International Journal of Management and Economics Fundamental
48
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VOLUME
Vol.05 Issue 03 2025
PAGE NO.
48-55
10.37547/ijmef/Volume05Issue03-08
Assessment of the effectiveness of investment projects
and improvement of state investment strategy
Kenjayev Ikrom Ergoshboevich
PhD, associate professor. University of Business and Science, Uzbekistan
Received:
20 January 2025;
Accepted:
19 February 2025;
Published:
17 March 2025
Abstract:
The article highlights qualitative indicators for evaluating the effectiveness of building a strategy in the
territory development system and the main indicators for evaluating the effectiveness of real investment projects.
The effectiveness of participation in the project is determined by the objectives of checking the investment project
being implemented and the interest of all its participants in it. To date, the grouping of indicators for assessing
the economic efficiency of investments and evaluating the effectiveness of investment projects is carried out
according to the main indicators of the investment project and calculation methods.
Keywords:
Investment project, investment strategy, efficiency assessment, quality indicators, control system, real
investments.
Introduction:
Numerous economic studies, the
implementation of joint business projects and the
Uzbek mentality have proved the need to attract
foreign investment and achieve European living
standards for a progressive future of Uzbekistan.
Foreign capital can have a significant impact on the
introduction of technical innovations and advanced
technologies in the field of production, the provision of
financial and non-financial services, and the quality of
management in the real and financial sectors of the
economy. Of course, foreign investment as a source of
capital is more attractive than credit resources, which
increase the total national debt. Their limited size
requires drawing attention to the most important
issues and trends that need to be taken into account
when improving the investment climate and optimizing
the business environment.
Literature analysis
According to the research results of I. Melnikov, N.
Ivanov, A.Verzhbitsky, the main goal of implementing a
management system is to achieve an established and
coordinated relationship of information flows to
improve management efficiency, which consists in
increasing efficiency as a result of coordinating
individual subsystems into a single system. An
important indicator for assessing the quality of control
application is the assessment of the qualitative
characteristics and indicators of management
information provided by the control system for making
rational management decisions. These indicators are
based on the level of achievement of the main
objectives of the enterprise. K. G. Skripnik's position on
efficiency assessment is also noteworthy, which,
according to the author, requires an analysis of three
factors:
- cash flow associated with the system's activities;
- capital expenditures for the implementation of the
system;
- the impact of the system on the monetary value of the
risks of the enterprise as a whole (the weighted average
value of the enterprise's capital) [1].
The indicators for assessing the economic efficiency of
investments were studied in the studies of
D.Chervanov, V.Sarkov, A. Peresad, Y. Nesvetaev,
A.Margolin, A. Bistrakov, P.Vilinsky, V.Shevchuk,
P.Rogozhin, V.Zakharchenko, G.Birman, S. Schmidt,
V.Dekterenko, I.Blank, I.Lipsits, V.Kossov, E. Chetirkin.
METHODOLOGY
Our scientific research is a method of system-analytical
and research work on investment analysis,
optimization of investment decisions. Indicators and
methods of its assessment and interpretation are used
to determine the effectiveness of alternative
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investment projects when a choice is needed. The main
information and analytical tools for evaluating projects
are: financial indicators of the project; indicators of
economic efficiency; sensitivity analysis; distortion
analysis; probability assessment. Their use is effective
in the context of the discounting method.
RESULTS AND DISCUSSION
Taking into account the achievements of our
predecessors, we suggest using such qualitative
indicators to assess the effectiveness of strategy
building. Qualitative indicators play an important role
in assessing the feasibility and effectiveness of strategy
development.
Qualitative factors largely determine the internal
qualities and properties of the studied objects. To
ensure a high-quality assessment, qualification
requirements for management personnel should be
developed and approved, not only in general terms, but
also taking into account the specifics of the company's
activities.
The definition of qualitative indicators for evaluating
the effectiveness of the use of control should be based
on the tasks, functions and goals that should ensure the
implementation of the control system at the
enterprise.
Thus, a properly functioning management system must
ensure that the following requirements are met [2]:
- efficiency or the ability to ensure relatively low
maintenance costs for business processes of the
enterprise;
- this means that the company can quickly adapt to
internal and external changes in the external economic
environment.;
- flexibility in understanding the tasks, needs and
sources of economic results obtained by management
personnel, etc.
