Uzbekistan's first steps on the road of independence made the whole world speak of this new country as a state with enormous potential and a great future. A program for radical fundamental reforms implemented by President Islam Karimov, successfully combines necessary measures such as:
Integration into the international economy, denationalization and privatization; and, the program ensures that the introduction of reforms will be done in a peaceful way, while maintaining stability and avoiding shocks or surprises. A stable socio-political situation, rich natural resources, high intellectual potential, developed industrial and agricultural base and the necessary infrastructure enable Uzbekistan to develop and move forward with confidence. Uzbekistan's abundance of minerals and raw material are a great asset to the country. Industries are involved in the manufacture of airplanes, automobiles, agricultural machines, industrial equipment, ferrous and nonferrous metals, cotton and silk cloth, clothing, footwear and the list goes on and on.

Relying on considerable natural resources, a highly educated labor force and a growing capacity to utilize them, the Government of Uzbekistan has attempted to craft a clear mechanism for economic development combining an emphasis on preserving macro economic stability and industrial capacity with efforts to improve the level of foreign trade and investment.

Soon after declaring independence, the Government of Uzbekistan established economic policies that were unequivocally opposed to the "shock therapy" approach, favoring instead efforts to support state enterprises and shield consumers from inflation through a combination of state subsidies, strict price controls and periodic wage increases. Initially, these policies enabled the government to hold the 1991-1994 GDP decline to 17% compared to a CIS average near 40%. However, this conservative approach became increasingly untenable in 1994, following Uzbekistan's expulsion from the Russian ruble zone. Faced with mounting economic problems accented by soaring inflation of the transitional currency known as the "som coupon", the government began a genuine economic reform program including stricter fiscal policies, freeing of prices on most commodities, cooperation with international financial institutions, modest steps toward privatization, overtures to foreign investors and institution of a permanent currency, the som.

After instituting these policies, the government made impressive gains against inflation, an end-year inflation rate of 27.6% for 1997, down from 64.4% at the end of 1996. Similar progress was made in preserving the GDP which went from a 4.2% drop in 1994 to a 5.2% growth in 1997.

Furthermore, tight fiscal policies and a positive balance of trade brought the government budget deficit to 2.4% of GDP in 1997 compared to 6% in 1994 and 11% in 1993.

Uzbekistan's leading trading partners outside of the CIS are: 1) USA - 8% of total export and 13.6% of total import; 2) Korea - 7.6% of total exports and 10.2% of total imports; 3) Germany - 2.7% of total exports and 18.1% of total imports; 4) Turkey - 1.2% of total exports and 11.2% of total imports; 5) United Kingdom - 10.4% of total exports and 3.3% of total imports.

Since June 1994, Uzbekistan has held GATT observer status. In December of 1994, the government of the country submitted an application to GATT / WTO for accession of Uzbekistan to the World Trade Organization. One of the main tasks of government activity in this direction is the successful integration of Uzbekistan into the international trade system. In September 1998, the Memorandum on the Foreign Trade Regime of the Republic of Uzbekistan was submitted to the WTO Secretariat.

Uzbekistan is firmly moving forward on the road to economic progress. Problems are being solved and new innovations are being introduced. The citizens of this prosperous country have entered the 21st century with anticipation and confidence.

ECONOMIC DEVELOPMENT

The Republic of Uzbekistan, both geographically, an productively consists of many sectors. These are based o the specialization of such industries as gas, electric power ferrous and nonferrous metallurgy, machine-building (agricultural machinery, mainly), cotton-ginning, textiles, chemicals, canneries and other industries.

Among the Central Asian republics, Uzbekistan has the largest economic potential and has many high indicators c both industrial and agricultural development. An important place in the country's economy is given to agricultural sectors, and primarily, to agriculture. The characteristics of habitat and climate and the traditional skills ( the people are favorable for growing silk worms, grape; fruit and melons and raising livestock. Considerable scientific and technical potential has bee accruing both in industry and agriculture.

The economic situation in the republics of the forms Soviet Union has been aggravated, and this include Uzbekistan as well. But 1994 became, to some extent, a year of critical importance when the economic decline halted an increase was attained in some areas of production. Growth in major economic sectors was obtained for the first time In 1995 the intention was to bring the gross domestic product to 96 % of the 1994, but in reality this figure was 98.8%

Over 100 branches of industry along with national staff workers have been created in the Republic. The Republic's industry was established in order to meet the requirements and needs of the main economic sector (growing of cotton, silkworms, fruit, astrakhan pelts). In time it grew into a leading link of the national cotton industry. has developed further links of specialization and cooperation in the main industrial branches. The structure of industrial development in Uzbekistan he undergone and continues to undergo improvements and now beginning to meet market requirements.

The largest share belongs to heavy industry which consists of fuel and power, metallurgical and machine-building developments and the production of building materials. The leading industry is machine-building. Stretching as far as the Ferghana Valley is the main cotton-growing area of Uzbekistan, and a large section of heavy industry is located there. The next largest share of industry belongs to the Tashkent Region where all the industrial branches of Uzbekistan are concentrated. In some regions, especially in the south and in the lower reaches of the Amudarya, industry is not well developed.

Industrial developments are irregularly spread throughout Uzbekistan and, because of this, enterprises are sometimes some distance away from the source of raw materials and consumers, and transportation is not straightforward.

