“Иқтисодиёт ва инновацион технологиялар” илмий электрон журнали. № 4, июль-август, 2017 йил
1
№ 4, 2017
IMPACT OF GLOBALISATION ON ECONOMIC GROWTH AND
INVESTMENT ATTRACTIVENESS OF REGIONS
Khaydarova Mastura Irkinovna,
Tutor of Tashkent State University of Economics
E-mail:
Copyright 2016 by
author.
All rights reserved. Readers may make verbatim copies
of this document for non-commercial purposes by any means, provided that this
copyright notice appears on all such copies.
Abstract:
The article focuses on the impact of globalisation strategies on
classification of national and regional resources defining socio-economic capacity of
territories and discloses its essential elements. It provides analysis of existing
conditions for maximizing usage of regional economic capacity, i.e. use of investment
flow methods for production process, hiring labour resources, and their effective
direction in expanded reproduction of the economy.
Аннотация:
В статье основное внимание уделяется влиянию стратегий
глобализации на классификацию национальных и региональных ресурсов,
определяющих
социально-экономический
потенциал
территорий,
и
раскрывается ее основные элементы. Он обеспечивает анализ существующих
условий для максимального использования регионального экономического
потенциала, то есть использования методов инвестиционного потока для
производственного процесса, найма трудовых ресурсов и их эффективного
направления в расширенном воспроизводстве экономики.
Аннотация:
Мақолада глобаллашув стратегияларининг ҳудудлар
ижтимоий-иқтисодий салоҳиятини белгилайдиган миллий ва минтақавий
ресурсларнинг таснифига таъсири ва унинг асосий элементлари баён этилган.
Минтақавий иқтисодий салоҳиятни максимал даражада ишлатиш, яъни
ишлаб
чиқариш
жараёнида
инвестициялар
оқимининг
усулларидан
фойдаланиш, меҳнат ресурсларини ишга тушириш ва иқтисодиётни
кенгайтирилишини такомиллаштиришда уларнинг самарали йўналиши учун
мавжуд шарт-шароитларни таҳлил қилади.
Key Words:
Globalization process, economic growth and investment
attractiveness, socio-economic capacity of regions
Introduction
Over the last three decades, accelerating globalization process has resulted in
complete distortion of conventional classic development strategies. While countries
with small population complaint on increased volatility of their production industries
and loosing economic self-sufficiency, countries with larger population are stuck in
dilemmas of rising economic growth and uneven distribution of national incomes.
Recent studies on economic growth from prospective of globalization and
increasing competition reveal new factors which can improve socio-economic
“Иқтисодиёт ва инновацион технологиялар” илмий электрон журнали. № 4, июль-август, 2017 йил
2
№ 4, 2017
conditions of countries. Inprovision of economic development of the country, special
importance has to be given to such factors as the role of regions and complex
measures implemented in localities, conditions created for development of
entrepreneurship and institutional systems are essential for competitiveness. The
annual increase in the GRP contributes to increase of wages, employment, profits of
firms and provides the increase in budget revenues. Income growth in turn leads to
increase in demand for goods and services. In their research, the economists methods
econometric analyses, the direct dependence of economic development from the
wealth created in the regions.
Exceeding of the figures of national income above the level of population
growth contributes to the growth of income per capita. On the one hand, the
conditions created for the development of small business and private
entrepreneurship, running economic policy based on the principle of fairness, as well
as timely and correct application of the regional investment serves for the growth in
new jobs and ensuring socio-economic development.
So, the ultimate goal of economic policy of the state through provision of socio-
economic development of regions is in economic development of the country and
improving the welfare of its population. Due to the fact that regional economic
resources are limited, the most efficient method of increasing production is to raise
additional capital resources based on resource-saving and high-tech solutions.
Therefore, in conditions of globalization process, the problem of conducting a deep
analysis of causal dependencies for the improvement of the regional investment
climate and further increase its attractiveness is an urgent issue.
