J ^ï»Ìièi «îJ¿1 ÌSì^M4i^a^ÌJjj^Ù^^ìj^ÌJÌÌUìiSàìiii*i«84s£¿¿M^i<iiàii.s*MÎ*iiâii*iiiiÌiàiàjSifcjjjSà-iiata k.>ijìiàwìiiiwiiii* my- V ? n . / 2 s & J! 7 li! 1 EUROPEAN UNIVERSITY INSTITUTE Department of Economics )i EUROPEAN UNIVERSITY INSTITUTE '4 RECEIVED - 2 SET. 1998 LIBRARY •!: V; ' !:•? Living Standards in Transition: the Case of Uzbekistan I I Aline Coudouel ! ■ ! 'i: Thesis submitted for assessment with a view to obtaining m i the Degree o f Doctor of the European University Institute ■Vi Florence, August 1998 ;f . ì ^ 1...... European University Institute Z"* /•' V/ Pol so EUROPEAN UNIVERSITY INSTITUTE Department of Economics LIB 339. 4709 587 COU <5 o % -J o % o* Living Standards in Transition: the Case of Uzbekistan Aline Coudouel The Thesis Committee consists of: Prof. Andrea Ichino, E.U.I. “ Emmanuel Jimenez, World Bank, Washington “ Ravi Kanbur, Cornell University, Ithaca “ John Micklewright, UNICEF, Florence and E.U.I., Supervisor MMuuuUHUuan Acknowledgements I am grateful to John Micklewright for his extremely constructive supervision and his availability, to Sheila Mamie for her insights and her constant support, and to Jeni Klugman for useful comments on various drafts of the thesis. I am also grateful to Galina Shcherbakova, Alisher llkhamov and all the team of the Expert Sociological Centre for providing information, support and an enjoyable introduction to Uzbek culture. Finally, I wish to thank my friends and family for providing encouragement and entertainment. Particular thanks go to James Heenan for hours spent proof-reading and reassuring. Financial support was provided by the Ministère des Affaires Etrangères, France (Bourse Lavoisier). Note Chapter 2 of the thesis is the result of joint work with Sheila Mamie, John Micklewright and Galina Shcherbakova. It has been published in 1997 in the book edited by Jane Falkingham, Jeni Klugman, Sheila Marnie and John Micklewright, Household Welfare in Central Asia , published by MacMillan, London. The section of Chapter 6 which presents the institutional details of the Mahalla scheme is the result of joint work with Sheila Marnie and John Micklewright (section 4). Contents: Table of contents -, Acronyms ¡v Chapter 1: Introduction 1 - Country profile 1 2 - Limitations of available information 8 3 - Outline of the research 1 -j Chapter 2: Regional differences in living standards in Uzbekistan 1 - Introduction 13 2 - Data sources 18 3 • Monetary indicators of living standards 23 3 -1 Per capita income 23 3 - 2 Household size and composition 26 3 - 3 Economic structure 28 3 - 4 Prices 29 4 - Alternative indicators: food production and consumption 31 4 -1 Agricultural production 31 4 - 2 Food consumption 34 5 - Other indicators of living standards 36 5 -1 Ownership of durable goods 36 5 - 2 Demographic indicators 37 5 - 3 Access to services 39 6 - Conclusions 40 Chapter 3: Living standards in Uzbekistan: the case of Kashkadarya 1 - Introduction 44 2 - Living standards measurement in Uzbekistan 45 2 -1 Indicator 46 2 - 2 Poverty line 47 2 - 3 Adjustment for household size and composition 50 3 - Data source 53 4 - Intra-regional variation in living standards 55 i M J i l l X — ....“ im ........ IMMWIfli 5 - Income versus expenditure and consumption 59 6 - Vulnerable groups: pensioners and children 65 7 - Conclusion 70 Chapter 4: The household survey in Uzbekistan (EESU) 1 - Introduction: the rationale for a household survey in Uzbekistan 72 2 - Survey design: topics covered 74 2 -1 Introduction 74 2 - 2 The household questionnaire 76 2 - 3 The individual adult questionnaire 77 2 - 4 Children under the age of seven 78 3 - Survey design: sampling 78 3 - 1 Population studied, sampling frame and size 79 3 - 2 Sampling methods 80 3 - 3 The method selected for the EESU 82 3 - 4 Correction for some sample and non-sample errors 86 4 - Survey design: implementation 88 4 - 1 Questionnaires formulation 89 4 - 2 Organisation of training 90 4 - 3 Organisation of field work supervision 91 4 - 4 Organisation of data entry, coding and cleaning 93 5 - An inquiry into the quality of the data collected 94 5 - 1 Statistics on non-response 94 5 - 2 Statistics on missing observations 97 5 - 3 Statistics on self-response 99 5 - 4 Statistics on accuracy and internal consistency 100 5 - 5 Statistics on representativeness 101 6 - Conclusions 103 Appendices 105 Chapter 5: A profile of living standards using the EESU 1 - Introduction 116 2 - Indicators 117 2 -1 Income variables 117 2 - 2 Assets 122 2 - 3 Other elements of welfare 127 3 - Living standards using income as a welfare indicator 132 3 -1 Definitions 133 3 - 2 Results and sensitivity analysis 136 3 - 3 Profile of the low-income population 141 4 - Alternative indicators 157 4 - 1 Composite index 159 4 - 2 Principal