Global dunyoda ilm-fan va ta‘limdagi innovatsion
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ABDULLAJONOV SAYFULLOH
MUZAFFAROVICH
The student of 21/2 group, Stars International
University
abdullajonovsayfulla7@gmail.com
SAIDOVA MARKHABO KHABIBULLO QIZI
PhD, Docent, Stars International University
saidovamarhabo1991@gmail.com
SMALL BUSINESS IN
UZBEKISTAN: ORDER
OF INTRODUCTION
Abstract:
This article refers to the theoretical and practical aspects of business, its de-
velopment paths and strategy selection in the Uzbek economy, the statistical analyses
through methods of observation, collection of statistical data, classification, and tabula-
tion; and also diagrams and graphs frequently used in presenting data, dynamic changes,
comparison and prognosis of indicators of the development of business, including the
ways of improvement of the private sector in the formation of the economy as well as the
perspectives of development of business in Uzbekistan.
Key words:
business, competitiveness, productivity, innovation, micro firm, privatization,
family business, individual business, small business, statistical analyses of data, analytical
method, prognosis.
INTRODUCTION
The operation of a market economy is inseparably going to connect with busi-
ness which is considered to be one of the main sectors of the fast-growing econ-
omy and improving living standards in the national economy. Through the devel-
opment of these sectors, new jobs are created, productivity and competitiveness
are increased, poverty is alleviated and societal goals are achieved, in particular
by helping specific population groups to help themselves.
Business plays a crucial role in the formation and development of the Uzbek
economy. Since its independence the Republic of Uzbekistan, which is a doubly
landlocked country conducted enormous economic changes. Economic reform
has gradually increased throughout many areas, such as business. As stressed
by The First President of the Republic of Uzbekistan I.A. Karimov “Measures to
improve the business environment and create more favorable conditions for the
development of small business and private entrepreneurship deserve all kind of
support” [1].
https://doi.org/10.47689/STARS.university-pp16-22
STARS International University
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There are many different opinions to open the meaning of business. One of
them is a business is one which is independently owned and operated and not
dominant in its field of operation. With inexperienced management and a lack of
financial stability, small businesses suffer a mortality rate significantly higher than
that of larger, more established businesses primarily because of limited resources.
The intricacy of entrepreneurship makes it impossible to apprehend the totality
of entrepreneurship with an idea; for that reason, I propose the following defini-
tion of entrepreneurship: “The entrepreneur has an owner or acting function, a risk
and uncertainty bearing function, as well as, an innovation function”.
The combination of innovation, owning or operating an establishment, and bear-
ing uncertainty provides an effective working definition of entrepreneurship that
is useful for economic development purposes. This definition captures all of the
components other scholars identify and is multi-faceted, to capture these multiple
components of entrepreneurship.
There are some issues that cause most business failures, they are poor opera-
tions management, lack of experience, poor financial management, over-investing
in fixed assets, poor credit practices, failure to plan, inappropriate location, lack of
inventory control, and others.
As it’s said above, business plays a distinctive and irreplaceable role in the de-
velopment of the economy in Uzbekistan. The development of these sectors is
provided with creating of new jobs, increasing productivity and competitiveness,
alleviating poverty, and achieving societal goals. Uzbek economy operates two
types of enterprises, which are large and small enterprises, as well as the activities
depend on personal and family labor. The condition to run a business in Uzbeki-
stan has been implemented through the Law of the Republic of Uzbekistan “On
family business”, “On the introduction of amendments and additions” in the Law
of the Republic of Uzbekistan, “On guarantees of free entrepreneurial activity “and
they are designed to further facilitate the development of business.
According to the Decree of the President of the Republic of Uzbekistan the law
“On measures to further stimulation of business development” of April 9, 1998, the
subjects of Business divided into three parts:
1)
Individual business is a physical person without legal entity, juridical/juristic
person.;
2)
Micro firm- employing 20 people or fewer people in production, 10 people or
fewer in services, and 5 people or fewer in trade (retail and wholesale);
3)
Small business. A firm was considered “small” for the purposes of tax collec-
tion if the number of employees did not exceed an officially established limit of 200
people (to July 1, 2014, was 100 people) in heavy industry and construction, 25 in
Research and science, 20 in other areas of production, 10 in trade and services.
The official definition of small businesses has changed a few times. The law “On
measures to further stimulation of business development” currently regulates all
activity of the business sector.
