4.8 Measuring Development Questionbank

Economic Developments in Uzbekistan

Uzbekistan, located in Central Asia, has undergone significant economic reforms since 2017, including currency liberalization, tax reforms, and measures to attract foreign direct investment (FDI). Historically reliant on cotton exports and gold mining, the country has started diversifying into emerging sectors such as automotive and tourism. Between 2018 and 2022, real GDP growth averaged 5.5% per year, supported by increasing remittances from Uzbek workers abroad and rising domestic consumption. However, inflation reached 10% in 2021, driven mainly by higher food prices and imported goods.

The government has prioritized infrastructure development, investing in roads, railways, and energy grids. Such projects have attracted a number of international firms, particularly from China and Russia. Yet, small and medium-sized enterprises (SMEs) in Uzbekistan argue that high interest rates and limited access to capital inhibit their competitiveness. To address this, the Central Bank of Uzbekistan has eased monetary policy gradually, aiming to lower borrowing costs for businesses.

Despite reforms and steady growth, poverty remains a pressing concern. Official data indicate that nearly 11% of the population lived below the national poverty line in 2020, a figure the government aims to reduce to 7.8% by 2025 through poverty-targeted social programs. In rural areas, a cycle of low incomes, limited job opportunities, and inadequate healthcare has trapped many households in persistent poverty. To break this cycle, government policies have focused on expanding vocational training, improving rural education, and providing microfinance to small-scale farmers.

Agriculture continues to play a significant role in Uzbekistan’s economy, accounting for over 25% of total employment. Wheat and cotton farmers benefit from state procurement policies, although reforms aim to reduce direct government involvement and move toward more market-based pricing. While these measures have improved efficiency, concerns about water scarcity and the environmental impact of intensive cotton cultivation persist. The government also subsidizes fertilizer and irrigation technology to boost agriculture yields, which has partially alleviated rural poverty but raises questions about long-term sustainability.

On the international front, Uzbekistan has taken steps to improve trade relations with neighboring countries through tariff reductions and simplified customs procedures. As a landlocked country, it relies on joint infrastructure projects across Central Asia to drive export growth. Exports include natural gas, cotton, gold, and an increasing volume of textiles and foodstuffs. FDI inflows have accelerated as the government strengthens legal protections for foreign investors, though volatility remains a risk due to global economic shifts and geopolitical tensions in the region.

Income inequality is a growing focus for policymakers. While official surveys suggest moderate improvement in the Gini coefficient since 2015, critics argue the informal sector obscures true disparities. Remittances from migrant workers—predominantly in Russia—have helped households combat poverty but also highlight Uzbekistan’s dependence on external labor markets. In response, the government is encouraging labor-intensive manufacturing and tourism to create domestic employment opportunities.

The Central Bank maintains a managed float of the Uzbek som, occasionally intervening to stabilize exchange rate fluctuations. Recent data show gradual appreciation of the currency as export revenues climb. Nonetheless, the significant share of the population living on subsistence farming underscores the importance of inclusive growth. Policies that bolster human capital—such as investments in education, healthcare, and vocational training—are viewed as critical to sustainable development.

Going forward, analysts see opportunities for Uzbekistan to leverage its strategic location as a transit hub between East and West. However, challenges such as ensuring water security, upgrading outdated infrastructure, and reducing dependence on extractive industries remain. Whether the current pace of reforms can translate into long-term, diversified growth will depend on the government’s ability to balance macroeconomic stability, social needs, and international integration.

Table 1: Selected Macroeconomic Indicators for Uzbekistan (2018–2022)

Table 2: Poverty, Employment, and Development Indicators

Tajikistan is a mountainous, landlocked country in Central Asia. It faces several development challenges, including a relatively high rate of poverty, a narrow export base (primarily cotton and aluminum), an aging infrastructure, and a heavy reliance on worker remittances sent from abroad—remittances constitute about 28% of the country’s GDP by some estimates. The agricultural sector accounts for about 20% of GDP but employs around 45% of the labour force. While the country has achieved steady growth in recent years, much of the population remains vulnerable to external shocks such as declining global commodity prices, extreme weather events, and reductions in remittances.

