The Uzbek economy is in a gradual transition to the market economy, with foreign trade policy being based on import substitution. In September 2017, the country’s currency became fully convertible at market rates. Uzbekistan is a major producer and exporter of cotton. With the gigantic power-generation facilities from the Soviet era and an ample supply of natural gas, Uzbekistan has become the largest electricity producer in Central Asia.
The first people known to have inhabited Central Asia were Scythians who came from the northern grasslands of what is now Uzbekistan, sometime in the first millennium BC; when these nomads settled in the region they built an extensive irrigation system along the rivers. At this time, cities such as Bukhoro (Bukhara) and Samarqand (Samarkand) emerged as centers of government and high culture. By the fifth century BC, the Bactrian, Soghdian, and Tokharian states dominated the region.
As East Asian countries began to develop its silk trade with the West, Persian cities took advantage of this commerce by becoming centers of trade. Using an extensive network of cities and rural settlements in the province of Transoxiana, and further east in what is today China’s Xinjiang Uygur Autonomous Region, the Sogdian intermediaries became the wealthiest of these Iranian merchants. As a result of this trade on what became known as the Silk Route, Bukhara and Samarkand eventually became extremely wealthy cities, and at times Transoxiana (Mawarannahr) was one of the most influential and powerful Persian provinces of antiquity.
In the 8th century, Transoxiana, the territory between the Amudarya and Syrdarya rivers, was conquered by the Arabs (Qutayba ibn Muslim) becoming a focal point soon after of the Islamic Golden Age. Among the achievements of scholars during this period were the development of trigonometry into its modern form (simplifying its practical application to calculate the phases of the moon), advances in optics, in astronomy, as well as in poetry, philosophy, art, calligraphy, and many others, which set the foundation for the Muslim Renaissance.
In the 9th and 10th centuries, Transoxiana was included into the Samanid State. Later, Transoxiana saw the incursion of the Turkic-ruled Karakhanids, as well as the Seljuks (Sultan Sanjar) and Kara-Khitans.
The Mongol conquest under Genghis Khan during the 13th century would bring about a change to the region. The Mongol invasion of Central Asia led to the displacement of some of the Iranian-speaking people of the region, their culture and heritage being superseded by that of the Mongolian–Turkic peoples who came thereafter. The invasions of Bukhara, Samarkand, Urgench and others resulted in mass murders and unprecedented destruction, such as portions of Khwarezmia being completely razed.