Tashkent, Uzbekistan (UzDaily.uz) — The economies of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan continue to export mainly raw materials and goods with limited processing. Most of the value added and technological rents accrue to countries that carry out subsequent processing stages, while economic integration within the region remains weak, according to a working paper by economists at the Eurasian Fund for Stabilization and Development (EFSD).
The study examines Central Asian countries’ participation in global value chains, the fund reported.
According to the authors, the dominance of raw materials in exports constrains productivity growth and increases the region’s exposure to volatile global commodity markets.
The economists analysed gross exports by source of value added using the Koopman–Wang–Wei decomposition methodology, participation indices for value chains, and indicators measuring production-chain length and distance to final demand. The calculations are based on the Asian Development Bank’s inter-country input-output tables.
The study identifies four distinct models of integration. Kazakhstan is a major supplier of oil, ores and metals that undergo several stages of processing abroad. Kyrgyzstan has the region’s most open export economy but relies heavily on imported components and serves as a regional transit and logistics hub. Tajikistan remains near the beginning of production chains as a raw material supplier, with limited processing capacity and high transit costs hindering deeper processing.
Uzbekistan, by contrast, is developing a more balanced industrial model by increasing imports of technology and capital goods to support automotive manufacturing, engineering and other high-tech industries.
In 2024, Uzbekistan’s intermediate exports amounted to 13.1% of GDP, while final exports accounted for 4.5%. Between 2022 and 2024, domestic value added in intermediate exports rose from 11.5% to 13.1% of GDP. The country’s overall global value chain participation index reached 55.8% in 2024, up from 55.6% in 2022.
The authors say Uzbekistan made the region’s most notable progress in moving up the value chain between 2022 and 2024. With production-chain length unchanged, the distance to final demand increased from 2.76 to 2.97. According to the economists, this indicates that Uzbek products, including textiles and goods produced by industrial clusters, are becoming more complex intermediate inputs for global manufacturing.
Among Uzbekistan’s industries, automotive manufacturing recorded the longest production chain, at 2.89. The report interprets this as evidence of the industry’s deep integration into global production networks.
The textile industry is another positive exception in the region. Whereas domestic value added previously centred on cotton cleaning, it now includes spinning, weaving, design and branding.
Switzerland is the largest buyer of Uzbek value added, accounting for US$1.71 billion, or 17.9%. The authors link this to Switzerland’s role as a gold-refining hub. China follows with 7.5%, and Türkiye with 4.7%.
Imported value added comes mainly from Russia, at US$2.25 billion, or 29.9%, and China, at US$1.64 billion, or 21.7%.
Economic integration among Central Asian countries remains limited. Of the US$48.6 billion in Kazakh value added embodied in other countries’ exports, only 1.6% is associated with exports from neighbouring Central Asian states, primarily Uzbekistan, at US$579.7 million.
Conversely, of the US$9.7 billion in Uzbek value added embodied in other countries’ exports, Kazakhstan accounts for US$132.8 million. Horizontal production links between Kyrgyzstan and Tajikistan are virtually absent.
The authors recommend deepening regional cooperation to build cross-border value chains, gradually shifting from raw material exports to more processed goods in line with each country’s specialisation, and attracting foreign direct investment tied to local processing and technology transfer.
They also propose harmonising regulatory frameworks and reducing transaction costs in trade between countries in the region.