The government’s revenue is primarily derived from three main types of taxes: corporate income tax, personal income tax, and a value-added tax (VAT). Despite the relatively low nominal rates, challenges in tax collection remain. Tajikistan’s trade balance has been in persistent deficit for most of the last decade, with imports of consumer and capital goods outstripping exports such as cotton, aluminum, and fresh fruits. The country’s real GDP growth, unemployment rate, and Gini coefficient are presented in Table 1.

Below is a snapshot of key macroeconomic indicators, the country’s tax structure, selected data on income distribution, and information on cotton as a key export.

Table 1: Macroeconomic Indicators in Tajikistan (2017–2021)

Table 2: Tax Structure in Tajikistan

Table 3: Income Distribution by Population Groups (2021)

Figure 1: Market for Cotton in Tajikistan (2021 → 2022)

Assume the price of cotton per bale (in TJS) increased from 10 to 12 between 2021 and 2022. Over the same period, the quantity demanded decreased from 500 000 bales to 470 000 bales, while the quantity supplied increased from 400 000 bales to 420 000 bales.

In 2021, the government introduced a stimulus package injecting TJS 600 million into the economy (for infrastructure projects and social spending). Economists estimate the marginal propensity to consume (MPC) in Tajikistan to be about 0.75.

Tajikistan’s heavy reliance on foreign remittances has raised concerns about macroeconomic vulnerability. A sudden drop in remittance inflows could constrain households’ consumption, reduce revenue from indirect taxes, and undermine the country’s balance of payments.

Pakistan’s Economic Recovery Challenges

Pakistan faces persistent economic challenges as a developing nation with a rapidly growing, youthful population. The country’s fiscal position remains precarious, characterized by a large budget deficit fueled by rising defense spending and debt servicing costs, with interest payments consuming approximately 40% of total government revenue. This fiscal strain is further aggravated by persistent current account deficits and a dependence on external financial assistance from international institutions.

In response, the Pakistani government has engaged with the International Monetary Fund (IMF) and other multilateral lenders. Under its latest IMF bailout program, Pakistan has committed to a set of structural reforms, including the privatization of state-owned enterprises to improve efficiency, reforming energy subsidies to lower government expenditure, enhancing tax collection mechanisms to increase revenue, tightening monetary policy to control inflation, and maintaining a market-determined exchange rate to stabilize the external sector.

Government officials stress that international financial support is critical for economic recovery, as it restores investor confidence, attracts Foreign Direct Investment (FDI), and facilitates access to additional funding from institutions like the Asian Development Bank (ADB) and World Bank. However, critics argue that IMF programs often lead to austerity measures that can slow economic growth and disproportionately impact low-income households.

Pakistan has a long history of engagement with the IMF, having participated in more than twenty IMF programs since the 1980s. A recurring pattern has emerged: temporary improvements in external balances followed by economic reversals, raising questions about the effectiveness of IMF-led reforms and Pakistan’s ability to sustain long-term economic stability.

Beyond macroeconomic stabilization, development economists emphasize the need for human capital investment to unlock Pakistan’s demographic dividend. Key policy recommendations include expanding education and vocational training programs to improve workforce productivity, promoting gender equality in labor markets to increase economic participation, and encouraging youth employment initiatives to leverage Pakistan’s young population.

While multilateral development banks support initiatives like green energy projects, infrastructure development, and digital transformation, concerns remain about policy implementation, governance challenges, and environmental sustainability. Some critics argue that economic stabilization efforts often overshadow long-term development goals, leading to an ongoing policy dilemma: how should Pakistan balance short-term fiscal stability with long-term economic development?