Literature review
Among scholars focused their research on economic capacity of the country, its
nature and specifics of their implementation, it is possible to point emphasize on A. I.
Abalkina, V. D. Anchishkin, V. D. Andrianov, A. A. Erunova, etc.. Additionally,
scientists V. D.Avdenko, G. A. Bayanduryan, V. Bogomolov, V. I. Shevchenko, V.
M. Yakovlev and others provided the conception of economic capacity as a distinct
scientific-methodical and theoretical-practical ways of their effective use.
Among the scientists conducted studies to assess the economic potential of the
country and calculation of the efficiency of regional economic resources use can be
highlighted A. G. Aganbegyan, E. G. Anemic, A. G. Granberg, E. A. Isaev, V. P.
Nesterov,E. S., Hoverman and others.
Scientists V. S., Bilchik, D. J. Darmilov, D. A. Barmin, Tn.Berkaliev, Blekha
Y., W. Goetz, L. Kruszwica, F. J. Fabozzi, and others described their current views
on the assessment of the economic capacity of territories based on existing resources
in the region, as well as the impact of globalization, economic-institutional and
analytical environment while employing regional economic capacity.
As it is known, in economic textbooks the concept of "economic potential" is
not given as a fundamental category and not considered as a factor of the
development of the economy and provision of balanced economy.
The term "potential" was first time used in the last century for comprehensive
assessment of production capacity. The concept of "potential production capacity"
“Иқтисодиёт ва инновацион технологиялар” илмий электрон журнали. № 4, июль-август, 2017 йил
3
№ 4, 2017
was used by V. I. Weitz and K. G. Vobliem as the ability of the country's production
of wealth to meet the needs of the population.
Among Russian scientists the concept of "economic capacity" was first used by
S. G. Strumilin to refer to the work created by an aggregate production capacity and
by all working population of the society.
In scientific research dedicated to the explanation of the category "economic
capacity" general provisions are explained in the following way:
- it is used relatively to the national economy, society, territories, regions,
industries and enterprises;
- treated as possibilities of existing economic resources for the production of
consumer goods;
- stressing on the relationship between quantitative and qualitative properties of
economic resources and economic systems, as well as their ability to meet the social,
collective and personal needs, that is, "... the inventory sources for the
implementation of specific goals and which may be brought in case of need"
(Shukov, 2002), the relationship between the external and internal climate to realize
the potential of these resources.
In our view, as an economic category, the term "economic capacity" reflects the
status and opportunities of the economic system. The importance is not only in
accounting of the production of goods and services, but also in paying attention to
their quality, competitiveness of enterprises and the effective operation of the
economic system in the future. According to V. N. Shukov "economic capacity" acts
as a measure of economic relations, and considered as an indicator for assessment of
the state of the national economy, regions, industries and enterprises (Shukov, 2002).
Over the last decade based on the conditions and situation of territorial
development scientists carried out a study on "the spatial potential of territories."
According to V. P. Efimov "... if development of territories will be based on the
allocation of resources at the spatial and inter-sectoral integration will result in both
economic and social efficiency (Efimov, 2006).
However, the researcher offers modern methods of provision for territorial
development such as the cluster method, stimulating the economy through economic
diversification; strengthening intra-regional links and development of the internal
market through introduction of new transport infrastructures, appropriate distribution
of social labor through effective use of internal capacities and local resources;
methods of support of investment projects through the effective use of investment
instruments.
Another great scholar, A.A.Zinovieva brings objective and subjective factors of
the polar development of territories. The first group of factors is: natural geographic
variation, availability of economic resources, technological capabilities of regions
and production specialization, economic autonomy of the territory. In the second
group of factors included such factors as: institutional, infrastructural and
organizational-functional determinants; customs and traditions of the region; the
existing major corporate system.
