FDI policies in protected industries: the Uzbek automobile industry since 1991

Abstract

The automobile industry has been the key driver of developing economies since the early twentieth century. Uzbekistan is an exceptional case, characterised by the creation of automobile production from scratch after independence through the adoption of a protective policy. A state-owned holding company was founded to implement the automobile industry policy and manage operating companies engaged in the sector, among which was a joint venture cofounded with Daewoo Motors. This article examines how a small country like Uzbekistan was able to develop a car industry since the 1990s. It relies on a narrative analysis of interviews as well as a qualitative analysis of internal company records and secondary sources. This study demonstrates that the free trade agreement with Russia and former Soviet countries supported the development of an Uzbek car industry created by FDI in a protectionist environment, a policy usually implemented in large economies.