At the same time, taking into account the above, it
should be noted that when implementing a system for
monitoring the activities of enterprises, it becomes
possible to directly bring the enterprise management
system to a new qualitative level by integrating and
coordinating the activities of information subsystems
of the management system aimed at achieving certain
operational and strategic goals.
Thus, to assess the effectiveness of the implementation
of the control system, it is necessary to analyze all
aspects of the impact of the control system on the cost
of the enterprise. In this case, the cash flow is checked
during the operation of the control system. The
components of this flow are the costs of developing
and implementing a control system, the costs of its
operation and support, as well as the company's
income from the activities of the control system.
The definition of qualitative indicators for evaluating
the effectiveness of the use of control should be based
on the tasks, functions and goals that should ensure the
implementation of the control system at the
enterprise.
Therefore, a properly functioning management system
must ensure that the following requirements are met
[3]:
- efficiency or the ability to ensure relatively low
maintenance costs for business processes of the
enterprise;
- this means that the company can quickly adapt to
internal and external changes in the external economic
environment.;
- flexibility in understanding the tasks, needs and
sources of economic results obtained by management
personnel, etc.
At the same time, taking into account the above, it
should be noted that when implementing a system for
monitoring the activities of enterprises, it becomes
possible to directly bring the enterprise management
system to a new qualitative level by integrating and
coordinating the activities of information subsystems
of the management system aimed at achieving certain
operational and strategic goals.
To assess the effectiveness of the implementation of
the control system, it is necessary to analyze all aspects
of the impact of the control system on the cost of the
enterprise. During the operation of the control system,
the cash flow is checked. The components of this flow
are the costs of developing and implementing a control
system, the costs of its operation and support, as well
as the company's income from the activities of the
control system.
Therefore, a comprehensive assessment of the
expediency of control and the effectiveness of use, in
addition to qualitative indicators, involves the
calculation of quantitative indicators. Quantitative
indicators are indicators that express the quantitative
accuracy of phenomena, which mainly describe
measurements related to measuring a value. When
calculating quantitative indicators, the manager gets
the opportunity to evaluate them and develop optimal
management solutions.
The list of indicators for evaluating the effectiveness of
investment projects, which should be used to assess
the effectiveness of the implementation of the control
system, is the most relevant. In a real investment
management system, evaluating the effectiveness of
investment projects is one of the most important
stages[4]. How objective and comprehensive this
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
assessment is depends on the payback period of the
invested capital, the options for its alternative use, and
the additional inflow of industrial profits in the
subsequent period. This objectivity and complexity of
evaluating the effectiveness of investment projects is
largely determined by the use of modern methods of
its implementation.
An analysis of the development of business plans and
evaluation of the effectiveness of various projects has
shown that, despite the use of criteria generally
recognized in world practice, the calculation by
domestic specialists is often carried out using different
cash flow structures using different algorithms and is
limited to using traditional methods of bringing
deferred income to the current level (the discounting
method), as well as current future levels (the savings).
There is also no single view on the formulation of the
tasks to be solved and the rationale for choosing the
discount rate. The main performance indicators of the
investment project are shown in Table 1.
Table 1.
The main indicators of the investment project
Index name
Necessity
Net discounted income (NDI) Allows you to get the absolute value of the effect of project
implementation
Internal income level (IIL)
Indicates the upper limit of the allowable level of the discount rate, the
increase in which will make the project useless
Modified internal income
level (MIIL)
The modified internal rate of return MIIL includes the definition of an
internal rate of return, which equalizes the current estimate of
investment costs and the future value of cash flows for the project and
is calculated at a certain interest rate.
Income index (II)
Allows you to get the relative value of the effect from the
implementation of the project
Average rate of return
(ARR,%)
Shows the ratio between average annual returns and initial investments
Return period (RP)
Allows you to determine how long it takes to cover the initial
investment
Discounted return period
(DRP)
Allows you to determine how long it takes to cover the initial
investment, taking into account the time
Performance indicators are always related to a specific
topic:
social performance indicators for society as a whole;
commercial performance indicators -for a real or
abstract legal entity implementing a project at its own
expense;
performance indicators of the company's participation
in the project
–
for this company;
indicators of the effectiveness of project participants'
investments in company shares
–
for shareholders of
joint-stock companies;
performance indicators for high-level structures;
budget efficiency indicators correspond to budgets of
all levels.