As can be seen from Fig.1 the regional market infrastructures are actively
participating in phases of reproduction and create the circular rotation mechanism of
“Иқтисодиёт ва инновацион технологиялар” илмий электрон журнали. № 4, июль-август, 2017 йил
4
№ 4, 2017
economic relations between them. As a result it reveals that: production infrastructure
in the production phase; ecological infrastructure in all phases; entrepreneurial
infrastructure in the phase of distribution and exchange; social infrastructure in
consumption phase.
In this regard, realization of economic reproduction requires maximum use of
economic capacity of the region. Which includes analysis of the current state of
investment flows and their methods for the effective direction, for involvement of
existing manufacturing and human resources. As it has been aforementioned above,
the economic development of each region depends on their capital and potential
labour resources and the extent of their use.
Figure1:Socio-economic system of regions
Research methodology
Under the conventional view, the economic capacity of the region and its
capabilities are determined by the production of essential goods through the effective
use of available resources.( Ackerman 2010)
It should be noted that, under the term “economic capacity of the region” usually
meant all existing elements of the system. That is, productive assets, labor resources,
while the capacity leads to economic (market) opportunities of an administrative-
economic region. However, according to neoclassical theory, the region is treated as a
part serving for provision of stationary balance, while the development of economic
capacity provides production resources (land, labor, capital, entrepreneurial skills).
(Shlychkov 2007)
It should be noted that the conduct of policy in administrative and economic
management of regions, the economic development is viewed as an outcome,
therefore future capacity of the region is determined by the efficiency of its use.
Given the presence of internal competencies, the government produces socio-
economic and investment programs aimed at ensuring integrated development of
territories and provision of the welfare of local inhabitants. In our view, it is
endogenous factors that are important in ensuring economic development of regions,
but one should not forget about economic location which should also be taken into
account.
Market infrastructure of regions
Phases of Re-
production
Infrastructural
circulation
Production
Distribution
Exchange
Consumption
Production
infrastructure
Ecological
infrastructure
Entrepreneurial
infrastructure
Social
infrastructure
“Иқтисодиёт ва инновацион технологиялар” илмий электрон журнали. № 4, июль-август, 2017 йил
5
№ 4, 2017
The article defines a complex method for determination of investment
attractiveness across regions or industries. For assessment of indicators for territorial
and sectoral investment attractiveness of the region (incomes generated from
investment funds directed to business objects) were used methods taking into account
risk of investments.
The main div
Today, the government provides a package of institutional reforms aimed at the
development of small and medium entrepreneurship in region and raising it to a new
level. Only in 2016 in order to support small business, there were accepted
regulatory legal acts on implementation of facilities and benefits to opening and
running a business (Narodnoe Slovo, 2016). As a result, in comparison with 2015,
GDP grew by 7.8%, industry by 7.2%, agriculture by 6.4%, retail trade by 14.2%
(according to the results of 9 months of 2016). Due to active investment policy aimed
at structural transformation, modernization and deepening of diversification
processes, it was managed to increase the development of investments by 9.4% and
construction works by 15% (Khalk Suzi, 2016).
While calculating GDP by the expenditures method, investments are considered
as a primary variable and its changes have a direct and positive correlation with GDP.
This can be interpreted as investments in equity …. and at the same time we should
not forget that investments relate to intangible assets, intellectual property, including
financial instrument (Gazibekov 2002).
Such high rates of savings and investment are insufficient to ensure economic
development. To ensure economic development it is necessary to solve broad
problems such as: accounting trends in the movement of foreign direct investment,
develop investment in human capital, as well as scope of knowledge associated with
advanced technology and equipment, and effective use of advanced achievements of
science and technology.
According to the data published on socio-economic development Uzbekistan for
2015, total amount of attracted investments amounted to 15.8 billion U.S. dollars,
from which 3.3 billion USD, or 21% was foreign investment, and 73% of which were
direct investments, ..... 67,1% of investments were aimed at creating new production
capacities. That allowed in 2015 to complete construction and to put into operation
158 large industrial facilities for a total amount of 7.4 billion dollars (Karimov,
2016).
