Constraints to Firm Growth in Uzbekistan: A Descriptive Analysis

Firm growth is an important part of economic development because growing firms create employment, increase productivity, expand production, and support private sector development. In developing and transition economies, however, firms often face barriers that may limit their ability to expand. These barriers may include limited access to finance, competition from informal firms, unreliable infrastructure, and shortages of adequately educated workers. This thesis examines these four constraints in Uzbekistan using recent firm-level data from the World Bank Enterprise Survey 2024. The main objective of the thesis is to describe the financial, informality, infrastructure, and human capital constraints reported by firms in Uzbekistan and to examine whether these reported constraints are associated with firm growth and performance. Firm growth is measured using annual sales growth and annual employment growth. Log sales per worker and capacity utilization are used as additional indicators of firm performance. The analysis is based on a sample of 1,008 formal private firms. The empirical approach combines descriptive statistics, graphical analysis, pairwise correlation analysis, and ordinary least squares regressions. The regression models control for firm size, firm age, exporter status, foreign ownership, sector fixed effects, and region fixed effects. Robust standard errors are used. Since the data are cross-sectional, the estimated relationships are interpreted as associations rather than causal effects. The descriptive results show that informality has the highest average obstacle score among the four selected constraints. However, the average values of all four constraints remain below one on the zero-to-four obstacle scale, indicating that many firms report either no obstacle or only a minor obstacle. A separate binary analysis shows that 15.15 percent of surveyed formal firms report the practices of informal competitors as a moderate, major, or very severe obstacle. Financial constraints are reported as serious obstacles by 12.50 percent of firms, human capital constraints by 11.58 percent, and infrastructure constraints by 7.06 percent. The graphical analysis shows that constraints are not evenly distributed across sectors and broad survey regions. Serious informality constraints are more visible in the food sector and other services, and in the East and Center regions. Serious human capital constraints are particularly visible in Tashkent. These patterns suggest that business constraints in Uzbekistan are heterogeneous and may differ across sectoral and regional contexts. The correlation analysis shows that the four reported constraints are positively related to each other, suggesting that firms experiencing one obstacle often report other obstacles as well. Most correlations between the constraints and the main growth outcomes are weak. The clearest simple relationship is a negative correlation between human capital constraint and capacity utilization. The regression results provide limited statistical evidence that financial, informality, and infrastructure constraints are associated with log sales per worker, annual sales growth, annual employment growth, or capacity utilization. The most notable result is found in the smaller subsample of firms with valid capacity-utilization data. Human capital constraint is negatively associated with capacity utilization and is marginally statistically significant at the 10 percent level. A one-point increase in the human capital obstacle score is associated with approximately a 2.9 percentage point reduction in capacity utilization, holding other firm characteristics, sector fixed effects, and region fixed effects constant. Frisch–Waugh–Lovell partial regression plots for all four constraints support this pattern visually, with the clearest negative partial relationship appearing for the human capital constraint.