Uzbekistan’s Transition to a Market Economy: The Impact on Income Inequality and Regional Development

Uzbekistan's transition from a state-regulated to a market economy represents a policy outcome aimed at balancing growth, stability, and equity. Gradual changes observed during the former President Karimov’s term maintained macroeconomic stability but entrenched structural and regional inequality, with rural provinces relying on low-productivity agriculture and labor emigration. This paper aims to assess the policy of the former president post-2016 and the changes introduced by Mirziyoyev, including currency deregulation, trade openness, and privatization, which have transformed regional development, income distribution, and migration flows. Focusing on qualitative research of government papers, international organizations, and academic articles, the study traces historical legacies, the development of the financial sector, and reform stages as drivers of inequality. The results show how an urbanized core and networked regions have benefited disproportionately from liberalization, while rural provinces lag, increasing spatial imbalances. Yet labor migration and remittances act as a hidden equalizer, reducing household poverty but leaving uneven regional outcomes and a heavy reliance on external labor markets. The paper concludes with the argument that while reform in Uzbekistan accelerates growth and modern development, inclusive development is constrained and requires targeted responses to address rural underdevelopment, labor market imperfections, and uneven rewards from migration flows.