components and factor analysis 170 5-Conclusion 178 Chapter 6: Public transfers 1 - Introduction 183 2 - The social protection and assistance system: an overview 184 2 - 1 The Soviet legacy 184 2 - 2 Uzbekistan in the transition period 187 3 - The impact of social benefits 190 3 -1 Size and frequency of social transfers 190 3 - 2 Distributional effects 195 4 - The Mahalla scheme: description 202 4 - 1 The Mahalla in Uzbek society 204 4 - 2 The rules governing the Mahalla social assistance scheme 205 4 - 3 The potential advantages and disadvantages of the scheme 208 5 - The Mahalla scheme: Assessment of targeting 210 5 -1 Administrative statistics 210 5 - 2 Descriptive statistics 213 5 - 3 Distributional analysis 215 5 - 4 Multivariate analysis of knowledge and receipt 218 6 - Conclusion 225 Chapter 7: Conclusions 230 Annex 1 : Questionnaires of the EESU 236 Bibliography 258 m W ^ -»¿.A ;. ■ ... i a M » »»««M~1 , ÉriUtkMJuuuuutMkMia i a u u L â Acronym s EBRD European Bank for Reconstruction and Development EESU European University Institute/Essex University Survey of Uzbekistan Epsem Equal Probability of Selection Model EUI European University Institute FBS Family Budget Survey FSU Former Soviet Union HDI Human Development Index ILO International Labour Organisation GDP Gross Domestic Product MoL Ministry of Labour of Uzbekistan NGO Non-Governmental Organisation OECD Organisation for Economic Co-operation and Development PPS Probability Proportional to Size PSU Primary Sampling Unit SSU Secondary Sampling Unit UNDP United Nations Development Programme USSR Union of Soviet Socialist Republics WHO World Health Organization iv Chapter 1: Introduction Uzbekistan appears as a special case among countries in transition. Despite very slow and progressive reforms, social and economic indicators show that its situation has remained relatively stable, while most other countries of the former Soviet Union have experienced a deterioration in conditions. In addition, Uzbekistan is the third largest country of the former Soviet Union in terms of population (after Russia and Ukraine) and, with over 24 million inhabitants, accounts for over 40 percent of the total population of Central Asian countries. However the question of living standards in Uzbekistan has so far received little attention. In particular, no comprehensive programme of analysis of poverty and social security reforms has been implemented either by the Uzbek authorities or externally. The living standard patterns concealed behind relatively stable macroeconomic trends have not been fully examined. This thesis represents the first in-depth investigation of living standards in Uzbekistan. The extent of intra and inter-regional disparities is assessed using published information and newly released data from the official household budget survey. A poverty profile is then drawn and an assessment made of the role of the country's social protection system, using an independent household survey carried out for that purpose in summer 1995 by a team which included the author. 1 - Country profile The choice of Uzbekistan is motivated by different reasons. First, Central Asian countries of the former Soviet Union (FSU), taken here to include Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan, have so far received comparatively little attention from academics, with greater attention being focused on the European countries of the former Soviet bloc. The demographic and economic patterns of Central Asian countries are, however, very specific. Their very young and rapidly growing population contrasts with the ageing population structure found in Central and Eastern European countries and exerts growing pressures on budgetary resources. In Central Asia, children represent over 40 percent of the total 1 i — M i i i i i population, compared to figures around 22-26 percent in Central Europe and western countries of the Commonwealth of Independent States (CIS). Persons over 60 years of age, on the other hand, account for only 6 to 10 percent of the total population while their share ranges between 15 and 20 percent in Central Europe and western CIS (Kazakhstan lies somewhere between the two groups, due to its ethnic composition, with 40 percent of the population being Slav). Although the birth rates have been decreasing since the late 1980s (the crude birth rate falling from 37.4 in 1985 to 29.7 in 1995 in Uzbekistan, UNDP, 1996b, p92), the population of Central Asian countries is still growing rapidly. For instance, the current growth rate implies that the population of Uzbekistan will double within 40 years. Such demographic characteristics are typical of developing countries and contrast with other features inherited from the former regime, such as almost universal literacy