Umrbek AllakulovSummer School on Human Development
in Uzbekistan 2010
Economic Growth and Human Development
• Economic growth and human development
• Links between growth and HD
• Growth and HD in Uzbekistan– Poverty eradication
– Child mortality
– Education
• The case of Karakalpakstan
• Closing remarks
Outline
• Impact of economic growth (given by
per capita GDP growth) on human
development is found to be robust,
yet not automatic
Economic growth and human development
• two main casual links
between growth and
human development
• Brazil with more than 6%
growth rate and Gini
coefficient of 0.634
Links between growth and HD
The three ratios:
1. the public expenditure ratio as given by the proportion
of GNP allocated for public expenditure;
2. the HD or social allocation ratio, the proportion of public
expenditure earmarked for social (HD) sectors; and
3. the social (HD) priority ratio, given by the proportion of
social expenditure for basic social services or other
priority areas as defined by the government (Ranis &
Stewart, 2000).
Allocation of resources for HD
• More equal distribution of income
• Expansion of income earning
opportunities
• Enhancement of access to
productive assets
• Good governance
• Improved community action
Enhancing the links from growth to human development
• Initial years – exports restricted and imports
liberalized
• High rates of inflation – purchasing power
decreased
• Decline in GDP
Growth and Human Development in Uzbekistan
• Terms of trade increased - forgo fewer exports in
return for more imports
• more products and services are made available in
the country
Foreign trade
Crisis resistant economy
• Poverty eradication
– HDI of Uzbekistan rose from 0.687 to
0.710 between 2000 and 2007, 119th
among 182 countries
– Category: more than 10% of the
population inhabits on less than $1.25 a
day
– income poor of Uzbekistan were found to
be “asset rich” and “human capital rich”
From economic growth to human development
Poverty eradication
• immunization is
received by 96%-99%
children aged between
12-23 months during
the last decade
• 70% in 1994
• to reduce by two-
thirds of the under
five child mortality
rate by 2015 - LIKELY
Child mortality
• Better nutrition
• Increased public spending on healthcare
– Both in absolute and relative terms
– From 7% to 12% of total public expenditure
– Public spending on healthcare still too low
• 2.5% of GDP in UZB and 9% GDP in OECD
Economic growth – decrease in child mortality?
• Free and obligatory primary and secondary
education is guaranteed by the Constitution
• average income of those with higher education was
1.6 higher than those without any formal education
• 7%-9% of gross national income directed to support
education
• adult literacy rate of 99.4% and an average years of
schooling reached 11.74 years in 2007
Education
• 37% of the total land area of Uzbekistan,
although its GDP accounts for only 2.4%
of the national income
• agricultural production such as cotton,
rise, and melons
• Karakalpakstan accounts for only 5.6%– Low density
– Unattractive for investments
– Transportation costs are high as settlements
are distant
Economic conditions and HD in Karakalpakstan
• Out of its 1.5 million population, 1.1 million live in the rural areas
• 50-70% of the rural population is estimated to be poor, out of which 20% is severely poor
Economic conditions and HD in Karakalpakstan
• Karakalpakstan has one of the highest
infant mortality rates as well as one of the
highest unemployment rates
• more than 40% of population do not have
access to safe drinking water – spread of waterborne diseases
• Severe droughts in Amudarya threatens the
economic well being
Poor economic conditions and HD
• Majority of the problems can be effectively eliminated through
creation of additional income opportunities, employment creation,
and diversification of the economy in the region
• additional funds to support low income households in the region
• incentives for enterprises to attract investments in certain
branches of the economy – Enterprises with FDI are exempted from payment of income (profit) tax,
property tax, tax for social infrastructure development and area
improvement, single tax for microfirms and small enterprises, as well as
compulsory deductions to the Republican Road Fund
Towards economic growth in Karakalpakstan
• more than $3.367 million
foreign investments in 2007,
mainly in the oil and gas
sectors
• $1.1 billion investment needs
are identified
Investments – key to growth
• Economic growth and human development are highly
interdependent
• BUT(!) not all countries with high rates of growth
achieve high levels of human development
• economic growth has been translated into human
development to a certain degree in UZB– Public spending
• further economic growth can be utilized in
Karakalpakstan to achieve progress in human
development
Closing remarks
Questions?