REGIONAL TRANSMISSION OF MACROECONOMIC SHOCKS AND THE DYNAMICS OF ECONOMIC CONVERGENCE
DOI:
https://doi.org/10.5281/zenodo.23367756Abstract
This article examines whether the regions of Uzbekistan converged economically after the exchange rate unification of 2017. The analysis draws on official regional accounts for the Republic of Karakalpakstan, twelve regions and Tashkent city from 2010 to 2025, and it combines sigma and beta convergence measures with an exact decomposition of regional variance. Real output per capita increased in every region after the reform, yet the gaps between regions widened rather than narrowed. This divergence is largely associated with the rapid growth of Tashkent city, whereas among the other regions the change is modest and sensitive to the choice of base-year prices. The regional hierarchy remained almost unchanged, and initial income levels show no reliable link with subsequent growth. The decomposition reveals why the convergence measures diverge, since a weak catching-up tendency among less developed regions was outweighed by persistent differences in growth rates. As the reform was introduced nationwide alongside other policy changes, the findings describe regional development paths and do not identify a causal effect of the reform. The study underlines the importance of real regional indicators and of firm-level data on exposure to exchange rate changes for future policy evaluation.Keywords
regional growth, sigma convergence, beta convergence, exchange rate reform, UzbekistanReferences
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