Last week, the Center for Economic Research presented key findings of the research. The results of the sociological survey conducted within the project framework covering 3,000 households and 1,000 businesspersons in all regions of Uzbekistan, which founded out that in conditions of the current private sector development model, opportunities to develop households-based entrepreneurship and self-employment are largely exhausted.

The research said that the share of real estate in the structure of assets is about 84 percent (78 percent in 2003), while real estate, transport facilities and livestock together make up 95 percent of all assets.

In the last five years, most efforts of households to use their assets (for instance, real estate, transport facilities, etc.) for entrepreneurial activity were successful. However, the cost of assets mobilization and the share of households willing to invest in a new or existing business are lower than in 2003. In 2003, the families estimated their needs in attracted resources/credit at US$5.2 billion; by the end of 2009, this was estimated at only US$2 billion.

Increase of income of households generally could lead to some positive changes in their consumption pattern. Still, the major part of household income is used for basic needs, and the share of expenses on food, clothing and public utilities reaches 65 percent on average in the structure of households’ expenses.

As the survey results show, if income continues to increase, then in the short term, households will be spending more on: the purchase of home appliances (and cars) and improving housing conditions (seven times more); the purchase of livestock (four times more).

However, the share of families investing in starting/expanding a business could be increased by only 12 percent. It is also alarming that the vast majority of population show low interest in accumulating human capital, above all in terms of investing in education and health.

As per the survey results, less than 10 percent of the population actually care about up-grading the level of education; investing in education, including the education of children, are on average only about 4 percent in the structure of household expenses. Further, only 44 percent of those interviewed more or less regularly visit a doctor and undergo at least a partial medical examination. Particular attention to health is paid only for that of children and elderly.

At the same time, if, hypothetically, households had more money at their disposal, 2.6 times more households would have spent for weddings and different family celebrations that may contribute to the accumulation of “social capital”, which is important in Uzbekistan.

Informal social networks to a certain extent continue to act as an obstacle to the development of formal institutions because the population prefers using informal channels (relatives, friends, etc.) rather than seek formal solutions to address problems.

The Uzbek society and economy continue undergoing significant transformations, primarily due to the introduction of private property and privatization, and the expansion of the class of owners and entrepreneurs. Today, around 28 percent of the country’s population may be considered middle class, bearing in mind certain assumptions, whereas the class of entrepreneurs and property owners serves as its core. The largest stratum (around 45 percent) is the “reserve of middle class”. Its representatives have equal opportunity to join either the middle-class or the low-income group.

As in other transition economies, the property and income factor prevails in shaping the structure of the society and expanding the middle class, primarily via its reserve. On the other hand, the lesser significance of many other traditionally used criteria of social stratification and definition of the middle class (like education, professional affiliation, system of values, consumer behavior, etc.) leads to biases that may have long-term adverse effects on society, the economy and the state.

Generally, it could be argued that in conditions of the current private sector development model, opportunities to develop households-based entrepreneurship and self-employment are largely exhausted. Undoubtedly, the policy stimulating the creation of new businesses, including those based on households, needs to be continued.

However, major efforts need to be focused on creating the conditions for development and qualitative changes in the existing sustainable business entities that can and should play the leading role in increasing investment in the economy, deepening the processes of structural transformation, and expanding and changing the quality of employment.

The first round of research on mobilizing household assets was conducted also with support from UNDP in 2003–2004 and aimed at assessing the size and structure of household assets and identifying ways to mobilize them for investment. The 2010 research framework had broader objectives beyond the assessment of tangible assets and covering intangible ones – human and social capital. The research also aimed to define social stratification and mobility in contemporary Uzbek society.