Structure of economy by industries
Uzbekistan the fastest growing economy in the Central Asia and it is estimated that by 2020 it will turn to upper middle-income country. Uzbekistan's prime goal is to achieve an outstanding rate of economic growth rate, creating jobs and become the best welfare state in the world. The country got independence in 1991 and planned to improve the welfare of the state and enhance the social liability of its citizens. The main focus of the government is to improve the social and economic development by strengthening the macroeconomic management.
The robust industrial sector has contributed greatly to the Uzbekistan's growth through effectively utilizing the natural resources and manufacturing sectors such as chemical, machinery, and automobiles sectors respectively. The construction activities have encouraged the public investment and giving a boost to the service sector of the economy. The current account of Uzbekistan has a positive balance due to the increase in export of automobiles, cotton, vegetables and fruits, non-ferrous metals and chemicals. The foreign reserve account partial transferred the Fund for Reconstruction and Development for financing the infrastructure of the public. In addition, the government support for the modernization of the potential sectors led the economic growth and higher public investment and construction, met the government's target for the long-term industrialization programs. The objective of the government is to bring the sustainable growth in the industrial sector with diversified nature of the business which will eventually create more jobs for the citizens.
On the other hand, Kazakhstan the largest economy of central Asia despite widespread privatization has been lined up for the upcoming years, the program requires certain reforms left to be implemented. To promote the economic growth, the Kazakhstan government is encouraging businesses to be established. Economic diversification is still a challenge and to bring areduction in the exports of hydrocarbons. Kazakhstan is considered to be among the major exporters of natural gas, minerals, and oil. The metal and oil industry contributed above 70% of the total export earnings economic growth of Kazakhstan. The economy of Kazakh is mainly based on the exports of oil; however, the constant fluctuation of the oil prices in the international market is tumbling the economic conditions of the Kazakhstan. The Kazakhstan government has stressed to bring the diversification in the economy encouraging the investment in industries other than the oil and gas industry to balance the economic growth of the country. The government of Kazakhstan has also taken initiatives of the stimulation of free trade practices to be adapted and supporting the small and medium sized businesses, promoting the foreign direct investments in the oil and gas industry to boost the economic growth and at the same time increasing investment in the Research and Development of industries other than oil, preferably the technology industry to modify the industry of energy of Kazakhstan.
Development
The Uzbekistan government has planned millennium goals for women's empowerment and reduces the discrimination across the country in every sector. The government has been supported for the development of infrastructure and other social activities, the education sector and rural areas etc. The European Union has deliberately co-operated with the Uzbekistan's government for the improvement and development of the economy as a whole. The bilateral cooperation is specifically designed to bring improvement in the health services, rural development, and education and to strengthen the local civil society to support for the SMEs. The bilateral cooperation is also made to carry out the regional development plan. The EU bilateral cooperation will be a help to the Uzbekistan a low income based country for the period 2014-2020. In the programming phase, the EU and Uzbekistan stressed on the ways to reduce the consumption of water for better irrigation, promoting the small-business entrepreneurs and enterprises development of agricultural products and food along with improving the living standards of deprived areas. Adding to this, the members of the two partners EU and Uzbekistan met in 2014 in Brussels sharing and stressing the development of the rural areas in the forthcoming period as the core part of the development program. The mutual understanding of the two partners aimed at providing and supporting the sustainable practices during the period and ensuring that the ecosystem of the country is safe, the partners have kept on priority to adapt the local practices and focus on the development of the small farmers and bring the improvement in the livelihood of the rural areas. The EU has also stressed on resolving issues concerning human rights.
Conversely, The Kazakhstan government has taken considerable steps in the development and improvement of the Kazakh economy. The poverty levels could not reduce to the satisfactory level due to the slower growth and poor labor market conditions. The Kazakh government has initiated the steps to improve the impact on the economy by increasing the social spending and pensions. On the other hand, the diminishing effect of the poor transfer programs has made the low-income earner at the worst position due to increase in the pricing levels which lead to fall in the wages and poor employment conditions. Kazakhstan economy has numerous challenges in the development of healthcare issues and the overall system of providing the healthcare. The government is keen in improving the system. The new healthcare development program has introduced development plans and framework to combat the diseases like cardiovascular diseases, cancer, and alcohol-related diseases. Moreover, the government has encouraged foreign investment in the industry other than oil to provoke more employment opportunities.