LITERATURE REVIEW
Presently, business development has been an issue among local and foreign re-
searchers, scientists and specialists, amid Uzbek researchers I.A. Karimov, Y. Abdul-
Global dunyoda ilm-fan va ta‘limdagi innovatsion
rivojlanishning zamonaviy trendlari 15 dekabr, 2022 yil.
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layev, Abdullaеv A., Yugai A., Sоtvоldiеv A., Sirojiddinov I., Botirova A., Abirova G.,
Yuldashеv Sh.A., A. Vakhobov, U. Burkhanov, N. Jumaev, F. Mullajonov, M. Solihov,
B. Bеrdiyorov, F. Dodiyev, N. Holmuratov, Sh. Normuminov, S.K. Salayev, N.B. Fay-
zullaev
,
B.U. Tadjiyev, E. Egamberdiyev, H. Hujaqulov, S. Sattorov, N. Abdunaza-
rova, N. O‘rmanova, N. Xusanov, O. Iminov; among foreign scientists Richard Can-
tillon, Jean Baptiste Say, Alfred Marshall, Y. Schumpeter, R. Kirzner, Lapusta M.G,
Gоrfinkеl V.Ya., Pоlyak G.B, Shvandar V.A., Nikоlas N., Gоrfinkеl V.Ya., Shvan-
dar V.A., Hirshleifer, Fama, Miller, Jensen, Meckling, Breley, Meyers and others have
researched these issues.
RESEARCH METHODOLOGY
In readiness of this article, there have been extensively used methods of ob-
servation, collection of statistical data, classification, and tabulation; and also dia-
grams and graphs frequently used in presenting data, dynamic changes, compar-
ison, and prognosis of indicators of the development of business.
ANALYSIS AND RESULTS
A prediction is a statement about a risk. It is often based upon experience or
knowledge and it can be useful to assist in making decisions about possible devel-
opments. Howard H. Stevenson writes that prediction in business is at least two
things: important and hard.
In statistics, prediction is a part of inference. One particular approach to such
inference is known as predictive inference, but the prediction can be undertaken
within any of several approaches to statistical inference. Indeed, one description
of statistics is that it provides means of transferring knowledge about a sample of
the population to the whole population, and to other related populations, which is
not necessarily the same as prediction over time. When information is transferred
across time, often to specific points in time, the process is known as forecasting.
Statistical techniques used for prediction include regression analysis and time
series analysis, and their various sub-categories such as ordinary least squares, lo-
gistic regression, and autoregression models. When these and/or a related, gener-
alized set of regression or machine learning methods are deployed in commercial
usage, the field is known as predictive analytics.
In many applications, such as time series analysis, it is possible to estimate the
models that generate the observations. If models can be expressed as transfer
functions or in terms of state-space parameters then smoothed, filtered, and pre-
dicted data estimates can be calculated.
To use an analytical method for prediction, data are collected on the variable
that is to be predicted. In a functional form, often linear the parameters of the
function are estimated from the data that is, are chosen so as to optimize in some
way the fit of the function, thus parameterized, to the data. For the prediction
step, explanatory variable values that are deemed relevant to future values of the
dependent variable are input to the parameterized function to generate predic-
tions for the dependent variable.
In order to use the analytical method, we need the right linear equation. Here
is its mathematical formula:
STARS International University
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Ȳ
t
=a
0
+a
1
t
In this, t-periods; a
0
and a
1
a
0
n + a
1
∑t = ∑y,
a
0
∑t – a
1
∑t
2
= ∑yt
Here, y-real degree of lines; and n-the number of degrees.
a
0
=ȳ-a
1
t
and
a
0
=
1
,
after that
;
If ∑t=0,
then the equation above can be in that manner:
a
0
n = ∑y,
a
1
∑t
2
= ∑yt
To measure tendency of business we decided to use analytical method, which is
one of the main methods to analyze economic changes in dynamic lines in statis-
tics.
Analytical methods
welcome early applied demonstrations of new analytical
methods.
This method
should be demonstrated that methods and technology are
sufficiently fit for purpose in the future.
The following five years, the share of business increased slightly from 53,0 per
cent in 2020 to 56,8 per cent in 2021. As can be seen, every five year the growth
rate has raised three or four per cent and the share is expected to go up mod-
estly. Between 2020 and 2050, it is also projected to raise, but more steadily and
it is predicted to reach more than three quarters in 2050 and then it will soar
gradually.
