One_pager_Uzbekistan Auto Industry: Sources of Growth Outside the Sec r11_automobile industry in uzbekistan_eng_2 | Page 2

Figure 2. The potential multiplier effect of the auto industry has yet to be fully realized
(Arrows indicate the distances between the multiplier effects in Uzbekistan and the EU countries (X-axis: supply multiplier; Y-axis: demand multiplier)
Machine building
X
Oil refining
0,4
Auto industry — Uzbekistan
Auto industry — EU
electric-power industry
Transport services
0,3
0,1
Electric-power industry
0,2
Auto industry — EU
Transport services
Auto industry — Uzbekistan
Chemical industry
Machine building
Iron and steel industry
Chemical industry
0,1
0
0
0,1
0,2
0,3
0,4
0
0,1
Transport services
Oil production
0,2
0,3
0,4
Chemical industry
0,3
0,4
Machine building
0,3
Auto industry — EU
0,2
Gaz industry
0,2
Nonferrous metallurgy
Oil refining
Auto industry — Uzbekistan
0,1
Building materials
Chemical industry
Auto industry — EU
0,1
Machine building
Gaz industry
Auto industry — Uzbekistan
0
0
0
0,1
0,2
0
0,1
Demand multiplier
Y
Qualitative changes in the auto industry alone can produce equally significant qualitative changes in other sectors that are key for Uzbekistan: machine
building, oil refining, transport and the chemical industry.
The higher the sector, the more products it consumes from the sector in question. The farther right, the more it generates increased demand for products
in that sector.
in transport services, by 20-25%. The supply multiplier may
increase by 120% in oil refining; by 150% in transport services;
and by nearly threefold in the chemical industry. A comparable
increase in demand and consumption will also occur in other
sectors, such as R&D and vocational education.
Given these facts, the main objective of industrial policy is
to activate this potential and transform the auto industry
into a driver of growth for the priority sectors and, therefore,
Uzbekistan’s entire economy. Uzbekistan has already taken
the first step to achieve this objective. At this stage the auto
industry has managed to become a driver of growth for
enterprises inside the automaking cluster. For example, the
auto industry complex today has more than 200 localizing
enterprises, has set up processes for more than 260 new types
of components, and the level of localization exceeds 50% for
new models and 80% for the Nexia and Matiz models. For all
of the pluses, its main deficiency is that the entire benefit is
confined to the automaking complex and is not providing the
necessary impetus for the development of other sectors.
What is of interest for long-term growth is the effect that the
auto industry can provide and is providing for other sectors.
The boundaries of the sector’s future growth are expanding,
and the sector itself is beginning to play a more substantial role.
Its development is beginning to transmit a powerful impetus
to the priority sectors of industry and, as a result, to the rest
of the economy. Significant demand is developing for more
skilled labor, which is bringing about changes in the system
of vocational education. This is also where the foundations
Center for Economic Research
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Tashkent 100070, Uzbekistan
Tel: [phone],
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Fax: [phone]
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are being laid for the independent development of new
production facilities for semifinished industrial products.
In order to fully unleash the existing potential, the following
measures must be taken:
1. The critical mass of enterprises, and hence production
volume, must be increased in the auto industry complex.
Based on the targets for development of the key sectors in
the economy up to 2020, the formation of such a critical mass
requires at least a 30% increase in production by the auto
complex (the auto industry and satellite enterprises) by 2020.
In the process, the expansion of production capacities should
be accompanied by measures to make production significantly
more competitive. Major institutional changes are needed to
develop real competition in the sector.
2. On a parallel track, additional efforts must be made to
develop intersectoral cooperation between the auto
industry and other priority sectors.
Specifically:
• One of the main strategic areas in the metals industry
is the development of production facilities for iron and
aluminum castings, which may be used to manufacture
intermediate goods for the production of engines, chassis
and, in the future, braking-system components;
• The machine building industry must establish within
the country the production of high-tech modules and
components, e.g. ABS and EBD systems, gearboxes and
braking-system and steering-system components;
The Center for Economic Research is jointly supported by the United Nations
Development Programme (UNDP) and the Government of Uzbekistan
The views and opinions expressed in this material do not necessarily reflect the official positions of the
Center for Economic Research or the United Nations Development Programme.
UNDP Country Office in Uzbekistan
4, Taras Shevchenko str.
Tashkent 100029, Uzbekistan
Tel: [phone];
Fax: [phone]
www.undp.uz