GDP per capita
Uzbekistan's GDP per capita income has increased from $542 to $1580, from 2005 to 2011. The poverty line is down in 2011 to 16.0% from 25.8% in 2005 as per estimates (World Bank Group, 2015). The macroeconomic policies of Uzbekistan were the prime reason for the sustainable economic growth on an average of 8% in between 2005 to 2011, improving the welfare and reduction in the unemployment by almost half to 5% in 2011 from 10% in 2005. There is a significant surplus in the current account and budget surplus account in the last 7 years, increasing the official reserves from $2.9 billion to $19.8 billion in 2011 (World Bank Group, 2015). There is a significant reduction in the external debt to GDP ratio from 30.2% in 2005 to 16.6% in 2011 (World Bank, 2016). The proceeds from funds have also contributed greatly helped to balance the budget. While the inflation rates remained high, which need immediate attention and to be fixed through effective monetary, exchange and fiscal rate policies.
On the other hand, the Kazakhstan government has taken considerable steps in the development of the Kazakh economy. The Kazakhstan an upper middle-income earner country if GDP US$ 10.5 thousand in 2015 (World Bank Group, 2015). There is a slow growth seen in the economy of Kazakhstan to 1.2% in 2015 from 4.1% in 2014, due to fall in the oil prices at the international market taking the demand in the negative direction both externally and domestically. The switch to floating exchange rate system by the Kazakhstan government has deliberately reduced the levels of tenge. The impact of this switch could be seen in the negative demand and increased the inflationary gap and thereby building the pressure. The effect was passed on to the inflation rate, increasing at a speed reached the level to 13.6%on yearly basis in 2015. The agricultural sector has to employ the majority of the working population although the contributed percentage is only 5%. This leads to a problem in addressing the issues in the country regarding poverty and food (World Bank Group, 2015).
Foreign investments
Uzbekistan's foreign direct investment have been increased over the period, the increase is seen in both domestic and foreign investments. The foreign direct investments have increased to $2.3 billion in 2011 from $88million in 2005 and the fixed capital increased to 26% in 2011 from 19% in 2005 (World Bank, 2016). The government of Uzbekistan has encouraged the investments and policies that increase the balance at foreign direct investment and contribute to the GDP (World Bank Group, 2015). The government has taken steps to maintain the pace of national growth which might reduce for a short time period due to the uncertain economic situation across the globe.
Moreover, the government has kept on stressing that Foreign Direct Investment is the top priority list but Tashkent have quite selected approach in reality. The government encourages the investments that offset the imports i.e. that encourage the country exports in which the country has a comparative advantage and the Uzbekistan government discourages the investments that do not contribute in the export and consume the imports. FDI of Uzbekistan stocks is only 2% of the GDP. The investments in the form of FDI are mainly in the oil and gas sector mainly from China and Russia. The automotive sector of Uzbek has been heavily invested by South Korea. The EU has recently removed the sanctions imposed on Uzbekistan due to having a poor record of human rights. The removal of the sanctions has encouraged more investments from the countries like Middle East including the countries from EU.
While, Kazakhstan government has been setup the law and economic framework in the broader legal scope, providing the support and protection to all the key investors, rights and its provided information confidentially. The law has also enforced the investments to be protected together with the interest of the investors. The investors who do not abide by the laws or compliance were treated to be carrying out the activities illegally. The Kazakhstan government has encouraged the investors to invest in the country in industries other than the oil and gas industry to strengthen the economic conditions, create more job opportunities thereby reducing the levels of unemployment in the country. The Kazakh government has also stressed to form the small-medium sized businesses so that the investments could be supported. The Kazakh government has also collaborated with certain international development institutions to take part in the development of the economy by injecting considerable investment amounts. The institutions involved are IMF, Asian Development Bank and World Bank etc.
