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FOUNDATIONS FOR ENSURING THE ECONOMIC POTENTIAL AND GROWTH
OF THE REGION
Aminov Fazlitdin
Professor, Karshi State Technical University, Uzbekistan
Abstract:
This article presents the scientific and theoretical definitions given by economists
to the concepts of “economic growth” and “economic potential” and their comparative
analysis, as well as the importance of regional potential in ensuring sustainable economic
development and economic growth. It highlights the main elements of economics growth and
the categorization of the economic potential and the possibility of its use. The directions of
strategic management are explained.
Keywords:
economic growth, economic potential, economic development, potential
elements..
Introduction.
When carrying out economic reforms in our country, much attention is paid to
ensuring the economic growth of the country through the effective use of the existing
potential in the regions. In the priorities for the development and liberalization of the
economy of the President of the Republic of Uzbekistan dated February 7, 2017, the priority
areas for economic development and liberalization are the further strengthening of
macroeconomic stability and the maintenance of high rates of economic growth, as well as
the comprehensive and proportional socio-economic development of regions, districts and
cities, their areas of integrated and effective use of the natural, mineral, industrial,
agricultural, tourism and labor potential of each region in order to effectively use the existing
potential, accelerate direct socio-economic development, to improve the standard of living
and incomes of the population [1].
The main economic problem of any country is to ensure stable economic growth and its high
rates. Sustainable economic growth is about ensuring that the economy grows at a high rate
for a long time, and high rates of economic growth are achieved as a result of a prudent
macroeconomic policy, economic liberalization, modernization and diversification of
production, as well as the acceleration and deepening of structural reforms aimed at technical
rearmament.
In order to introduce a unified system for assessing the integrated and proportional socio-
economic development of the regions of our country, the efficiency of the use of natural and
raw materials, economic and investment potential and other comparative advantages, the
Decree of the President of the Republic of Uzbekistan, dated 01.05. rating systems for the
socio-economic development of regions” a decision was made [2] to introduce a rating
system, the implementation of which will ensure high rates of economic growth using the
existing potential in the regions. Based on the foregoing, the relevance of this work is
considered high.
Literature review.
The problems of economic growth now occupy a central place in
economic discussions, in the dialogues of various politicians, members of the government,
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representatives of different nationalities. Because the growth of real production allows, to one
degree or another, to solve the problem, typical for any economic system, of satisfying
unlimited needs in conditions of limited resources.
One of the early concepts of economic development, associated with the name of A. Smith
and T. Malthus, was based on the assumption that labor, capital and population are the
primary factors of its growth or slowdown. But they, like many supporters of classical
political economy, did not take into account the importance of such an important factor as the
development of human knowledge, the development of science and the application of its
achievements to improve the organization of technology and production. [3].
Another prominent classical scholar, David Ricardo, argued that economic growth could be
controlled through technological improvements in machinery and specialization in trade, but
also assumed a fairly steady state.
Further concepts of economic growth focus on various combinations of the four determinants
of development: labor, capital, resources and technology. In particular, of particular interest
for theories of economic growth is W. Rostow's stage theory, according to which sustainable
economic growth after a certain period of time leads to significant qualitative changes in the
country's economic structure, and the economy naturally passes "from one stage to another",
or from one state to another [4].
Effective demand is a key factor in the Keynesian model, and it is the expansion of aggregate
effective demand that should contribute to economic growth. In practice, Keynes focuses on
supply factors, which is characteristic of the classical approach, and not on demand factors.
According to Keynes, the multiplier effect of investment is important in the study of
economic growth. The richer the country, the greater the share of the growing national
income is accumulated and directed to investment.
J. A. Schumpeter made a major contribution to growth theory with his work The Theory of
Economic Development, published in 1934. It was Schumpeter who introduced the concept
of "innovation" into economics and considered the nature of the entrepreneur in a completely
new way from the point of view of economic growth. Theoretically, an entrepreneur, an
innovative entrepreneur, a creative person is involved as a driving force for development. [5].
The modern concept of economic growth was introduced into scientific circulation by the
American economist Simon Kuznets. According to him, economic growth is economic
development in which the long-term growth rate of production is higher than the population
growth rate [6].
The main factors of economic growth, according to P. Samuelson and V. Nordhaus, are
capital, technology, natural and human resources. The above scientists understand economic
growth as “growth in the potential GDP or output of the country”, which occurs when the
limits of production possibilities expand [7].
C. R. McConnell and S. L. Brew in their classic works also emphasize the fact that economic
growth is determined by the following factors:
a) the quantity and quality of natural resources;
b) the quantity and quality of labor resources;
c) capital resources;
d) technology [8].
In order to reveal these concepts, a unique approach is used by studying scientific and
theoretical studies and the opinions of economists related to economic growth and economic
potential. The author made a conclusion about the economic growth of the region and its
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economic potential, and also expressed his proposals on the elements of the potential and
their effective use.
J.A. Schumpeter made a major contribution to growth theory with his work The Theory of
Economic Development, published in 1934. It was Schumpeter who introduced the concept
of "innovation" into economics and considered the nature of the entrepreneur in a completely
new way from the point of view of economic growth.
Research methodology.
When preparing a scientific article, methods such as scientific
abstraction, induction and deduction, system analysis of socio-economic phenomena,
comparative analysis are widely used.
Analysis and results.
Since economic growth is studied from different perspectives, it can be
divided into intensive and extensive types. Extensive economic growth occurs due to the
additional involvement of such factors of production as natural resources, labor and capital,
and only their quantitative increase. Their quality and technical level will remain unchanged.