As can be seen from figure (Fig.1) which reflects socio-economic region, investments
are particularly important in establishing the expanded reproduction in the economy,
increasing competitiveness of enterprises and firms in the context of globalization,
and ensuring delivery of sufficient goods and services to consumers.
If domestic savings will exceed volume of investments, we can expect that in
this country exports will be higher than imports. Otherwise, your export will be less
than imports. The country consuming much of its capacities, will try to increase its
exports at the expense of attracting from outside, foreign investment. In this case, the
investments will look like a credit to economy (Gazibekov, 2002).
Analysis of factors affecting investment activity, investment capacity and
investment attractiveness.
“Иқтисодиёт ва инновацион технологиялар” илмий электрон журнали. № 4, июль-август, 2017 йил
6
№ 4, 2017
One of the important challenges in the regulation of investment activity is
optimally balanced allotment of enterprises with foreign capital across regions.
Important conditions for proving investment attractiveness are such factors as: natural
conditions of regions, already established business environment, socio-economic and
administrative-managerial principles, the willingness of the population to run
business entities, the perception of risk and qualification of labor resources, the
existence of different institutional systems and their development.
While tackling tasks on creating a positive investment climate, we should mind
that the globalization of the economy has to be considered as the main factor for the
expansion of opportunities for investment resources, as well as competition between
investors. If we want to increase the volume of foreign investments to the optimal
level of the investment industry and maintaining comparable conditions to other
competitors, as well as providing of a “comfortable” environment and discarding of
excess risks for activation of domestic investment. Otherwise, there will be a sharp
reduction in the volume of incoming investment and giving investment resources of
local investors.
Following factors can be included in the framework of the regional investment
climate:
Investment capacity (potential) - openness to the flow of investment and
availability of economic resources in the region;
Investment risk - the probability of obtaining gains or losses that depend on
created conditions for investors.Investment risk has contradicting effect on
investment attractiveness.
The degree of efficiency and global competitiveness of regions can be appraised
throughfactors of
investment capacity
,
investment risk
and i
nvestment activeness,
which can be analysed by division into following groups (see Table 1.)
Table 1: Socio-economic capacity of regions and set of factors influencing to them
№
Group
Set of indicators
I.
Factors influencing level of investment capacity of regions
1.
Natural-geographic
capacity
-
raw-material resources: mineral resources; land and water; fuel-
energy; various types of ores and metals.
2.
Labour capacity
- demographic capacity of regions: population density; labour force;
number of labour forces and its quality; average monthly salary paid
for labour; number of unemployed; age of employed and
unemployed; skills and qualifications of unemployed.
3.
Production capacity
- Production capacity: gross regional product (GRP); state of fixed
assets; productivity of factors of production; specialization of the
region on sectors and branches; volume of imports and exports
4.
Innovative capacity
- scientific-technical capacity of the region: scientific technical
achievements; those who have scientific degree; volume of scientific-
technical projects; those engaged in research; research and
development centres and their branches in the regions
5.
Institutional capacity
-
national and local legislation: consumer rights; principles of
corporate governance; healthy competitive environment; condition
for doing business and provision of information; accounting and
“Иқтисодиёт ва инновацион технологиялар” илмий электрон журнали. № 4, июль-август, 2017 йил
7
№ 4, 2017
statistical reports; financial markets and development of institutions.
6.
Infrastructure
capacity
-
Infrastructure provision: the state of available water and electric
energy in the region; availability of airport, automobile roads and
railways; development of information-communication technologies
7.
Financial capacity
-
A main criterion’s of financial potential: loans given by
commercial banks for business activities; amount of money deposited
in banks by population both in national and foreign currency; amount
of deposits of legal entities in banks(both in national and foreign
currency)
8.
Consumption
capacity
-
Demand of the population of the region for consumption: salary;
all other types of income (rent, dividend, interest, profit, pension,
subsidy and etc.)
9.
Touristic capacity
-
Touristic destinations: historical places, artefacts, eco and agro-
system, development of socio-economic objects for service provision
II. Factor assessing level of investment risks
1.
