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- Convenors:
-
Chekhros Kilichova
(Lund University)
Rustamjon Urinboyev (Lund University)
Send message to Convenors
- Discussant:
-
Matthias Baier
- Formats:
- Panel
- Theme:
- Sociology & Social Issues
- Sessions:
- Thursday 14 October, -
Time zone: America/New_York
Long Abstract:
Over the last two decades, all five five post-Soviet Central Asian republics (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan) have declared their willingness to reform their business and investment climate. However, inconsistent business ethics standards, widespread corruption and the peculiar way in which rule of law is interpreted and applied (called “the local way of doing business”) have hindered and limited the foreign investment in the region. This is because the Central Asian region is a challenging environment when it comes to navigating and understanding its legal culture and business and economic context. Little is known about how the environment can be navigated. Companies operating in the region have been led by a trial and error approach, often keeping the results of their experiences to themselves and making it difficult for newcomers to gather information quickly on how to operate. Potential investors are faced with at least two additional challenges: First, the risks associated with entering Central Asian markets and running business activities are much higher and involve informal and illegal relations with state officials as well as fierce competition with local business elites who are connected to the higher echelons of the government. Second, a difference in legal cultures, often resulting in a different understanding of business ethics, leads to a conflict between a) what is considered moral, socially acceptable or even legal in the region and b) what is considered good practice, in line with international law and international standards.
Based on the above considerations, our proposed panel aims to promote greater understanding and explanation of the interconnections between legal cultures, local business environments, and governance in Central Asia. More specifically, we are concerned with the way national and international laws, norms, and (written and unwritten) rules come to shape the business environment and governance in five Central Asian countries. In order to do this, the papers proposed in this panel aim to shed light on why some rules and laws are complied with, while others are ignored or avoided, and why some rules are bent or violated in support of personal objectives and benefits. We aim to compare visible and “invisible” practices, official and unofficial ones, explaining why and how a law is adopted and written on paper, how it is interpreted, applied in practice, and translated into practical recommendations in practice, and how the target group responds to the new provisions generated by a new law.
Accepted papers:
Session 1 Thursday 14 October, 2021, -Erhan Dogan (Marmara University)
Paper long abstract:
Uzbek President Shavkat Mirziyoyev, stated that Uzbek authorities acted unfairly towards Turkish entrepreneurs in the past. If these unfair treatments continue, it would be impossible to gain back the trust of Turkish investors. Uzbek President clearly announced that from that time on a “treason to Turkish investors was a treason to the state policies”.
These strong words were a reflection of a sincere apology for the wrongdoings of Uzbek government officials to Turkish businessmen which started during the mid-2000s and ended by 2016 with the death of ex-president Karimov.
The rationale behind my study is that when doing business or entering the market in Uzbekistan, one should not only consider the official legal framework that regulates the activities of foreign investors and businessmen.
It seems that there are some unwritten codes that would determine the destiny of one’s investments in this country.
The businessmen that come from the Republic of Turkey supposedly have certain qualities which make their acceptance easier compared to other investors in Uzbekistan. Turkish businessman, culturally and linguistically, has a lot of advantages compared to other investors who invest in Uzbekistan.
Can we even claim that being of Turkish descent would only be meaningful only when there exist good relations among Turkey’s and Uzbekistan’s political elites and this connection would not mean anything if this entente between the state elites fades away?
Would, being from the same ethnic, linguistic and cultural descent be counterproductive as these people would easily find themselves as a party within the political cleavages and informal governance structures that already exist in the host country? They would either prefer to take part or being pulled down to the domestic political struggles by one of the parties in host countries' politics.
When one makes investments and business in a foreign country, they first look to the security, profitability, and tax laws. If they think that they would be safe, make money and transfer this money back home. If one of these three is problematic then they think twice or three times.
In countries like Uzbekistan next to the existing laws, invisible and informal cultural or business codes do also matter. Respect to these invisible/informal business codes and practices makes communication easier and it also makes the conduct of business safer and sustainable, though they might be seen as instances of illegality and corruption from a legal standpoint.
