Uzbekistan-China Knowledge Exchange on Poverty Measurement, Poverty Reduction Strategies, and Rural E-commerce
For the Government of Uzbekistan, the objective of this knowledge exchange was to increase capacity on how to successfully design, coordinate, implement, and monitor a growth-oriented poverty reduction strategy. Specifically, it aimed to (a) facilitate the most practical knowledge exchange on what policies China has used to address challenges in its transition period and how they were implemented by the local governments, (b) increase capacity in designing and updating poverty lines to improve utilization of poverty analytics in evidence-based policy making, (c) explore strategies to leverage tourism resources in Kashkadarya region, and (d) connect stakeholders for discussion of key e-commerce challenges and the future of the sector’s development in Uzbekistan.
The authorities in Uzbekistan are wrestling with important development challenges in their drive to reduce poverty. Progress over the past decade has been painfully slow. The poverty rate declined by less than half of a percentage point per year from 2015-2019, while the real GDP per capita growth rate averaged above 5 percent. In the wide-ranging reform program launched in 2017 and supported by the World Bank, policymakers aim to ensure the poor and vulnerable increasingly benefit from overall economic growth.
Given its rapidly expanding labor force, Uzbekistan faces an urgent need to sustainably generate new productive jobs. Since independence, structural transformation has proceeded slowly in Uzbekistan, and the country struggles with slow job creation. The reform program envisions an ambitious transition to a private sector-driven, market-based economy to create more and better jobs. But this is still in the early stages. Under the statist model, labor was exceptionally taxed, both implicitly and explicitly. In contrast, capital, which is mostly owned and controlled by the state, has been heavily subsidized. As a result, a large share of the income generated in the economy accrued to the state, with labor income accounting less than 30 percent of GDP. The lack of job growth has been particularly problematic. Only about 200,000 mostly seasonal or contract jobs were being created for 600,000 new entrants into the labor force each year, resulting in high youth unemployment and contributing to low female labor participation.
As one of the only two doubly landlocked countries in the world, Uzbekistan remains largely disconnected from the world economy both geographically and digitally. According to the World Bank Logistics Performance indicator, Uzbekistan ranked the 99th in the world in 2018. In 2019, more than one third of the population had no access to internet. The lack of connectivity limits the growth potential of Uzbekistan by isolating it from geographical integration, restraining it from accessing markets, information and technology, and slowing it down from accumulating both human and physical capitals. In addition, though the government has been investing heavily in logistical and digital infrastructure, the private sector in Uzbekistan is in an early stage to utilize its existing logistic and digital networks.
A practical knowledge exchange was deemed necessary to build the capacity of the Government of Uzbekistan by learning from the instructive experience of China in designing the country’s poverty reduction strategy for the coming decade. The poverty reduction strategy in Uzbekistan has heavily relied on transfers to the poor and vulnerable. The effectiveness of a transfer-based poverty reduction strategy is limited by the country’s fiscal capacity as well as the targeting efficiency of the social programs. For example, although the country’s constitution requires that all beneficiaries of social programs receive no less than the subsistence minimum (by international standards an extremely generous commitment), this has never been implemented. Uzbekistan can learn from China’s success, and difficulties in reducing poverty. The poverty reduction strategy in China has been growth-oriented and only uses transfer-based approaches as the last resort. The experiences of China are especially relevant to Uzbekistan because the country has gone through a similar transition process from a state-led economy to a more market-oriented economy.
