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Abstract

Uzbekistan’s post 2016 reform agenda aspires to establish inclusive, transparent, and market enhancing institutions, yet the persistence of informal practices continues to shape governance outcomes in ways that diverge from official policy intentions. Drawing on New Institutional Economics and the conceptual distinctions between economic actors and economic institutions, impersonal versus interpersonal relationships, and inclusive versus exclusive incentive structures, this paper explains why well designed formal reforms frequently fail to achieve credibility in hybrid regimes. Soviet organisational legacies, hierarchical administrative logics, and deeply embedded reciprocal networks continue to structure decision making, access to opportunities, and enforcement practices, producing a path dependent blend of formal and informal governance. Using two empirical cases, the state’s deployment of mahalla institutions and the informal survival of sectoral management despite its formal abolition, the paper illustrates how competing informal institutions co opt or reinterpret new rules, undermine impartiality, and weaken the credibility of formal commitments. These contradictions generate persistent gaps between policy goals and policy outcomes, particularly in areas such as public administration, resource allocation, and citizen participation. The paper contributes a dynamic framework for analysing institutional change in hybrid regimes, showing how actor incentives, inherited relational structures, and informal enforcement mechanisms interact to reproduce governance paradoxes even under ambitious reform programs.