An analysis of the development of textile industry and its impact on the export diversification in Uzbekistan

Abstract

i ABSTRACT This paper is devoted to one of the most important issues of one of the Central Asian economy in transition – Uzbekistan and its success in attracting Foreign Direct Investments within the transformation process from a centrally planned economy to a market economy. The paper attempts to demonstrate the reasons for success or failure of Uzbekistan in attracting FDI into the textile industry, while at the same time, stress the main obstacles in penetration of FDI into the textile industry of Uzbek economy. Based on a comprehensive analysis, this thesis will produce a strategy that should be adopted in order to make the Uzbek economy and in particular textile industry more attractive for FDI in contrast with its impact on the export structure of Uzbekistan. Some researches were conducted to identify the main causes and reasons of slow increase of level of FDI into the textile industry of the republic. Textile industry of Uzbekistan needs significant support from the government. Majority of the equipment and machineries in the factories and cotton processing plants should be modernized so that they can produce high-quality ready-garments and other textile products. Effective usage of resources and high-technology brings lots of additional sources (financial resources) to the countrys budget. Foreign Direct Investment (FDI) can play an important role in raising Uzbekistans technological level, creating new employment, and promoting economic growth. Many countries are actively trying to attract foreign investors, to promote their economic development, particularly at times when a countrys domestic growth prospects are weak. ii Uzbekistan has substantial comparative advantages in establishing a significant national textile sector and welcomes all investors that plan to develop the industry and the economy of Uzbekistan. Governmental support in the textile industry is provided through the SJSC ―Uzbekengilsanot‖, a company that include more than 5,000 companies of the textile industry.