Intensive economic growth is ensured by improving the scientific and technical base, the
effective use of all factors of production and increasing labor productivity. The intensive
method is expressed in the productivity of each unit of resources involved in the production,
ultimately in increasing the quantity of the product, in improving the quality of the product
[9].
The variety of theories and driving forces in them is explained by the complexity of the task
of determining a single common whole that describes the goal, source, driving force and
controlled factor in the development of the economic systems of the region. However, a close
examination of the goals, growth factors, categories and driving forces, you can see that they
are all integrated into the concept of "competence" of a single economic system, of which
each of them is a part.
Its potential can be taken as the basis of the regional socio-economic system. Ability
(potential) - (lat. potentia - strength), can be used to perform any task, to achieve a specific
goal, the available resources, capabilities, tools, reserves; the possibilities of a person, society,
state in a certain area [10].
The term “competence” means that the subject has hidden, not yet fully manifested
capabilities that have not manifested themselves in the field of his activity due to objective or
subjective conditions [11]. In economic theory, potential is defined as a set of available tools
and opportunities in any area, but at the same time, the term "competent" means "capable of
implementation", its presence and use is a probable factor [12].
In the economic literature, there are disagreements about what is meant by the potential of the
socio-economic system, including the regional economy. For example, in the Oxford
Dictionary, economic potential is defined as the level of power and capabilities that ensure
competitiveness [13], and in another source, economic potential is defined as “the totality of
the ability of the national economy to carry out capital construction, transport goods and
provide services to the population over a certain period of time.” Even in a number of
scientific publications there is no consensus of authors about the economic potential. In
particular, A. Yu. Chalenko characterized the economic potential as a set of available
resources, as well as the result of production and economic relations of economic entities [14].
Another source says that “the value of the economic potential shows the development of
productive forces, the competitiveness of the country, the level of capitalization of
enterprises” [15].
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According to F.M. Rusinov, potential in a broad sense means means, reserves, resources that
exist and can be used to achieve a specific goal [19]. In this concept, economic potential is
identified with the accumulated result of previous labor.
In our opinion, it is impossible to narrow down the content of the economic potential in this
way, because past labor without living activity, the living labor of people is only a reserve, it
can only be conditionally called potential. Some economists identify economic potential with
national wealth [17]. But national wealth is a broader concept than economic potential. The
economic potential ensures the accumulation of material wealth created by labor, but does not
create natural resources, but uses them to create wealth and, thus, is part of the national
wealth. For practice, other ways of classifying the potential, reflected in the works of
economists, are also important. For example, a number of authors propose to consider the
potential in blocks, separating natural and production resources, population, organization and
management according to structural elements [18]. At the same time, the geopolitical
potential is highlighted, reflecting the position of the territory and the region in interregional,
interstate and world relations and communication systems.
It is interesting to classify the potential taking into account the types of socio-economic
activities. As such, it is viewed from three perspectives.
The first
aspect is territorial. It includes labor potential in terms of the size and structure of
the population, as well as the geopolitical position of the region.
The second
aspect is production. Usually it is industry, agriculture, production, infrastructure
and innovation.
The third
aspect is the socio-spiritual, intellectual potential of the region [19].
Conclusions and recommendations.
In a number of definitions of economic potential, only
the economic sphere is considered, that is, resources are put forward in the first place, and the
main goal of the economy - meeting the needs of people is not reflected. Therefore,
"economic potential should be understood as the ability of the economy to produce goods and
services in a certain volume and quality and deliver them to consumers" [20]. However, this
definition also excludes benefits generated by economic activities that are not goods or
services, such as benefits produced by the family. Taking this into account, we can define
economic potential as the ability of an economy to produce and deliver goods to consumers
in a certain quantity and quality over a given period of time [21].
An important feature of the approaches considered is that they study only the economic
potential of the socio-economic system, which is the economic use of resources. However,
the subjects of the socio-economic system are united by both economic and non-economic
interests. In this case, the economic potential is only a certain part of the potential of the
socio-economic system involved in the economic process. The overall potential of the region
can be divided into social and economic components.
Economic potential is a set of opportunities for the organization of economic activity and
marginal indicators of economic activity of the territory within the existing or possible
conditions and restrictions of a financial, organizational, technical, regional and sectoral
nature.
Social potential is the ability to organize life activities within the criteria and limitations of
the existing or potential standard of living of a political, spiritual, philosophical-ethical,
cultural-ethnic nature, and the standard of living in this context is an indicator of quality.
The above theoretical analyses allow us to define the potential of the region as the ability to
ensure long-term activities based on the use of available resources, taking into account the
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interests of the population, the state and the environment. Based on this, the potential of the
region can be considered as a system consisting of such structural elements as natural
potential, production potential, scientific and technical potential, managerial potential, labor
potential. The potential of the region is the means, reserves and resources that are available
and can be used to achieve the goal.
Based on the above, the economic potential of the region, in our opinion, can be expressed as
a combination of the following components from the point of view of managing available
opportunities: resource potential (base), functional potential (use), reserve potential (growth),
their sum gives strategic management (development) of the potential of the region. Regional
potential is a complex system with its own internal structure and is classified according to a
number of characteristics.
It is possible to define the potential of the region as follows: the totality of economic relations
between the subjects of the region, if possible, the assessment, use and development of
resources and processes.
From the point of view of managing the possibilities of using the potential of the region, each
of the categories has its own economic and non-economic components.
The basic resource potential includes natural-resource, natural-climatic, economic-
geographical, demographic potential.
The functional potential includes labor, production, financial, infrastructural, entrepreneurial,
foreign economic, regulatory and methodological potential.
Reserve potential includes scientific, technical, intellectual potential, social, investment,
innovation, digital potential, organizational and managerial potential, informal economy.
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