CONCLUSION AND RECOMMENDATIONS
Business more flexible and can adapt quickly to changes in demand, the situ-
ation on the global and regional markets, timely respond to their challenges, be-
cause it’s compact in form, has a mobility and speed in decision-making and it’s
receptive to innovation. Creating and developing business do not require large
expenditures and capital investments, which allows faster and easier to carry out
modernization, technical and technological equipment, develop new products,
constantly updating its range and provide competitiveness. The higher stability of
this sector compared with large enterprises to the challenges and consequences
of the global financial and economic crisis. Business is not only a source of income,
but also opportunity to disclosure the creative and intellectual abilities of peo-
ple. This scope allows everyone to show their individual talents and capabilities,
thereby forming a new layer of people – enthusiastic, enterprising, and prone to
self-employment who can achieve the goal.
The most important document accepted by the Central Bank of the Republic of
Uzbekistan jointly with the Association of Banks of Uzbekistan, commercial banks
and international financial institutions is the development of foreign funds and
banks, proposals for the creation of the Guarantee Fund. It provides for business
the need for the part uncovered collateral for loans of commercial banks issued
for the purchase of new equipment.
Global dunyoda ilm-fan va ta‘limdagi innovatsion
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As you know, one of the basic principles of lending in the allocation of loans by
commercial banks is that of a secured loan. The main problem is lack of business
Republic of collateral in financing of investment projects. The problem of lack of
security for loans by businesses exists not only in countries with economies in
transition but also in developed countries such as the U.S., Japan, and EU coun-
tries. In these countries, the issue is solved just through the mechanism to guaran-
tee the repayment of loans – the guarantee fund.
The creation of the Guarantee Fund for the Development of entrepreneurship
in Uzbekistan will increase access to thousands of business representatives to
bank loans who want to organize production and services on the basis of new,
advanced technologies. Undoubtedly business play an important role in shaping
the structure of the economy, meet rapidly changing market demands. Business
represents a sphere of labor application and a source of income generation for a
significant percentage of the country’s population. Moreover, it is the most flex-
ible part of national labor market, covering a lion’s share of predominantly low-
skilled manpower, those with insufficient practical experience and those pre-
ferring flexible working hours. Very often, it is the only economic sector, where
many socially vulnerable strata of population, such as women, young people,
uneducated and unskilled persons, can find a job.
Principles of incentives to ensure the development of small business and private
entrepreneurship are provision of tax incentives, the use of a simplified tax sys-
tem, preferential loans, reducing the frequency and timing of tax and accounting
in government tax and statistical authorities, ways to reduce the frequency of tax
and other inspections.
The higher stability of this sector compared with large enterprises to the chal-
lenges and consequences of the global financial and economic crisis. Business is
not only a source of income, but also opportunity to disclosure the creative and
intellectual abilities of people. This scope allows everyone to show their individual
talents and capabilities, thereby forming a new layer of people – enthusiastic, en-
terprising, and prone to self-employment who can achieve the goal.
As stressed by the President, “We should be aware that what has been achieved
so far is just the beginning of the long path that the country has chosen: to be-
come a modern, developed, democratic country; to ensure a decent quality of life
for the people and for future generations; and to achieve a strong reputation in
the international community”. [5]
Following the introduction of the President’s initiative, the country has adopted
27 laws and dozens of normative acts to implement constitutional and regulato-
ry reforms. These reforms aim to: further develop and enforce the constitutional
principle of separation of powers, enhance the role of the Oliy Majlis (Parliament)
within the governance system, and strengthen the parliamentary role and authori-
ty in shaping and implementing both domestic and foreign policies. Parliamentary
powers have thus been enhanced, while the Government’s accountability to the
Parliament and local authorities’ accountability to the Councils of the Peoples’
Deputies have been strengthened. Critically, Uzbekistan has introduced an import-
ant institutional mechanism that allows the party that receives the largest number
of Deputy seats in the legislative chamber to promote its candidate to the post of
Prime Minister; strengthen judiciary control to ensure that civil procedural rights
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are enforced during the stages of inquest and investigation. The number of civil
courts has been increased to improve the quality and speed of case processing.
Strengthen accountability of the Government and public agencies for decisions
taken under the Law “On the Openness of the Government and Public Agencies”,
further improving institutional and regulatory frameworks of civil self-governance
institutions and enhancing their roles in providing legal protection to citizens, par-
ticularly youth, women and vulnerable populations.
Opportunities for various strata of the population in taking advantage of the
benefits of economic growth also depend directly on infrastructure conditions. In-
frastructure services are not only the major consumer benefits but also are means
for the increase of labor productivity and improvement of market access. Both
functions of infrastructure – support of economic growth and expansion of its
facilities-has great importance for overcoming poverty, accumulating human cap-
ital, and increasing the welfare of the country.