Legal risks
-
Main directions of evaluation of legal risks in the regions: legal
conditions in financing the sectors and branches included in
investment program; state of development of legal base; protection of
investments and legal basis of preferences created for investors and
its scale; special activities directed to exploitation of production
resources
2.
Political risks
-
Points that are considered in evaluation of political risks:
attitudes of people towards the activities of political parties and
political processes; participation of people in elections for parliament
and presidency; reputation of local government; activities of the
legislative and executive branches of the state; democratic activities
carried out by different groups and political parties; activities of
different religious, national and ethnic groups; state of international
relations; activities carried out for preservation of government.
3.
Social risks
-
Indicators that are representing social life and social risks:
living/life style of the population; condition of social infrastructure;
demographic condition – number and age of population, number of
families and their structure, migration and stratification, ratio
between strata’s of very rich and poor population; income level and
its sources; purchasing power; structure and level of expenditures and
needs; residential buildings; transport and communication; education
and culture, unemployment and employee turnover;
4.
Economic risks
-
Factors effecting to economic pre-conditions created for the
inflow of the investments: changes in local and international markets
and scale of the market; production of goods and services and volume
of their sale, level of prices (market demand); share of the regions in
the total exports and imports of the republic; economic policy of the
state and efforts directed to ensure the economic development of the
regions;
5.
Ecologic risks
- Main directions needed in evaluation of investment climate:
pollution of environment; radiationless environment; water, bio
resources; condition of soil and land resources and technogen
changes
6.
Criminal risks
-
Main directions of evaluation of criminal condition in regions:
level of crime committed in the region; crimes committed under
“Иқтисодиёт ва инновацион технологиялар” илмий электрон журнали. № 4, июль-август, 2017 йил
8
№ 4, 2017
someone’s request; level of corruption.
III. Investment activeness
1.
Factors
reflecting
investment
activeness
-
Starting new capacities
-
Economic potential of the enterprise
-
Centralization of the capital
-
Implementation intensity of investment projects
-
Energy efficiency of products
-
Decreasing the implementation time between phases of
investment projects
Source: Author’s compilation
One should note that various types of investment requires various investment
climates. The investor and the host country for investment never have the same goals.
Country attracting investments will try to bring minimum amount of resources will
try comprehensively implement socio-economic tasks, while investor to maximize
revenue in the long-term. Therefore, the investment market is the processes
associated with the action of the laws of supply and demand (of the solidarity of
interests) and provision of balance of interests.
Based on the above factors, in the long-term investment climate has to be stable,
and at the same time, the investment climate has to be flexible to changes in the
demand for resources involved in the phase of re-production.
At modern socio economic conditions, investment flow depends on investment
climate and demand for investment mechanism by promoting the development of
innovation sphere and innovative entrepreneurship.
Conclusion
In the long term prospective, supporting of socio-economic development for
regions traditionally based on the agricultural sector it is advisable to pay attention to
the following areas:
- Increasing volumes of industrial production, strengthening of structural
transformation and increasing the share of industrial production in GDP;
- In order to intensify the processing production to develop cooperation between
the agricultural sector and industry;
- Allotment of production facilities based on the types of locally available
natural resources and their volumes;
- based on the capabilities and capacity of regions to ensure high level of
specialization, enhance and ensure the dissemination of this experience to other
regions of Uzbekistan;
- stabilization of the condition of labor market, especially in rural areas, in order
to eliminate distortions on the labor market, creation of highly labor-intensive
production systems;
- in order to ensure efficient use of production resources in rural areas to provide
development of production and market infrastructure;
- acceleration of technical and technological re-equipment and modernization of
local production and agriculture;
- development of various spheres of production and services in order to prevent
reduction in national figures of gross regional product.