Tolibjon Mustafoev (Lund University (Sweden)) Rustamjon Urinboyev (Lund University)
Paper long abstract:
There have been extensive discussions within academic and policy circles on why many governance reform initiatives and legal interventions failed in Uzbekistan. In our paper we will engage with these scholarly debates by arguing that laws and policies are comprehensively written on paper but remain poorly implemented in practice due to the contradictions and discrepancy between government reform agenda objectives and socio-political and socio-economic realities. These processes, i.e., divergence between law in books and law in action, are particularly visible in Uzbekistan’s agriculture management policy, namely the agri-cluster model. The cluster model is a chain of different farming and business entities that cooperate vertically (with suppliers or buyers: farmers as cotton producers and textile companies) and compete horizontally (with similar scope businesses: a farmer with another farmer; a textile company with another textile company).
The cluster model can be seen as the latest reform initiative in a series of agricultural transformations that started in Uzbekistan after the collapse of Soviet Union. Uzbekistan shifted its policies from the state-centric management to the private cluster model in few years, when other developing economies like Egypt or India required decades for the same reforms to be implemented among farmers in a genuine way, but not by forced state policy. In this paper, we mostly concentrate on recent cluster-model-based agriculture management reforms of Uzbekistan, which unveiled the cluster model as the most decisive practice to ‘boost’ the privatization, cease the state-centric approach, develop the economy and shift from considering cotton and grain as export commodities, by replacing them with textile and ‘ready to go’ products, but causing uncertainties, social dilemmas, and legal issues among farmers.
Previous research examined Uzbekistan’s agricultural transf0rmations through political, sociological and anthropological lenses, whereas there has been little investigation of these processes from a socio-legal perspective. In our paper we will provide a socio-legal analysis of the agriculture management in Uzbekistan, specifically the cluster chain model, its implementation process, implications to the local business environment in rural areas, and perceptions by local farmers. Theoretically, the paper draws on concepts of legal cultures and living law to analyze the empirical data gathered during the fieldwork conducted in the Jizzakh, Bukhara, and Ferghana regions of Uzbekistan during December 2020-February, 2021, in the frame of the Central Asian Law project at Lund University supported by a Marie Curie Research and Innovation Staff Exchange H2020 Programme.
Peter Finke (University of Zurich)
Paper long abstract:
The region of post-Soviet Central Asia has been described as a notoriously unfriendly business environment, both for local and international investors, as is true, indeed, for many former socialist parts of the world. This has been ascribed to the slow transition path and to the many legal insecurities that allowed local and national elites to keep a firm hand on any activities and to intervene on their behalf, should they see a potential benefit in this. Political and social circumstances were thus seen as major obstacles for a successful transformation and economic growth in the region.
There is certainly a lot of truth in that, although such a picture neglect further aspects of resource endowment and global entanglements. But clearly, a major driver, or barrier, to entrepreneurship is the overall institutional framework, composed of different and sometimes overlapping layers of formal and informal rules and patterns that define the attractiveness and plausibility of economic activities. Property rights, taxation regimes as well as established business customs all play a preeminent role in this. They shape the expectations people have regarding different strategies and investment opportunities. In situations of high transaction costs and asymmetrically distribution of information these will naturally be rather limited and thus precent beneficial courses to be taken.
This paper will outline a general framework and theoretical conceptualization of studying business culture and entrepreneurship empirically in the larger Central Asian region, as part of the inter-disciplinary project ‘Central Asian Law’, funded by the Horizon 2020 scheme. Taking examples from different parts and across the last thirty years, it aims to show the interlinkages of individual strategies, official legal and political specifications, as well as the multiple levels of informal arrangements between entrepreneurs, political and business actors, and the social environment within which they take place.
Slavomir Horak (Charles University, Prague)
Paper long abstract:
Turkmenistan represents one of the most challenging environments for business and investments. Nevertheless, the profound analysis of the investment potential is still far behind the expectations both from business practices and from an academic perspective. The paper attempts to include complex analyses of the business and investment climate in the country from several principal points of views - political (political elites, geopolitics), technical (infrastructure, standards), legal (laws and law enforcement, taxes) and economic (economic system, budget, banking system, foreign currency exchange) and human aspects (informal rules, corruption, language and local business culture). The research includes the analyses of accessible open sources and interviews with available business people (at least those willing to speak).