Despite all these achievements, according to some sources, serious problems
and misbalances, attributes of which can be found practically in all sectors and
segments of given sector of the economy, are maintained and being aggravated
in social and economic infrastructure of the country.
Taking into account national peculiarities and spiritual values of the republic, en-
trepreneurship has a special social significance. Social efficiency reflects the degree
of achievement of social dimensions of entrepreneurship. In this case brings to the
fore the question of how data with limited resources to best meet the needs of staff
entrepreneurial structures (micro level) and all members of society (macro level).
Recommendations will be in the further development of business in Uzbekistan:
– Reduction of government intervention and regulatory authorities in financial
and economic activities of businesses;
– Creation of maximum favorable conditions, privileges and preferences on tax
and other payments for business, improvement and standardization of the re-
porting system and the mechanism of delivery of reports in the financial, tax and
statistical authorities;
– Broad involvement and direction for the development of business of foreign
investment, especially concessional loans from international financial institutions
and private equity;
– Further development of information management system and advice to busi-
ness, as well as in matters of training, retraining and skills development;
– Expand opportunities for small businesses bank loans, raw materials.
However, the Law of the Republic of Uzbekistan “On family business”: allowed
to carry out activities in family business of residential and non-residential prem-
ises owned by the participants in family business ownership or other legal basis,
sales of products family business can be carried out at the place of production;
determined that after the payment of family business members of taxes and oth-
er obligatory payments remaining under their jurisdiction shall be exempt from
income tax; found that a family business in the manner prescribed by law shall be
exempted from the single tax on revenue received from the sale of products of
national crafts and applied arts own making.
According to the idea of M. Kalecki who is Polish economist, the most important
prerequisite for becoming an entrepreneur is the ownership of capital. In terms
Global dunyoda ilm-fan va ta‘limdagi innovatsion
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of prerequisite for business he was totally right. Nevertheless, it is also important
entrepreneurial skills.
Recent advances in the theory of ownership and contracting provide a more
specific analytical justification for business. The trade-off facing a government
seeking to arrange for the provision of a particular service is between quality and
efficiency. The private sector can use its better management skills and capacity
for innovation to more actively pursue opportunities to reduce costs, but service
quality may be compromised in the process. However, private provision may be
workable if the government can write a fully specified, enforceable contract with
the private sector. It needs for entrepreneurs to be able to enforce contracts,
and reviews the types of reform of contract enforcement which have proven to
be successful. For instance, tax registration, labor registration, administrative
registration, bank deposit, notarization, health benefits, notice in newspaper,
Company seal, court registration, statistical papers and etc.
Needless to say, special initiatives to reduce burdens and support regulatory
compliance of business should be balanced against other concerns. Business have
been put forward and originally realized in industrially developed countries, but
soon was picked up also in developing countries, which have experienced urgent
need for expansion and modernization of infrastructure. The most important fea-
tures are the ability of small businesses to accelerate the development of invest-
ment and high turnover of working capital. Another characteristic of this sector
is an active innovation and accelerate the development of various sectors of the
economy in all sectors of the Uzbek economy.
The inherent flexibility of small businesses and high adaptability to market condi-
tions variability contribute to the stabilization of macro-economic processes in the
country. Analysis showed that in Uzbekistan, the sector characterized by a certain
yield, high labor intensity, the complexity of the introduction of new technologies,
limited own resources, and increased risk of competition. In our view, it is appropri-
ate to establish a definite system which provides for sanctions for clear violations
or improper fulfillment of the law. A special role is played in business control over
the implementation of legislation and economic reforms should be based on full
legal space. In this case, absolutely equal footing before the courts and arbitration
authorities should be all. Uzbekistan has developed industry and regional priority
programs and enterprise development are successfully implemented.
Reference:
1.
Small business in Uzbekistan. Statistical Bulletin. Tashkent 2020. 16 p.
2.
Annual Statistical Report of Uzbekistan. Tashkent.2021.
3.
The Law of the Republic of Uzbekistan “On measures to further stimulation of
business development” from May 25, 2020.
The year 2021 observed the continuation of active work on providing the reli-
able protection to private property, small business and private entrepreneurship,
the removal of barriers to their rapid development. The Ministry of Economy
of the Republic of Uzbekistan has published a report on the results of the so-
cio-economic development of the country in 2021 and the most important priori-
ties of the economic program for 2022 January 15, 2022.