In order to support the achievement of the capacity building goal, the knowledge exchange sought to: (1) share China’s experience in addressing challenges in its transition period to the Government of Uzbekistan; (2) bring knowledge on poverty line calculation and updating, poverty monitoring and reporting, as well as poverty analytics; (3) explore potentials to leverage tourism resources in Kashkadary region based on global experience and preference of China tourists; and (4) share experiences in leveraging ICT technology and e-commerce to tackle development challenges and develop connection between stakeholders for future development of the sector. Six videoconference sessions were organized including (i) one with Deputy Prime Minister’s participation in Sustainable Development Forum 2021 themed around “People-Centered Sustainable Development”, (ii) a South-South knowledge exchange workshop on poverty reduction between Uzbekistan and China, (iii) another workshop on reforms and policies during the transition process from a state-led economy to a more market-oriented economy, (iv) a consulting workshop on tourism resources analysis in Kashkadarya region and recommendation for tourism development, (v) a knowledge sharing session on e-commerce in Central Asia, and (vi) an online event themed around streamlining e-commerce in Uzbekistan and regional cooperation. These six sessions are described in more details below.
Deputy Prime Minister’s participation in Sustainable Development Forum 2021
Against the backdrop of the discernable trend of reversing globalization and sweeping COVID-19 pandemic, the world is facing unprecedented development challenges that are undermining efforts to achieve the Sustainable Development Goals (SDGs) by 2030. It pointed to the importance of continued and accelerated support the make the SDGs a reality for all. The Sustainable Development Forum 2021 aimed to provide a constructive platform for all parties worldwide to communicate practices and experience of implementing the 2030 Agenda and explore forward-looking strategies and plans for common and sustainable development. The Forum had five plenaries to explore the following topics: poverty eradication and inclusive development; COVID-19 responses and global health governance; green transition, emission peak, and carbon neutrality; digital technologies for sustainable development; and international cooperation on sustainable development in the new era. The Deputy Prime Minister of Uzbekistan delivered a speech on poverty reduction and development priorities at the opening ceremony. It emphasized the importance to bridge China and Uzbekistan.
South-South knowledge exchange workshop on poverty reduction between Uzbekistan and China
The workshop was organized to respond to the demand raised by the Ministry of Economic Development and Poverty Reduction (MoEDPR), headed by the Deputy Prime Minister of Uzbekistan. The Ministry expressed genuine interests on China’s experience in developing and implementing poverty reduction strategies since the Reforms and Opening-up period in China. The World Bank invited Professor Sangui Wang, Dean of China Institute of Poverty Alleviation of Renmin University of China, to provide his expert views in this topic and suggestions to questions from the Ministry prior to the workshop. The workshop is particularly valuable given Uzbekistan’s importance in the traditional and new Silk Road, as well as the time of crafting the Poverty Reduction Strategy 2030.
South-South knowledge exchange workshop on reforms and policies during the transition period
The workshop was organized to respond to the interests of MoEDPR in reforms and policies during the transition process from a state-led economy to a more market-oriented economy in China. The World Bank, jointly with the Center for International Knowledge on Development (CIKD) in China, invited expert from China Development Bank to introduce policies that China used to address challenges in its transition period, how these policies were implemented by the local governments, and how the policy impact has been monitored. In particular, the leverage effect of policy in fostering investment from private sector was discussed.
Consulting workshop on tourism development in Kashkadarya region of Uzbekistan
This workshop was organized to offer professional suggestions to the MoEDPR on exploring tourism potential in Kashkadarya region and providing a blueprint to developing a mountain resort with competitiveness worldwide. The World Bank invited Lonely Planet China to deliver a consulting presentation on tourism development of Maidanak Astronomical Observatory in Kashkadarya region. It included profile and highlights of the Observatory, tourism resource analysis, preference of Chinese tourists and the potential of attracting them to travel in Kashkadarya region, and recommendation for tourism development at the Observatory based on global mountain resort models.
Central Asia e-commerce knowledge sharing session 2022
This session consisted in a conversation between Central Asia SMEs, e-commerce associations, global leading e-commerce platforms, and experts. It covered Uzbekistan, the Kyrgyz Republic, and Tajikistan. The session took place within the framework of the World Bank study in Central Asia on the development of e-commerce at regional level, as part of a poverty reduction strategy aimed at the development of e-commerce, the creation of jobs, the increase of population’s income, and the facilitation of trade at the regional level. The World Bank, jointly with CIKD, invited SMEs, e-commerce associations, global leading e-commerce platforms and experts to discussed difficulties and obstacles to e-commerce in Central Asia and potential solutions from the private sector. It also played as a good opportunity for a direct dialogue between firms and platforms that could help facilitate future investment.
