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  • Dilsora Fozilova: Falling from the Global Scope: What Does Globalization Mean for Uzbekistan?

    karta“Globalization appears as an inexorable force – perhaps of progress, perhaps simply of a capitalist juggernaut, but in any case irresistible.”i

    Craig Calhoun

    Globalization is understood as the unintentional erasure of differences and cultural specificities worldwide due to the mobilized economy, information technology, production exchange and spread of democratic ideology. Advanced communication technology, increases in the mobility of capital in the global arena and deepening international relationships (both political and economic) are the most significant changes of our time that have accelerated globalization in the world. However, many countries are not open to the natural progression of globalization and try to slow it down with state censorship and passive international capital exchange. Dr. Bolton argues there are still a few states remaining free from the international oligarchy, and Uzbekistan is one of those few states whose maintenance of its national currency and rejections of involvement with international financial institutions enabled it to stay secure from recent world financial turbulence.ii Some negative consequences of globalization including cultural eradication, environmental decline and weakening the state sovereignty are assumed, but economic isolation and internet censorship to stop or slow down this process have greater financial, social and political costs for the states. The natural flow of globalization is powerful, as people travel around the world and work in neighbouring countries, and while information technology is improving and international communication is reaching its high stages, it is impossible to remain isolated from the rest of the world.
    Uzbekistan is one of the developing countries which has both rich natural and human resources. It is located in Central Asia, which is a core area of the Asian continent, and it has an area of 447,400 square kilometers and an estimated population of 29,559,100.iii China, Afghanistan and Russia surround Uzbekistan from three sides and influence the country in three different ways. The implicit character of the region’s political and social structure including slow economic growth, unemployment, environmental decline, and undemocratic governance are unsolved problems characteristic to the region. However, since breaking away from the former Soviet Union, Uzbekistan suffered a decline in real GDP along with other members of the Commonwealth of Independent States.iv Due to the damage in the Soviet economic chain and re-configuration in the state structure, unemployment and economic tension increased. Separation from the state-centered economy and committing to a gradual transition to a marked-based economy was Uzbekistan’s first step towards neo-liberal globalization. Progress with the economic policy reforms in Uzbekistan has been cautious, but the country has registered respectable achievements since its independence.v Currently, Uzbekistan attracts very small amounts of Foreign Direct Investment (FDI), which is causing significant damage for its economic progress. The major economic reforms such as foreign investment law, contract and tax legislations, stableness of regulations, performance of the banking sector, internet and international communication quality all play a significant role for investors considering investing and conducting business in the country. The increase in foreign direct investment indicates its good performance in the global arena and competitiveness within global standards.
    During the Soviet regime Uzbekistan mainly produced agricultural goods and raw materials, which caused a feeling of being far behind most of the world’s industrial development, international business experience, existence of modern technology and improvement in intellectual/managerial skills. Up to the present day Uzbekistan is a leading world producer of cotton and gold, and also produces significant amounts of non-ferrous metals, natural gas and oil.vi After untying itself from the Soviet supply and production chain, Uzbekistan urgently needed foreign direct investments because it is an important vehicle for industrial development, capital/skills inflow and to improve political/economic interaction with the rest of the world. Losing the Soviet umbrella was intimidating at times. Lacking international experiences, both political and economic, are required very cautious steps. Also, in traditional societies globalization is seen as a threat for cultural and religious traditions. After the collapse of the Soviet Union, the idea of national identity and cultural uniqueness became even more desirable in Uzbekistan. At the same time alteration in traditions, improvement in technology and transformation in lifestyle was observable in the big cities. The natural flow of cultural globalization was still occurring regardless of the state’s antagonism toward it. The interrelationship between economy, technology and democracy defines neo-liberal globalization. It appears to be an intentional force to create one global culture in the planet by spreading through national borders without any hesitation, without much pushback, then integrating societies and altering cultures.