Performance indicators related to the entire project
implementation period are called integral. It is
recommended to evaluate the following types of
effectiveness [5]:
the effectiveness of the project as a whole;
the effectiveness of participation in the project.
In general, the effectiveness of a project is understood
as “the effectiveness of a project carried out by a sole
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
participant at his own expense. Thus, performance
indicators are determined solely on the basis of cash
flows from investments and operating activities” [6].
The effectiveness of participation in a project is
determined in order to verify the investment project
being implemented and the interest of all its
participants in it. In Figure 1, we have systematized the
main indicators for evaluating the effectiveness of real
investment projects based on two calculations.
It contains:
the effectiveness of enterprises' participation in the
project (the effectiveness of the investment project for
participating enterprises);
efficiency of investing in company shares (efficiency for
shareholders of joint-stock companies participating in
the investment project);
the effectiveness of the participation of higher-level
structures in the project compared to enterprises
participating in the investment project;
budgetary effectiveness of an investment project (the
effectiveness of government participation in the
project in terms of expenditures and revenues of
budgets at all levels and the effectiveness of real
investment projects are assessed based on a
comparison of investment expenditures, on the one
hand, and the amounts and payback periods of
investment capital, on the other);
consideration of the project continues throughout its
life (estimated period);
the principle of positivity and maximum impact;
time factor accounting;
The assessment of the amount of investment costs
should cover all the resources used related to the
implementation of the project [7].
Figure 1. Grouping indicators for assessing the effectiveness of investment projects by
calculation methods.
Therefore, several styles and systems of indicators are
used to assess the effectiveness of investment projects.
Five main styles are widely used in the evaluation of
investment projects. In turn, these styles can be divided
into two groups [8]:
Styles based on the application of the concept of
discounting:
* The method of determining the net present value;
* The method of determining the return on investment;
* A method for determining the internal rate of return.
Styles that do not involve the use of the discounting
concept:
* Methodology for determining the payback period of
funds invested in investment projects;
* Methodology for determining the accounting return
on investment.
Systematic investment performance indicators help to
make calculations on the application of investment
projects of any type, regardless of their technical,
technological, financial, industry or regional specifics,
THE MAIN INDICATORS OF ASSESSING THE
EFFECTIVENESS OF REAL INVESTMENT PROJECTS
Discounted calculation
methods
Static method
Net current income
Profitability index
(coefficient)
Income index (coefficient)
Undocumented return period
Discounted return period
Internal income level
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based on the following basic principles of investment
project analysis.
The presented system allows you to quickly assess the
economic efficiency of investments in projects, which
leads to an increase in the efficiency of investment
management and the development of a certain
territory.
At the current stage of Uzbekistan's development, it is
very important to take into account all the
shortcomings and mistakes made over the past years
and determine a further strategy that will allow the
country to move forward towards improving the
investment climate. Studying the experience of
effective work carried out by other countries to
increase investment attractiveness is an important
element in the formation of a base of mechanisms and
tools in Uzbekistan that can be used by authorities at
the state and regional levels.
However, there are several key points to consider.
Firstly, the investment attractiveness of the country as
a whole largely depends on the investment
attractiveness of each region in its composition.
Secondly, the use of mechanisms and tools that have
had a certain impact on improving the investment
climate in other countries may not produce the
expected result in Uzbekistan. Thirdly, the business
reputation of the region, despite a certain abstraction,
plays an important role in attracting investments.
Fourth, among the totality of regions, the investor
makes capital investments that receive a lot of support
in them, which is not necessarily expressed in the form
of financial assistance.
Thus, the directions for improving the state investment
strategy are shown in Figure 2. We will look at the main
mechanisms and instruments of investment policy that
have proven their effectiveness and, under certain
conditions, can be applied in Uzbekistan.
Figure 2. Directions for improving state investment strategy.
Thus, the regulation of the investment business climate
in Poland is carried out using internal tools and
common tools for the entire EU. However, EU
regulations usually establish general principles for
conducting business, while national acts are more
specific. However, in addition to forming the basic
principles for improving the investment climate, the EU
generates financial resources aimed at supporting
investment projects that are a priority for this entity.
About a dozen funds can partially finance investment
projects in Poland. Along with financial support, there
is another form of government assistance, which is
carried out through the functioning of a system of
developed institutions, the purpose of which is to
ensure sustainable investment development at the
regional level. Consequently, institutions involved in
the development of the investment climate include
institutions with logistical support and qualified
personnel who support businesses at the beginning of
their production activities, as well as those who
accompany these activities.