Rating of running a business
The Uzbekistan government has also taken imperative steps in establishing industrialized business and diversification within the economy. The Small and medium-sized enterprises (SMEs) are also encouraged to establish and take part in the structuring of the business infrastructure. This will help in overcoming the deficit of infrastructure and promote the economic transformation, promoting industrialization and create more employment opportunities. Uzbekistan has potential to growth and enters in the ranking of high-income earners.
Meanwhile, Kazakhstan is the world's leading oil and gas industrial country with the sound business environment and is the main source of the economic growth. The Kazakhstan government has initiated the steps in encouraging the small to medium size business to take an active part in building the economy, by creating jobs and establishing the diversified range of business. The country currently is solely dependent on the oil and gas industry which has tumbled the economic conditions of Kazakhstan due to fall in the international oil price. The government is keen to improve the business sector of the economy to boost the level of earnings and the economic structure.
Reforms
Uzbekistan's effective macroeconomic policies and measures have enabled the country to overcome the effects of 2008-2009 'global financial crisis. The government has effectively managed the policies to combat the crisis through its incremental reforms getting entrance in the economies of the free market by avoiding the destabilizing the shocks to its own economic system. The government has also realized the benefit of having the consistent reforms and its maintenance. The Uzbek government has also stressed on imperative industrialization and bringing diversification in the business nature by creating more job opportunities within the private sector keeping a balance in the development of rural and urban areas. In addition, the government has also encouraged in promoting the small-medium sized enterprises (SMEs) in contributing the economic development, industrialization, and creating further employment opportunities. Uzbekistan has the potential to grow and enter in the race of high-income earners. The challenge for the Uzbekistan government is to keep its financial reforms in line to that of its growth objectives. The main challenge is to make foreign exchange transaction and cash without incurring any hindrance in the process of lending the money. The banking sector and other measures will not perform well if these reforms are not addressed properly and will lead to severe economic shocks to the economy.
In contrast, The Kazakhstan government has also made several reforms in the year 2015 for the improvement of structure. The government has taken constructive and concrete steps to provide better health services and state of the art investment opportunities to the citizens and the investors. The government has also taken initiatives to strengthen the industries other than oil and gas in order to improve the job opportunities and bring diversification in the industry. The government initiatives are based on five core agendas including Professional public administration; enforcing the rule of law; to bring transparency at the state level; Diversification and growth of the economy; and uniting the nation.
Plan for the future
Uzbekistan government has planned for the industrial development and to bridge the industrial gap by developing the infrastructure and energy sector, and increasing the competitiveness of businesses. The Uzbek government has estimated the required amount of investment for the development of industrial and infrastructure projects is $47 billion. The government has realized that the requirement alone cannot be met and for the said purpose the government has decided to involve the private sector of the economy to take part in industrialization. The Uzbek government has assigned special areas Navoi and Angren for the industrial projects to be established by the private sector. Uzbek government has also planned to create more job opportunities for the rural areas citizens and to bring reduction in the living style of rural and urban areas by bringing further development, improving the infrastructure, housing, microfinance and etc. The core part of the development 2020 is improving the infrastructure of Uzbekistan's rural and urban areas. The government of Uzbekistan has received several grants and funds and support by international institutions such as the World Bank, IMF, Asian Development Bank, European Union etc.
Conversely, The Kazakhstan government has planned to bring reforms in its structural framework of carrying out the activities and to boost the economic growth which was affected by the fall in the oil prices. The country lacks on transparency and equality in the economy. The government has also planned to improve the market conditions and encourage the foreign investor to invest in the economy. There has been a number of firms lined up for the privatization.
Conclusion
To conclude the analysis, it can be established that there is a huge difference in between the economic and cultural reforms of the business. However, the government of both of the organizations has been stressing to have more foreign direct investment within the countries. In order to create more employment opportunities and welfare of the states both of the countries have laid the reforms that are needed to be implemented. The countries are also aimed at providing world's best healthcare activities to its citizens.