Table 1
SHARE OF INDUSTRIAL BRANCHES IN TOTAL INDUSTRIAL OUTPUT, %

Industrial year      1980        1985        1990        1993
Heavy industry       42.3        44.1        44.4        58.9
Light industry       40.2        38.5        37.6        23.6
Food industry        14.3        13.9        14.2        12.3

Machine-building, electric power, nonferrous metallurgy, the chemical industry, and metal treatment have been developing at an accelerated rate, as have the sectors that stimulate scientific and technological advance. Over the last several years, several big industrial ventures have been built in the Republic, such as the Tashkent and Syrdarya Hydro Power Stations, Navoi Electric Chemical Factory, Almalik Chemical Factory, Angren Rubber Plant, Tashkent Engine Factory, Samarkand Refrigerator Plant, and Kuvasay Porcelain Factory.

Food and light industries are well developed and are traditional to the Republic. Large projects implemented during the last few years are the Bukhara Mill, Khiva Carpet and Silk Factories, Djizak Knitted Garments Factory, Urghench Seed Oil Extraction Plant, Kibray Soft Drinks Factory plus many others.

Industry is a leading economic sector in the Republic. Its development is linked with the complex exploitation of natural and economic resources and the employment of a rapidly growing population. Exploitation of large stocks of natural gas in the Bukhara-Khiva depression in the 60s meant a qualitatively new phase for the development and diversification of the industrial structure. This gave an impetus for the development of other economic sectors.

Industrial success can be proved by the fact that within only 15 days in 1990 the Republic of Uzbekistan produced as many industrial items as were produced in the whole of 1940. 119 days would be required in 1940 to produce the same quantity of electric power as was generated during one day in 1990; or 4,800 days for the production of the same quantity of mineral fertilizer during similar time frames.

Heavy industry and its branches supply state-of-the-art machines for different sectors of the national economy. Heavy industry is the basis of the technological rehabilitation of industry, transport and agriculture, but its functions are wider. Its final aim is the all-round development of the means of production and of consumer goods. In a word, this is a major industrial sector which helps to strengthen the foundations of production and also to develop food and light industries along with agriculture.

Electrical power is the bedrock of modern production. In September 1994, the electrical power industry celebrated its 60th anniversary. The setting up of Uzbekenergo on September 25, 1934, was a momentous event in the Republic's life. Uzbekenergo is responsible for the coordination, planning and management of the electric power industry.

The power system of Uzbekistan began its history in 1923, with the construction of a Hydro Power Station, Bozsu Canal, near Tashkent. Equipment for the first phase was commissioned in 1926.
The basis for expanding the electrical potential in the 30s was established by the construction of new hydro power stations on the Chirchik-Bozsu Canal, Kadirin and Burdjar, Komsomol and Tavaksay Hydro Power Stations.

At the end of the 30s the construction of the Kuvasay Hydro Power Station began which uses coal from the Kizilky deposit, Kyrgyzstan. The first phase was over in 1939. The capacity of this station is 48 megawatts. Later, several more hydro power stations of smaller capacity were built.
A test of human heroism was the construction of the Farkhad Hydro Power Station that began during a difficult war period, in 1943, using the hasher method. The Uzbek people displayed true courage and strong will. The first phase of the station was finished and put into operation in 1948. It became an object of pride.

During the war the development of the Angren coal deposit began. Coal from this deposit is used by the Angren Hydro Power and Almalik Heal Power Stations. The Charvak Hydro Power Station, capacity 600 thousand kW, and Hodjikent Hydro Power Station were built in the 70s. Later the Syrdarya Hydro Power Station was built to a hitherto unknown capacity and it consists of 10 units, of 300 megawatts each. The feasibility of constructing new heat power stations in Tashkent and Ferghana, with a capacity of 1,000 and 230 megawatts, is being analyzed. The total capacity of all Uzbek hydro power stations today is 1,420 megawatts and the length of electric lines is over 224,000 kilometers. The country's electrical system fully meets the domestic demand for electricity and heat.

As to the production and consumption of electricity, the Republic takes fourth place in the CIS (after Russia, Ukraine and Kazakhstan). Most of the electric power is generated by large heat power stations, such as Syrdarya, Tashkent, Navoi, Angren and Takhialash. Many hydro power stations, including those at Charvak and Hodjikent, along with 19 cascade stations on the River Chirchik have also made a substantial contribution to the country's electricity system. Despite the breakup of the former Soviet Union, the United Power System of Central Asian states is still operational. The system was created 30 years ago. The integrated system has a common electric network as well as a common operational management which makes it possible to decrease the total capacity of electric stations and the total expenditure of fuel. Currently, the United Power System is facing the task of ensuring some reserve systems for operation in regular and emergency conditions, for the exchange of electrical power within the framework of interstate agreements and for an efficient and rational use of power resources. The advantages of a joint operation of power systems are obvious, and this is borne out by the existence of large interstate power unions in developed countries. The power industry of the young independent slates of Central Asia can also receive such advantages in the new development conditions. An action plan for the development of the electric power industry of Uzbekistan up to 2010 has been worked out.

Table 10
PRODUCTION AND CONSUMPTION OF ELECTRICITY IN THE CIS COUNTRIES, 1992

CIS, total               1495.26     92.6      1485.57   93.7
Azerbaijan               19.67       84.3      19.04     88.1
Armenia                  9.0         94.0      9.1       82.0
Belarus                  37.5        97.2      44.1      89.8
Kazakhstan               83.33       96.9      97.34     95.9
Kyrgyzstan             11.95      85.0     9.78       100.2
Moldova                  11.2        84.8      10.48     87.2
Russia                   989.2       94.5      972.6     94.0
Tajikistan               16.8        96.0      17.6      92.1
Turkmenistan             13.13       88.0      8.83      92.5
Uzbekistan               50.88       94.1      50.4      93.9
Ukraine                  252.6       90.7      246.3     93.8

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