Thus, the following interesting elements can be
extracted from the Polish experience:
- an integrated approach to improving the investment
climate;
Elimination of
bureaucratic barriers,
corruption
Directions for
improving state
investment strategy
Introduction of tax and
Customs benefits
Ensuring a clear legal
field of investment
Investment protection
Information support
Dotations, subsidies, subventions,
Budget Loans for the development of
priority areas, sectors
Development of
investment
infrastructure
Macroeconomic and
political stability
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- International cooperation;
- use of international sources of financing;
- a well-developed institutional investment attraction
network;
- the use of various tools, including their advertising.
The main institution involved in attracting investments
to the Czech Republic is the agency Czechinvest. The
main aspects of the activity of this institution are the
support of existing and potential enterprises, as well as
foreign investors.
Among the complex of measures to attract investments
to the Czech Republic, the formation of clusters should
be noted.
The Czech Republic's experience may be of interest to
Uzbekistan:
- the Agency's investment attraction activities;
- Using the cluster approach;
- cooperation between business and scientific
institutions.
The main unit engaged in attracting investments in
Turkey, including the Investinturkey Agency at the
regional level. In 2012, Turkey approved a new system
of measures aimed at increasing the volume of
investment attraction. This system consists of four
main investment schemes, each of which is
characterized by different sets of investment
advantages. The experience of Turkey may be of
interest to Uzbekistan:
- a well-developed investment incentive system;
- the use of a differentiated approach to the
development of territories;
- focus on innovative development.
Canada's investment status is regulated by both
national legislation and documents regulating the
activities of international organizations to which this
country belongs (WTO, FTAA, NAFTA, etc.).
The main division engaged in attracting investments at
the international level is the investin Canada agency.
Investment development support programs for Canada
are formed at both the national and regional
(provincial) levels. The national level is characterized by
the fact that the financial support of government
agencies and agencies consists of the provision of
grants, subsidies, guarantees of borrowing obligations,
etc. All national support programs are divided into the
groups shown in Figure 3.
Figure 3. Groups that are part of the investment strategy support program
Each of these groups includes business support
programs, the implementation of which provides for
attracting significant amounts of investment at the
national level and, in particular, at the level of
individual regions.
Please note how the Canadian experience may be of
interest to Uzbekistan:
a systematic approach to attracting investments;
a well-developed sector of institutional support;
a variety of investment programs.
Effective work experience The focus on increasing
investment attractiveness carried out by other
countries is an important element in the formation of a
base of mechanisms and tools in Uzbekistan that can be
used by authorities at the regional level. However,
there are several key points to consider. Firstly, the
investment attractiveness of a particular region largely
depends on the investment attractiveness of the
country. Secondly, the tools for improving the
investment climate, which have proven themselves
well in other countries, may not have the expected
effect in Uzbekistan. Thirdly, the business reputation of
the region, despite a certain abstraction, plays an
important role in attracting investments. Fourth,
among the totality of regions, the investor makes
capital investments that receive a lot of support in
them, which is not necessarily expressed in the form of
financial assistance. It is necessary to take into account
the capabilities of a particular region in terms of using
Grants, contributions and financial aid
Securities
investments
Programs
Loans and cash
advances
Wage subsidy
Reimbursement of taxes and loans
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available resources and tools to develop an investment
climate.
CONCLUSIONS
In our opinion, the experience of state-owned
companies engaged in investor support is useful for use
in
Uzbekistan
(for
example:
investinpoland,
investinturkey, etc.). There is a National Investment
Fund in the Republic of Uzbekistan that performs these
functions. Further deepening of its cooperation with
local governments will contribute to improving the
effectiveness of this div.
Effective interaction between investors and authorities
can be, among other things, in the form of a public-
private partnership that facilitates the implementation
of investment projects.
The region's image also plays an important role in
shaping its investment attractiveness. Therefore,
various agencies are engaged in advertising the country
as a whole and individual regions in particular. In this
regard, the Polish experience of creating a positive
image of the region will be useful to Uzbekistan. It
should be noted that the analyzed examples show that,
despite the different approaches to the formation and
implementation of investment policy, the main
institutional components, such as an effective property
rights protection system and an effective justice
system, are important for improving the investment
climate.
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