Connectivity is not enough: Digital Infrastructure, the 2022 Relocation Shock and ICT Services Exports in Central Asia and the South Caucasus, with Implications for Uzbekistan

Abstract

Uzbekistan has expanded digital connectivity faster than almost any economy in the post-Soviet space: internet use rose from 15.9% of the population in 2010 to 89.0% in 2023 and fixed broadband from 0.4 to 30.3 subscriptions per 100 people. Yet ICT services exports amounted to only 0.41% of GDP in 2023, an order of magnitude below Armenia (4.44%), Moldova (3.80%) or Georgia (2.90%). This paper asks whether digital infrastructure explains cross-country differences in ICT services exports and how economies absorbed the 2022 relocation shock in the regional technology labour market. Using a balanced-design panel of ten Central Asian, South Caucasus and Eastern European economies over 2010–2023 (137 observations) and two-way fixed-effects estimators with Driscoll–Kraay standard errors, we find that, once common time shocks and country heterogeneity are controlled for, within-country increases in internet penetration and broadband density are not systematically associated with higher ICT services exports. Trade openness is the most consistent, though sample-sensitive, correlate (elasticity 0.74–0.93). The post-2021 period is associated with ICT exports about 62% higher than the pre-existing trend would imply. Interaction models suggest that economies with stronger pre-shock broadband capacity captured more of this shock, but the result rests on the low-connectivity tail of the sample and is not robust to wild cluster bootstrap inference. We interpret connectivity as a participation threshold rather than a marginal export driver. For Uzbekistan, the binding constraints lie in human capital depth, regulatory openness of digital trade and integration into international value chains. We discuss the 2026 liberalisation of data-localisation rules and WTO accession as complementary levers.