and employment creation in transition economies and (ii) reducing fiscal and financial system business subsidies--"hardening budget constraints"-and facilitating the restructuring, reorganization and bankruptcy, including where necessary liquidation, of inefficient firms so as to re-channel bottled up assets to new ventures. At the same time, the industrial policy regime should be reformed to be made consistent with the objectives of the country's competition policy. Similarly, reforms in the areas of foreign exchange liberalization, international trade and direct investment, fiscal and financial sector policy should be informed by, and harmonized with those aimed at improving the competitive business environment.

The analytical capabilities of Governmental and associated institutions also need to be considerably enhanced to carry out on a systematic and regular basis and in line with international practice, independent economic assessments of Uzbekistan's industrial rmiarket structure and determinants of enterprise conduct and peiformance. To date, only a handful Df majior analyses of Uzbekistan's industrial structure has been undertaken; and most have been on a sectoral basis. Moreover they have generally focused on the narTow issues of competition as defined by cuiTent statutes, such as legally defined market shares. Rather, what is needed to inform effectively Government competition policy-making consistent with promoting Ihe public interest are: (i) comprehensive independent assessments of product and geographic market boun(laries, as determined by economic forces so as to accurately gauge market structures; (ii) analysis of how the structure of markets (e.g., extent of producer concentration and barrier to entry) influences business performance and economic welfare; and a focus on not only specific sectors but also on cross-sectoral market structures, such as horizontal and vertical integration.

In order to create a credible competition "champion"-one with teeth-within the Government, the organizat3ion, structure and functions of the existing authority responsible for competition and regulatory policy-making and eniForcement should be transformed into an independent agency, reporting directly to the Prime Minister. The current Anti-Monopoly Committee is an outgrowth from the earlier Committee on Prices (hence its reliance on price controls as a competition policy instrument), and is part of the Ministry of Finance, with a Deputy Finance Minister serving as its Chairman. To effect greater public commitment to implemernt competition policy in a de-politicized fashion, reduce apparent conflicts of interest, and have, the clout to deal with powerful vested interests, both on an inter-agency basis and within the economy at the republic and local levels, there is a need to break from the past and reinvigorate the agency with a new mandate and "corporate culture". There is a not a single model for restructuring of the agency, but international practice suggests a set of principles upon which the agency should operate, including, but nolt limited to: decisions should be rules-based; the entity's budget should be financially autonomcus from. other ministries; there should be a transparent appeals process for consumers and businesses, includling public hearings; the agency should have autonomous legislative authority; and the agency's performance should be subject to regular public monitoring to ensure the public interest is protected.

Corporate governance incentives and institutions should be strengthened and brought in line with market-based principles and international practice (for example, the new OECD corporate governance guidelines) to engender greater transparency and accountability. Currently, sound corporate governance practices are blunted because of ill-defined organizational structures and institutions, contradictory lines of authority, and weak disciplines/checks and balances, especially in the management of State assets. As epitomized in the case of the 56 "trade associations", it appears there is often little distinction between the role of government as policy maker and regulator, on the one hand, and business shareholder (owner) and manager, on the other: as former sector ministries, these holding group entities bear little resemblance to _bona fide,_ companies, are still headed by individuals that serve on the Cabinet of Ministers, and are governed by boards of directors comprised of 'insiders'. Coiporate governance incentives and structures appear stronger in the nascent private sector, especially the PIFs, but these entities are not yet of sufficient competitive scale in the economy to effect fundamental behavioral changes; indeed the role of the PIFs 19