“Иқтисодиёт ва инновацион технологиялар” илмий электрон журнали. № 4, июль-август, 2017 йил
9
№ 4, 2017
Based on the weights of the exposure groups of investment risks, according to
the Table 1, it is appropriate to use the method of peer assessment for determination
of investment attractiveness of territories in the region. While calculating investment
risks by industry it is appropriate to exclude political, social, infrastructural,
legislative and criminal factors. Because the influence of these factors on the
estimated factor is not essential. Additionally, the consideration of the same factors in
sectoral and territorial scale considered to be ineffective.
Problems and tasks for future researchers.
The analyses provided in this article are based on a limited number of materials.
There has not been created econometric model for identification of the regression
relationship between investment attractiveness and other influencing factors.
Therefore, there has not been provided a forecast of the condition of investment
attractiveness among Uzbekistan’s regions, that is changes in it.
Also one of the important directions left for further research are calculation and
deep analysis of the profitability on industry investment. That requires long-term
statistics on investment in fixed capital and GDP generated by sectors and regions. In
addition, along with the definition of investment attractiveness, one of the demanding
issues is the implementation of theoretical-methodological studies on the distinction
between economic terms such as investment environment, investment climate and
investment condition.
References:
1.
Ackerman E.N., Mikhalchuk A.A., Trifanov A.Yu. (2010).Typology of
regions as an instrument of co-organization of regional development //
Tomsk State
University
Journal
,.
№
331,
pp.126-131.URL:
http://journals.tsu.ru/vestnik/&journal_page=archive&id=844&article_id=12867
2.
Ackerman E.N., Mikhalchuk A.A., Trifanov A.Yu. (2010).
Factor approach
in building the region's economic space
//
Tomsk State University Journal,
Economics,
№
3
(11),
pp.84-92.URL:
http://journals.tsu.ru/economy/&journal_page=archive&id=733&article_id=26619
3.
Ghozibekov D.G. (2002)
Financing problems of investments
. Doctoral
dissertation. T.,. P-15
4.
Ghozibekov D.G.
Financing problems of investments. Doctoral dissertation.
T., 2002. P-33
5.
Efimov V.P. (2006)
Spatial potential - the basis of development of the region
as an integrated socio-economic complex
. Synopsis of the thesis of the doctor of
economic sciences Moscow, URL:
http://rudocs.exdat.com/docs/index-177000.html
6.
Karimov I.A.
Our main goal is – deepening the structural changes and
reforms in economy and facilitate small business and private entrepreneurship.
Tashkent, “Uzbekistan”, 2006
7.
Keynes J.M. The
General Theory of Employment, Interest and Money
.
Moscow. 1978.
8.
Lapin EV
The economic potential of the enterprise
. - Sumy: "University
Book", 2002. Pp.-310.
“Иқтисодиёт ва инновацион технологиялар” илмий электрон журнали. № 4, июль-август, 2017 йил
10
№ 4, 2017
9.
Mustafakulov Sh.I. (2016) Regional capacity: Comparative analysis of
theoretical and methodological approaches
.Journal of Economy and Innovative
technologies.
№
5.URL:
http://www.iqtisodiyot.uz/sites/default/files/maqolalar/37_Sh_Mustafaqulov.pdf
10.
Uzbekistan in numbers
. (2006) State Statistics Committe of the Republic of
Uzbekistan, Tashkent.
11.
Decree of the Prezident of the Republic of Uzbekistan (2016, October 5).
“On additional measures to ensure the rapid development of business activity, all-
round protection of private property and the qualitative improvement of the business
climate”.
Xalq so’zi
, № 197 (6632).
12.
Results of the socio-economic development of the Republic of Uzbekistan in
the first 9 months of 2016. (2016 October 21).
Xalq so’zi
, № 208 (6643).
13.
Shlychkov V.V. (2007). Economic mechanisms of management of resource
potential //
Journal of economics, law and sociology
. № 2.
14.
Schukov V.N. (2002).
The economic potential of Russian regions and the
efficiency of its use
: Students manual, Ivanovo. URL:
15.
Keynes, J. M. (1937)
, "
The General Theory of Employment",
, 51: 209–223.