Table 1: Pakistan’s Government Expenditure and Debt Servicing

Table 2: Foreign Direct Investment and Current Account Balance in Pakistan

Country Q, a developing economy, has been experiencing significant economic challenges over the past decade. With a GDP per capita of $4,000 and a relatively low Human Development Index (HDI), the government has been focusing on policies to improve living standards, increase economic growth, and boost international trade.

Table 1: Key Economic Indicators (2022)

Table 2: Demand and Supply Data for Wheat Market in Country Q

Table 3: Income Distribution and Tax Revenue

Figure 1: Government Expenditure Breakdown (US$ Billion)

Education: 10

Healthcare: 15

Infrastructure: 12

Welfare: 8

Other: 5

Ghana to Seek Help from International Monetary Fund

Ghana has said it will seek financial aid in the form of a loan from the International Monetary Fund (IMF) to help stop the rapid decline in the value of the cedi, Ghana’s currency, and close a large budget deficit. Ghana’s transformation from one of Africa’s fastest-growing economies to the home of the world’s worst-performing currency has become a concern. The exchange rate depreciated by 40% against the US dollar in 2014. The fall in the currency has led to increases in the price of consumer goods such as sugar and fuel; inflation is at an unacceptable 15%.

Despite being a major exporter of gold, oil, and cocoa, Ghana’s current account deficit has risen sharply to 12% of its gross domestic product (GDP). This is partly due to a rapid increase in demand for imports and falling gold prices. Additionally, oil revenues have not been as strong as expected.

The government is also struggling with a wide budget deficit, which stood at 10% of GDP last year. Ghana’s good reputation for fiscal responsibility has worsened considerably as the government tripled salaries for police officers and soldiers.

It is expected that the news of talks with the IMF will be positively received in international financial markets. The finance minister has said the step would help to stabilize the currency, to bring domestic prices under control, and also to restore investors’ confidence in Ghana’s economy.

A Ghanaian spokesperson noted that the IMF would insist on the government introducing measures to tackle inflation and reduce its budget deficit. The IMF says that Ghana needs to tighten its budget immediately, by reducing public sector wages, lowering subsidies, and increasing taxes. The IMF is likely to demand a limit on borrowing and perhaps some privatization of power and water companies.

Earlier this year, problems in the economy had led to nationwide protests, with thousands of workers across the country protesting in the streets about the rise in the cost of living. The country’s largest trade union says the government has been mismanaging the economy. In response to the protests, a government minister said that the government would work very hard to achieve economic development to make life easier for the working people of Ghana but that all Ghanaians would have to make “some sacrifices for the economy to recover.”

Table 1: Ghana’s Macroeconomic Indicators

Table 2: Selected Macroeconomic Data for IMF Evaluation

Text A: Trade and Industrial Policies in Country Y

Country Y has recently joined its neighbouring Free Trade Area, eliminating tariffs on agricultural imports. This has led to an increase in cheaper food products but has also resulted in declining incomes for local farmers due to intense competition. In response, the government has introduced subsidies to help farmers purchase modern equipment and seeds to improve productivity.

In addition to agricultural reforms, Country Y has imposed tariffs on imported luxury goods to counter its widening trade deficit. Policymakers argue that these tariffs will protect domestic manufacturers, though critics warn they could lead to inefficiencies and harm diplomatic relations with trade partners.

Text B: Environmental Challenges and Policies in Country Y

To achieve carbon neutrality by 2050, Country Y has implemented stricter environmental regulations on industries emitting greenhouse gases and introduced a tax on single-use plastics. While these policies are designed to curb pollution, they have increased production costs for domestic firms, leading some companies to relocate to countries with less stringent regulations.

To foster green innovation, the government has launched a subsidy program for renewable energy firms and offered incentives for businesses that produce eco-friendly goods. However, critics argue that the slow implementation of these policies has limited their effectiveness in reducing carbon emissions.

Table 1: Trade Statistics of Country Y

Table 2: Environmental Policies in Country Y

Burundi

1. Burundi is a small landlocked African country. Densely populated, it has a population of approximately 10.6 million inhabitants. The economy is dominated by subsistence agriculture, which employs 90 % of the population, though cultivatable land is extremely scarce. More than a decade of conflict led to the destruction of much of the country’s physical, social and human capital. However, substantial improvements have occurred since the conflict ended in 2006, thanks largely to the success of measures implemented to reduce the excessive control of the military.

