foreign, social impact, investment priorities, policy tools, etc. But it does not necessarily mean that they may not overlap or even follow each other. On the contrary, the models or some elements may be intertwined and reflect a particular stage of the development. For example, an emphasis on the export-oriented industrial development (Model 3) may take place simultaneously with the improvement of conditions for agricultural and entrepreneurship development (Model 2) which would lead to the general improvement of business climate.
The question only whether the resources, both domestic and foreign, may be available on the sustainable basis. Besides, much will depend on how well the long-run benefits in the most progressive Model 3 could be perceived by the society comparing to a more direct impact from the implementation of Model 2.
At the same time, the republic had to pay high price to achieve these goals. The pressure on the country in general and its energy sector in particular could come from not only the changed economic interrelations, necessity of reforms in the management system, accumulated foreign debts as a result of the implementation of large-scale and costly import-substitution energy projects, etc. The issue may partly concern a set of financial and legal instruments in government policy itself too, which specifically are:
o financial destabilisation in the energy complex;
o high technological costs and weak incentives to innovations;
o disproportions between prices on various types of energy and oil resources, as well as between energy resources and other goods and commodities;
o fiscal orientation of tax policy;
o overconsumption of energy resources leading to high energy and material intensity in GDP.
In this regard, the national energy strategy should foresee stability and security in supplies of energy in the future. Prices should promote efficiency in production and energy-saving. From the social point of view, it is crucial to take into account minimum privileges provided by state to the needs of those social groups who will really need some government support.
Politically, the national energy strategy should stem from the national interests of Uzbekistan and contribute to its energy security. For these purposes, a combination of organizational, economic, political, technological, ecological steps will be required, including:
forecast and formation of energy demand taking into account energy-saving activities;
development of the small-scale energy sector, i.e. construction of thermal ES of small capacities, similarly improving generating capacities;
prudent regional energy policy between regions having an excess in energy and those with energy-shortages;
reasonable technological and ecological policy;
optimization of price and fiscal and investment policies;
gradual demonopolisation and incorporation of the energy sector;
the enhancement of foreign investments on the basis of bi- and multilateral energy cooperation on the interstate, regional, and interregional levels.
The world experience showed that in countries with rich energy resource base other manufacturing industries actually remained underdeveloped. Although the role of the energy sector as a necessary pre-requisite for the future development is not compromised, long-run success is going to be also dependent on how these export earnings from physical assets will be absorbed and spent within the economy bringing social effects. In other words, sustainability and progress has much to do with the policy actions in a much broader context, embracing non-energy areas too. The latter include first of all light and food industry which in turn are closely related to the agricultural sector where the main labor force is concentrated.
Such a shift in priorities from capital-intensive to labor-intensive industries will be in line with the tasks to secure the efficient use of domestic resources. This comparative advantage of Uzbekistan would allow the encouragement and support of structural reforms in the agricultural sector, as well as to keep up necessary incentives for agro-related industries. The stable development of labor-intensive industries could cushion the potential difficulties of transition period, stimulate more employment, raise income and its more balanced distribution among economic sectors. As a whole, such an economic basis would strengthen the pillars of social stability in society.
Generally speaking, Uzbekistan’s sustainable development could be analysed within various development models which are not new in international practice. Among others, the following could stem from: 1) an emphasis on the development of the mining and energy sectors through the expansion of liquid commodities exports; 2) the targeted development of the agricultural sector and entrepreneurship; 3) policy-led efforts on the protection and support of the large-scale corporate interests, both in domestic and foreign markets. The realization of each of the models will depend on local demographic, technological, financial, ecological and foreign constraints, as well as at the particular stage of the reforms in each single area, both in the domestic and external sector. Not at least, this is going to be connected to regional developments too, including regional trade in energy and the related products, improvements in infrastructure, structural reforms, common investment strategy, and export expansion, with particular geopolitical and geoeconomic implications. But this is to anticipate the following chapter which will examine all the aforementioned issues.
CHAPTER 4. THE ENERGY ISSUE IN THE CENTRAL ASIAN REGION