EXPORT ORIENTATION AND IMPORT SUBSTITUTION: EVALUATING POLICIES IN TRANSITIONING TO AN EXPORT-ORIENTED DEVELOPMENT MODEL

This study analyzes two major industrial development strategies—import substitution (IS) and export-oriented (EO) growth—highlighting their relevance for developing economies, particularly Uzbekistan. While IS policies aimed to foster domestic industries by limiting foreign competition, they often led to inefficiency and economic stagnation. In contrast, EO strategies, as demonstrated by countries like South Korea and China, have proven more effective in promoting innovation, competitiveness, and global market integration. The paper discusses systemic issues restricting Uzbekistan's shift to an EO model such as strong reliance on primary goods exports, poor quality infrastructure, low value-added exports, and skill mismatch. It also reviews the contribution of WTO in promoting trade liberalization and provides the policy steps that would enable Uzbekistan to deal with the existing challenges. These policies include investment in education and R&D, modernization of the logistics and component manufacturing infrastructure, facilitation of small and medium enterprise activity, and deregulation. With these steps, Uzbekistan will be able to move towards a more diversified, competitive nondomestic, and sustainable economy.