    Opponents of globalization in Uzbekistan would argue that as globalization brings western ideology along with the western capital and skills, there are significant potential dangers of weakening the state’s sovereignty and loss of national and cultural identity.vii Investing a lot of power and capital might lead big corporations to a sophisticated form of colonization over poor countries. Foreign companies might invest money in developing countries for one reason; they try to take advantage of the cheap local labour force and cheap raw materials of the country. In addition, those who have employment in the foreign companies will have an immense pressure and threat of losing their job at any given time. Environmental standards might decline because of large manufacturing corporations, but what is more dangerous for Uzbekistan’s case is not allowing these changes, and experiencing, learning and forming applicable policies to prevent undesired consequences of globalization. State sovereignty of the United States, Russia, Canada or China did not weaken because of their high level of global involvement. The centerpiece of the globalization project is the belief in market liberalization that took hold under the debt regime. Local environmentalists, economists, financial advisors and policy providers need to analyze every possible positive and negative outcome to achieve equal efficiency for both sides.
    Regardless of the president Karimov’s (incumbent president of Uzbekistan) very slow movements towards globalization, internet and media censorship, and the rejection of global financial institutions, progress of globalization is powerful and inevitable. Therefore, attracting foreign direct investment is critical for Uzbekistan to improve industrial development, to relieve the tension of shifting to a market-based economy and to accelerate the adaptation to more democratic practices. Foreign investments provide citizens with jobs and financial stability. The Uzbek government is unable to control currency inflation, and there is still a big gap between “black market” value and the value of national currency. National currency was not convertible until 2003, and even after the government formally agreed to currency convertibility Uzbekistan’s, currency rate did not improve.viii A very preventative trade regime and domineering policies continue to bring damaging effects on the economy. Uzbekistan needs a substantial structural reform to create a more desirable climate for foreign investors, strengthening the banking system and currency, and needs to release the agricultural sector from state control.
    According to Pamila Blackmon Uzbekistan ranks second place between Central Asian countries for its richness to natural resources.
    “Uzbekistan is considered moderately endowed with natural resources including gold, oil, natural gas and cotton. In fact, at independence, the country was ranked as the seventh largest producer of gold, the tenth largest producer of natural gas and the fourth largest producer of cotton in the world.”ix
    As Blackmon discusses, foreign investors attracted more of the resources of neighbouring countries compared to Uzbekistan because of their investor-friendly legislations. For example, government of Kazakhistan implemented tax and investment legislations which made it more attractive to foreign investors, but Uzbekistan does not have such stable policy measures for an investment framework. Uzbekistan’s first “Law in Foreign Investment” was passed in 1994 and has been renewed very often, which made it even more difficult for investors to keep track of numerous modifications every time, and it increased doubt about the stability of the policies.x Uzbekistan’s tax code legislation was passed only in 1998, but it still does not have a clear rate for different enterprises. A lack of progress in tax legislation, banking sector reforms and the risk conducted in doing business with Uzbekistan have negative impacts on the number of firms doing business in the country.xi
    As former US president Bill Clinton stated “globalization is about more than economics. America’s purpose must be to bring the world together around democracy, freedom and peace and oppose those who would tear it apart.” Regardless of what America’s purpose is in spreading globalization, every country should learn and adapt the best applicable features for the better future of its own citizens and country’s strong standing in the global arena. Globalization erased distance between different countries of the world. Communication technology and the internet are perhaps the most significant technological advancements of our time that accelerated globalization in the world. Trying to slow down the globalization process by state censorship is a temporary solution for authoritarian governments which has great negative consequences for the future of their own nation. After the collapse of the Soviet Union, communist ideology was slipping out of the county and Uzbekistan had an urgent need to fill this gap. Because of this void, the idea of national identity and cultural uniqueness became significantly desirable; for example, names of historical heroes who lived in this region were again popularized. Regions, streets, theatres, buildings and parks were changed back to the original pre-Soviet names and styles. The Uzbek language was recognized as an official language and national celebrations like Navrus, Independence Day and religious festivities were added to the national identity with pride. Although the Uzbek government is criticized for oppressing religious citizens with ideals of “extremism”, many mosques were built and others were re-opened after the end of the Soviet regime. However, the undeniably beautiful look of the cities and costly celebrations in the capital city did not reduce unemployment, did not deepen democratic adaptations, did not increase the quality of education, and more significantly, did not significantly reduce poverty in the country. Education in Uzbekistan does not adhere to global education standards. Degrees and certificates can be purchased from educational institutions. Evidently, this isolation is causing more harm than benefits for Uzbekistan. Interest in education between youth declined significantly in last twenty five years.