Streamlining e-commerce in Uzbekistan and regional cooperation: agriculture, light Industries, and digital services
In Central Asia, particularly in Uzbekistan, e-commerce can serve as a tool to achieve inclusive growth, bypass landlocked geography, integrate into global supply China, and provide opportunities for a young labor force to launch online businesses. The online conference brought together leading e-commerce stakeholders from across Central Asia, as well as international e-commerce companies, experts, and policy makers. The conference lasted three days. Experience and knowledge sharing, and discussions were made around three themes: (1) enabling e-commerce for e-commerce: policy support; (2) practical e-commerce: business views, and (3) incubating inclusive digital labor market for e-commerce: youth participation and gender balance. The first two themes were further managed to three sessions each by industries: (a) agriculture e-commerce: processed and horticulture products, (b) light manufacturing e-commerce: textile, crafts, ceramics, and (c) e-commerce in digital services: transportation, tourism, banking and more. The event helped initiate knowledge exchange, allowed stakeholders to connect to discuss the future of the sector’s development, and explored key e-commerce challenges and practical solutions in the region.
The governments learned a wide range of lessons from the knowledge exchange. These include, amongst others:
- Poverty reduction strategy design has to consider specific local conditions and be tailored at a granular level accordingly. Understanding profiles of poor households, fostering corresponding income generation activities, and developing a tracking system to monitor poverty dynamic are important.
- Well-designed policies can significantly improve incentives of investment from private sector. The leverage effect is particularly strong and valuable during transition period when the government only has a limited fiscal budget to build enabling infrastructures for modernization and industrialization.
- The key points of tourism development include understanding preferences of tourists, providing travel convenience and high-quality services, identifying unique characteristics of tourism resources, and developing in coordination with existing mature attractions in surrounding areas to generate economies of scale.
- E-commerce has a great potential to bring inclusive growth to doubly landlocked and youthful Uzbekistan. It overrides part of unfair costs imposed by geographic conditions and provide income generation opportunities to youthful and tech-savvy workers.
- A government hands-off approach and sometimes deregulating functional sectors can quickly boost e-commerce growth through decentralizing decision making to profit-driven private sectors.
- Many e-commerce jobs are flexible and adaptive towards women’s needs, and income-generating opportunities for women are the ultimate solution to gender inequality in a society.
Beneficiaries / Participants
Participants in the knowledge-sharing sessions included (a) government officials from Uzbekistan who were in charge of reform and poverty reduction, ICT development, and agriculture sector in the country as well as the project coordinators and key technical team members, (b) private sector representatives including SMEs, business associations, IT park, technologies companies and local e-commerce marketplace companies, and (c) the World Bank tasks team.
- The Sustainable Development Forum held in 2021 brought together over 400 participants, including ministerial-level officials from SDG-related government institutions worldwide, senior representatives from UN agencies, ambassadors to China, entrepreneurs, renowned scholars, senior cadres of local governments, and heads of social organizations.
- Participants in the poverty reduction workshop between Uzbekistan and China included the First Deputy Minister, the technical team from the ministry, World Bank economists and consultants.
- Participants in the workshop on reforms and policies during the transition period included the First Deputy Minister, the technical team from the ministry, World Bank economists and consultants.
- Participants in the consulting workshop on tourism development in Kashkadarya region of Uzbekistan included technical team from the ministry, World Bank economists and consultants.
- The Central Asia e-commerce knowledge-sharing session held in 2022 brought together representatives from the China Association for Trade in Services, ITC-eBay partnership project, Spacemarket, Alibaba Research Institute, CIKD, and Harvard, as well as World Bank economists and consultants.
