sec r11_automobile industry in uzbekistan_eng_2
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Issue # 11 (June 2013)
The Uzbekistan Auto Industry:
Sources of Growth Outside the Sector
Uzbekistan is pursuing an active industrial policy designed to provide sustainable, high rates of economic growth
and a shift of focus from the production of raw materials to finished products with higher added value. The industrial
policy involves the selection of priority sectors whose development can generate not only a direct effect by increasing
production and creating jobs but also a multiplier effect. The latter is derived from the fact that the sector’s products
are used by other sectors or that the sector increases demand for the products of other sectors. In other words, priority
should be given to the sectors that are capable of creating and extending the multiplier effects to the whole economy.
Based on these criteria, the priority sectors in Uzbekistan are
electric power, the chemical and petrochemical industries,
oil refining, machine building and metalworking, the auto
industry, transport services, oil production, nonferrous
metallurgy and construction. These industries are in the right-
hand yellow quadrant above and to the right of the medians
(Fig. 1) 1 .
The sectors must become the primary reference points for
industrial policy and the drivers of sustainable economic
growth of at least 8% per year.
Now it is important to determine how most effectively to
stimulate the development of the selected priority industries
as drivers. It is worth noting here that each priority sector has
its own locomotives, its own engines, that maximize their
development. The calculations done during the study helped
to identify these locomotives for each priority sector. They may
be seen in the right-hand yellow quadrant in the diagrams of
Fig. 2.
According to the results, the driving sectors for virtually all of
the key sectors are the chemical industry, machine building
and the auto industry (Fig. 2), whose multiplier effects stand
out in comparison to the other sectors. Out of these three
sectors, however, the auto industry is best suited for the role
of “engine” of the priority sectors. This conclusion is derived
from the following factors:
1. Despite the fact that each of these sectors has goods in
which Uzbekistan has a comparative advantage 2 , among all
these goods automobiles have the greatest technological
sophistication (Fig. 3). The high degree of technological
sophistication means that, all other factors being equal,
this industry makes a bigger contribution to the processes
of structural transformation than others do.
2. The share of automobiles in total exports is also
significantly greater than the share of goods from
the chemical or machine building industry in which
Uzbekistan has a comparative advantage (Fig. 3). Having
established its own niche in export markets, the industry
is forming a market inside the country for other sectors
that can manufacture components and materials for auto
production. Accordingly, the industry’s growth generates
growth in the markets for industrial goods within the
country.
Therefore automaking could become an effective driver of
growth for the key sectors: oil refining, the chemical industry,
the energy industry, machine building and metalworking,
construction, the transport sector and nonferrous metallurgy.
The strategic importance of the auto industry is based not
so much on direct as on indirect multiplier effects 3 that
promote economic growth and structural reforms.
The fact that the auto industry’s influence on the development
of other sectors in foreign countries is much greater than in
Uzbekistan shows that the appropriate potential exists for this
purpose. The potential increase in the auto industry’s effect
on the development of the priority sectors is indicated by
the arrows in Fig. 2. For example, the demand multiplier for
machine building goods may increase more than tenfold; in oil
refining, fivefold; in the chemical industry, more than threefold;
Figure 1. The priority role of the auto industry is based on the benefits that the sector generates for the economy
5
Median
Key sectors
4
The diagram shows values for the demand multiplier and the
supply multiplier for all sectors of the economy. The farther right
sectors are on the graphic, the more demand they create for goods
in other sectors. The higher the sectors are in the graphic, the
greater the supply they generate for other sectors. Through their
influence on demand and supply, the key sectors have a major
impact on production growth in other sectors of the economy. The
sectors that are highest and farthest to the right are priority sectors
– drivers of the country’s economic development. In the diagram
key industries (top-priority sectors) are highlighted in red and are
in the right-hand yellow quadrant
Machine building
Transport services
3
Chemical industry
Electric-power industry
2
Auto industry
Oil refining
Oil production
Construction
Nonferrous metallurgy
1
Median
0
0
Center for Economic Research
5, 1 st blind alley, Usmon Nosir str.
Tashkent 100070, Uzbekistan
Tel: +99871 150-02-02,
281-45-56/57/58/59;
Fax: +99871 281-45-48
www.cer.uz
1
Demand multiplier
2
3
The Center for Economic Research is jointly supported by the United Nations
Development Programme (UNDP) and the Government of Uzbekistan
The views and opinions expressed in this material do not necessarily reflect the official positions of the
Center for Economic Research or the United Nations Development Programme.
UNDP Country Office in Uzbekistan
4, Taras Shevchenko str.
Tashkent 100029, Uzbekistan
Tel: +99871 120-34-50, 120-61-67;
Fax: +99871 120-34-85
www.undp.uz