    Since 1991 Uzbekistan moved forward to liberal reform for its economic structure and made a significant shift from a centrally-planned economy to a market economy. The changes were overwhelming but not significantly beneficial for the majority of citizens. As importing gold, cotton and oil is not enough for improving economic development, having an exchange relationship with the neighbouring countries, more specifically countries with economic difficulties/crisis is the only option for surviving. Therefore, attracting foreign direct investments is an urgent need for the newly independent Uzbekistan. Foreign direct investments and capital inflow can decrease unemployment, improve education and skills, and relieve the tension of the transition to a market based economy. Additionally, foreign direct investments also bring new technologies, and powerful scientific and managerial skills.xii
    After the collapse of the Soviet Union in the 1990s, Soviet economic chain between countries of former USSR was also diminished. The corresponding increase in unemployment pushed people to seek work in neighbouring countries.
    “Unemployment and underemployment are persistent problems, and a significant number of people continue to look for jobs in Russia, Kazakhstan, the Middle East, and Southeast Asia. Business analysts estimate that a high number of Uzbek citizens are working abroad. Estimates range from lows of 3 million to highs of 5 million Uzbek citizens of working age living outside Uzbekistan. Uzbekistan signed a labor agreement with Russia in 2007 to facilitate the temporary migration of Uzbek workers and the taxation of their income.”xiii
    People who are working in Russia, Kazakhstan and other neighbouring countries are providing for their families, bringing new technologies, new skills and easing the economic tension in the country but they do not have social security, they do not live in acceptable living conditions while working and most of the time they do not have registration or work permits, putting their lives in danger. According to the Memorial – Human Rights Organization there are many occurrences were Uzbek workers were beaten, killed and forced to work for long periods of time for free.xiv Uzbekistan has natural and human resources, and desirable weather conditions to attract foreign investors. If Uzbekistan could adopt correct legislations, new economic reforms and desirable democratic practices, encouraging foreign investments would solve a significant part of the economic and unemployment issues in the country.
    Attracting foreign investors also depends on the availability of information about the country to the investors. Unfortunately, Uzbekistan has the most strict internet censorship in Central Asia, and information the Uzbek government releases is not reliable. Citizens inside the country are disconnected from the outer world and do not know more than what is permitted by the censors for them to know. After the Andigan massacre on May 13, 2005, where the Uzbek government unlawfully killed thousands of people in the central park of Andigan city during peaceful demonstrations, internet censorship increased. Citizens cannot access many websites that would perhaps encourage more democratic practices and inform their opinion of international organizations and knowledgeable analysts about the political and economic situation in Uzbekistan. Most of the people in Uzbekistan are forced to live with a dogmatic view about their country, president and constitution and express very high pride and satisfaction about their lives. Also, unreliable sources of information make Uzbekistan undesirable for foreign investors. Journalists and politicians suffer from oppression from the government, forced child labour is still in practice, and torture in the jails and uninformed detentions are part of the harsh centralized control. Arguably, the authoritarian character of the Uzbek government uses cultural erosion as an excuse for its anti-globalism actions, but in reality tries to hide its undemocratic way of governing the country from international eyes.xv As citizens of Uzbekistan are travelling to Russia to get a job and provide for their families, they are accessing the internet and other democratic media sources in different ways. Therefore, the Uzbek government is only limiting its own opportunities to attract foreign investors while trying to censor the internet.
    Uzbekistan has great weather and very historical cities that always have been attractive for foreign tourists. Bukhara, Khiva, Samarkand and Urgench were historically located on the Silk Road which connected Mediterranean countries with China, yet tourism in Uzbekistan has a great need for improvement. Adopting the visa system was Uzbek government’s way of increasing security in the region. Obstacles in obtaining a visa are damaging tourism and causing economic difficulties for the region.
    Uzbekistan as a landlocked country has a deep need for adopting globalism and opening doors to Foreign Direct Investment (FDI). During the Soviet era Uzbekistan was not able to develop the technology or the skills for broad industrial development. Therefore, foreign direct investment is going to be an important potential vehicle for industrial development, and capital and skills inflow. Uzbekistan can offer manufacturing of advanced technology, further processing of commodities, including agricultural, mineral and hydrocarbon primary products, the manufacture of pharmaceutical and medical equipment and tourism commodities and services. Unfortunately, the Uzbek government’s currents policies and regulations, visa system, internet censorship and very slow movement towards globalism are creating an unwelcoming climate for foreign investors.