- The conference on streamlining e-commerce in Uzbekistan and regional cooperation closed with 328 participants, 82 speakers, from 16 countries and 5 continents. It involved 39 government representatives from 5 Ministries of Uzbekistan. Among all participants, 71 were entrepreneurs from Central Asia, 127 were from international companies and associations, 72 were from development partners and the World Bank, and 19 were from academia.
World Bank Contribution
A World Bank task team facilitated the knowledge exchange which was funded through a South-South Facility grant. The team invited technical experts to speak on key topics of relevance e.g., on poverty reduction, poverty measurement, tourism development, and e-commerce development. Each VC discussion benefitted from simultaneous interpretation services: Russian-Chinese, Russian-English, Russian-Uzbek. The Bank team was led by Chiyu Niu (Economist) and William Seitz (Senior Economist) and comprised of Xuejiao Xu (Consultant), Yaroslav Efrien (Consultant), Ilhom Aliev (Consultant) and Nargiza Fonziljonova (Consultant) with support from the Uzbekistan Country Office. Salman Zaidi (Practice Manager) and Dilshod Khidirov (Senior Agricultural Specialist) were resource people in addition to the facilitating team mentioned above.
- The Government of Uzbekistan and the World bank team will continue to build on this knowledge network to communicate and exchange knowledge on poverty reduction and digital transformation. Offline events will be organized to enhance communication and foster potential collaboration
- MoEDPR will review their poverty reduction strategies and improve the implementation of their on-going reforms including strengthening of necessary institutional structures to coordinate regulatory reforms that span multiple agencies and ministries.
- To facilitate and sustain e-commerce development beyond this knowledge exchange, the organizing team will continue to organize online and offline conferences for communications and exchanges between local and global market players, and public and private sectors. The conference topics will be refined based on participant feedback/interests from the previous exchanges.
MoEDPR’s capacity enhancement and digital transformation in Uzbekistan
The knowledge exchanges resulted in the following intermediate capacity outcomes to catalyze progress towards the development objectives of Uzbekistan.
- New knowledge: MoEDPR was trained on how to design a poverty reduction strategy supported by reform strategies and roadmaps highlighting priorities, clear goals, and timeline. Government officials from the Ministry learnt experience from China counterparts in implementing reforms and addressing implementation gaps on the ground.
- Enhanced skills: MoEDPR was able to gain new learnings on strengthening the necessary institutional structure to coordinate regulatory reforms that span multiple agencies and ministries.
- New and improved actions: An international tourism advisor has been hired to support MoEDPR in implementing tourism-related activities in Kashkadarya region. The advisor will provide expert opinions for improving public infrastructure for the development of agribusiness and tourism, strengthening skills, entrepreneurship, and business development services to enable potential beneficiaries to participate, contribute, and benefit from the tourism development.
- Enhanced connectivity: The e-commerce knowledge exchanges helped build connection of the government and private sector of Uzbekistan with international experts and market players. To further catalyze effect of the connectivity, a set of activities have been carrying out under World Bank’s Elevate Global Access Through E-commerce (E-GATE) program, providing technical assistance and advisory services on e-commerce development in Uzbekistan. The activities include horticulture product trade facilitation through e-commerce channels, onboarding SMEs to local, regional and global e-commerce platforms with e-commerce and business intelligence trainings provided, promotional events for e-commerce industry in Uzbekistan, and regulatory assessment and other in-time support to client’s request.
Knowledge sharing events were led by the World Bank. CIKD is the main partner for implementation of the knowledge exchanges by connecting resources from China. Specifically, (i) CIKD is the organizer of Sustainable Development Forum 2021; (ii) CIKD helped identify and invite China experts in poverty reduction and reforms and policies during transition period; and (iii) CIKD helped connect experts and key players in China e-commerce market with the World Bank team to facilitate knowledge sharing in the sector.