Publication Details
Abstract
Conventional macroeconomic policies in developing economies frequently operate under a “space-blind” paradigm, inadvertently exacerbating territorial inequalities by overlooking the spatial dynamics of capital allocation. This study investigates the structural mechanisms through which financial-credit concentration and intergovernmental fiscal flows influence asymmetric regional development, proposing an integrated fiscal-monetary framework tailored for emerging markets. Utilizing a comprehensive regional panel dataset across 14 administrative regions of Uzbekistan (2015-2025) as a representative transition economy, we employ a Spatial Durbin Model (SDM) with geographical and economic weight matrices to capture direct, indirect, and spatial spillover effects. The empirical results reveal a statistically significant “backwash effect”, wherein the concentration of credit resources and financial infrastructure in central economic hubs extracts capital from peripheral regions, thereby deepening spatial divergence. Furthermore, the findings demonstrate that standalone fiscal transfers exhibit low elasticity in driving long-term regional convergence unless structurally coupled with targeted regional credit instruments. Based on these econometric insights, we propose a novel Integrated Fiscal-Monetary Framework that synchronizes differentiated monetary transmission channels, place-based credit allocation incentives, and performance-based fiscal equalization. This architecture offers policymakers a quantitative roadmap to mitigate regional asymmetry while fostering sustainable macroeconomic stability.