2. Even though Burundi is enjoying its first decade of sustained economic growth, poverty remains widespread. Burundi’s ranking on the Human Development Index (HDI) increased by 2.5 % per year between 2005 and 2013 as education and health outcomes have significantly improved over the period, yet the country still ranks low at 180th out of 187 countries in 2013. Per capita gross national income more than doubled between 2005 (US$130) and 2013 (US$280).

3. Burundi is making the transition from a post-conflict economy to a stable and growing economy. Economic reforms and institution building are ongoing. After significant improvements to achieve peace and security, the country’s development program is shifting gradually towards modernizing public finance. However, the government has limited “fiscal space” because tax collection is very hard to carry out and tax receipts are low.

4. With its limited resources, the government is attempting to strengthen basic social services and upgrade infrastructure and institutions, particularly in the energy, mining, and agricultural sectors. This has been accompanied by increasing participation of the private sector. The goal now is to grow a more stable, competitive and diversified economy with enhanced opportunities for employment and improved standards of living.

5. Over the last decade, annual economic growth in Burundi has been between 4 % and 5 %. Inflation continues to decline reaching 3.9 % in July 2016, down from 24 % in March 2012, reflecting a careful monetary policy helped by a recent decrease in the prices of imports, especially oil, which is an essential commodity.

6. Burundi’s main exports are agricultural; coffee and tea account for 90 % of foreign exchange earnings, and exports are a relatively small share of Gross Domestic Product (GDP).

Economic development in two West African countries

Ghana

1. Ghana is the world’s second largest cocoa producer and Africa’s second largest gold producer. It is one of Africa’s fastest growing economies and has made major progress in achieving persistent economic growth.

2. Over the last decade, Ghana has enjoyed increasingly stable and improving democratic governance. Four successful elections during the decade have strengthened the effectiveness of key national institutions, improved investor confidence and created an environment that promotes investment and growth.

3. Ghana enjoys a high degree of media freedom; the private press and broadcasters operate without significant restrictions. The media are free to criticize the authorities without fear of punishment, says the non governmental organization (NGO) Reporters Without Borders. The private press is allowed to express criticism of government policy, which increases the accountability and transparency of the government.

4. Although Ghana’s growth has been fairly strong, the source of growth has always been dominated by commodities and the capital-intensive services sector. Neither of these has a direct effect on poverty reduction. Growth in rural areas is often limited by basic infrastructure, such as roads. This limits the ability of people in rural areas to access markets in urban areas.

   **Nigeria

   **

5. Nigeria is Africa’s leading oil producer. In 2016, it experienced its first full year of recession in 25 years. Global oil prices reached a 13-year low and oil production was drastically cut. Oil has continued to dominate Nigeria’s growth pattern, but the volatility of oil-dependent growth prevents progress in social and economic development.

6. On the political front, the transition from military dictatorship to democratic rule has been acclaimed as one of Nigeria’s major successes in the last decade. The 2011 general election, supported by the United Nations, was widely acknowledged by international observers and domestic monitors as one of the freest and fairest elections conducted in the country in recent years.

   Ghana and Nigeria

7. Both Ghana and Nigeria have cut fuel subsidies in order to reduce their budget deficits. This has had severe consequences for low-income households.

Table 1: Selected economic data for Ghana and Nigeria

$Source: adapted from _UNDP Ghana country profile_, http://hdr.undp.org, accessed 19 February 2019; _UNDP Nigeria country profile_, http://hdr.undp.org, accessed 19 February 2019; _About Ghana_, http://hdr.undp.org, accessed 19 February 2019; _About Nigeria_, http://hdr.undp.org, accessed 19 February 2019$

* measles: a highly contagious disease that is one of the leading causes of death among young children