    Bibliography

    Bolton, Kerry. ”Uzbekistan: An Outpost Against Globalization .” Foreign Policy Journal. 35. no. 1 (2010). http://www.foreignpolicyjournal.com/2011/06/05/uzbekistan-an-outpost-against-globalization/ (accessed November 12, 2012).

    Blackmon, Pamila. ”Divergent paths, divergent outcomes: linking differences in economic reform to levels of US foreign direct investment and business in Kazakhstan and Uzbekistan .” Central Asian Survey. 26. no. 3 (2007): 355–372. http://ehis.ebscohost.com.login.ezproxy.library.ualberta.ca/eds/pdfviewer/pdfviewer?vid=3&hid=121&sid=3349ccf7-416f-4c11-aeea-d7e325560581@sessionmgr114 (accessed November 12, 2012).

    Bureau of Public Affaires, ”U.S. Department of State.” Last modified December 3, 2010. Accessed November 12, 2012. http://www.state.gov/r/pa/ei/bgn/2924.htm.

    Craig Calhoun, “Imagining Solidarity: Cosmopolitanism, Constitutional Patriotism, and the Public Sphere,” Public Culture 14, no. 1 (2002): 147.

    Ruzaliev, Odil. ”Attitudes Toward Globalization and the use of New Technologies.” The National Bureau of Asian Research (NBR). (2006). http://www.nbr.org/Downloads/pdfs/PSA/Uzk_Conf06_Ruzaliev.pdf (accessed November 12, 2012).

    United Nations, Investment Policy Review of Uzbekistan. New York, Geneva: Routledge on behalf of United Nations, 1999

    (”U.S. Department of State” December 3, 2010) http://www.state.gov/r/pa/ei/bgn/2924.htm

    Craig Calhoun, “Imagining Solidarity: Cosmopolitanism, Constitutional Patriotism, and the Public Sphere,” Public Culture 14, no. 1 (2002): 147.

    Kerry Bolton, ”Uzbekistan: An Outpost against Globalization,” Foreign Policy Journal, 35, no. 1 (2010),

    http://www.worldatlas.com/webimage/countrys/asia/uzbekistan/uzfacts.htm

    United Nations, Investment Policy Review of Uzbekistan, (New York, Geneva: Routledge on behalf of United Nations, 1999), 5-1.

    United Nations, Investment Policy Review of Uzbekistan, (New York, Geneva: Routledge on behalf of United Nations, 1999), 5-1.
    United Nations, Investment Policy Review of Uzbekistan, (New York, Geneva: Routledge on behalf of United Nations, 1999), 5.
    Kerry Bolton, ”Uzbekistan: An Outpost against Globalization,” Foreign Policy Journal, 35, no. 1 (2010),
    Pamila Blackmon, ”Divergent paths, divergent outcomes: linking differences in economic reform to levels of US foreign direct investment and business in
    Kazakhstan and Uzbekistan ,” Central Asian Survey, 26, no. 3 (2007): 355–372,
    Ibid.359
    Pamila Blackmon, ”Divergent paths, divergent outcomes: linking differences in economic reform to levels of US foreign direct investment and business in
    Kazakhstan and Uzbekistan ,” Central Asian Survey, 26, no. 3 (2007): 355–372,
    ibid.
    UNCTAD (1995). World Investment Report 1995: Transnational Corporations and Competitiveness
    (Geneva and New York: United Nations).
    (”U.S. Department of State” December 3, 2010) http://www.state.gov/r/pa/ei/bgn/2924.htm

    http://www.memo.ru/eng/memhrc/discrim.shtml

    Pamila Blackmon, ”Divergent paths, divergent outcomes: linking differences in economic reform to levels of US foreign direct investment and business in Kazakhstan and Uzbekistan ,” Central Asian Survey, 26, no. 3 (2007): 355–372,

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    Published on januari 5, 2013 · Filed under: Дилсора Фозилова;
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