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DETERMINING INDICATORS OF INVESTMENT AND INNOVATION ACTIVITY OF
NATIONAL ECONOMIC ENTITIES
Kurbanov Salimjon Numonjonovich
Independent researcher at the Namangan Institute of Engineering and Construction
Abdurakhimova Saida Akhmadjanovna
Professor of TIFT University, Doctor of Economics
Abstract:
This article analyzes key indicators used to determine the level of investment and
innovation activity of national economic entities. Evaluation criteria are developed based on
international rankings, diagnostic approaches, and indicators tailored to national economic
conditions. The article also puts forward practical suggestions for improving these indicators and
their impact on economic growth.
Keywords:
Investment, innovation, indicators, economic diagnostics, economic entity, rankings,
competitiveness, evaluation system.
Introduction
Efficient regulation of investment and innovation activity requires a preliminary assessment of
its state and the conditions for its implementation within the national economy. Researchers use
indicators that reflect the general characteristics of the economy and appeal to various investors
— such as the state of the economy by sectors and types of activity, attraction of direct
investments, and efficiency. Thus, the main task in forming and improving government policy on
regulating investment and innovation is to determine the investment-innovation condition of the
national economy.
Creating conditions for implementing investment and innovation activity is crucial for a
favorable business environment in the national economic system. Choosing the right indicators is
essential for economic entities and government bodies to support and develop investment and
innovation processes and assess their effectiveness.
Indicators should be chosen so that their calculation and comparison not only reflect the
investment and innovation state of the economy but also help identify the most suitable sectors,
directions, and objects for policy intervention.
Economic literature pays significant attention to choosing indicators for evaluating investment
and innovation activity. Numerous studies focus on assessing the effectiveness of attracting
foreign investments. Commonly analyzed macroeconomic indicators include GDP (absolute or
per capita), its dynamics, inflation, central bank discount rate, exchange rate, average or
maximum tax rate, tax revenues and expenditures, and average wages.
Additionally, indicators such as consumption and production potential, living standards, market
size, and agricultural and industrial resource potential are considered. Indirect indicators include
the education level of the working-age population, number of schoolchildren, population size,
unemployment rate, and proportion of technically educated individuals. Innovation potential is
also reflected by the share of GDP spent on R&D.
Literature Review
In Uzbekistan, scholars such as S.S. G’ulomov, D.G‘. G‘ozibekov, T.M. Qoraliyev, B.T.
Bayxonov, U.A. Otajanov, and S.A. Abdurahimova have conducted research on investment and
innovation climate, potential, and policy. In global economics, factors determining investment
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and innovation reproduction efficiency across regions and sectors have been long studied,
analyzed, and classified.
Methodology
At the macro level, research has focused on developing aggregate indices to comprehensively
describe investment and innovation activity. These include globally recognized indices such as
the Doing Business Index by the World Bank, the Global Competitiveness Index (GCI) by the
World Economic Forum, and the Global Innovation Index (GII) by Cornell University, INSEAD,
and WIPO.
Each of these indices consists of numerous sub-indicators that collectively assess various factors
influencing investment and innovation activity. The Doing Business Index, for example, includes
11 major components, each with sub-indicators, focused on regulatory aspects such as starting a
business, getting electricity, registering property, and dealing with construction permits.
The GCI identifies competitiveness as the combination of institutions, policies, and factors
determining productivity, which defines prosperity levels. Its methodology is based on expert
surveys and statistical data and includes 12 sub-indices such as institutional quality,
infrastructure, macroeconomic stability, health and education, market efficiency, labor market
efficiency, financial market development, technological readiness, market size, business
sophistication, and innovation.
The GII measures innovation inputs (e.g., institutions, human capital, infrastructure, market
sophistication) and outputs (e.g., knowledge creation, technological impact, creative outputs),
forming a comprehensive framework for assessing innovation efficiency.
Results
The analysis of Doing Business indicators reveals the regulatory conditions for key
entrepreneurial activities such as acquiring permits, electricity connection, credit access, property
registration, and insolvency resolution. However, it does not consider political, security, or
corruption factors — focusing only on legal and regulatory frameworks.
The GCI methodology includes a classification based on development stages, adjusting the
weight of indicators accordingly:
Stage 1 (Factor-driven): Competitiveness relies on basic requirements such as institutions,
infrastructure, macroeconomic environment, and primary education.
Stage 2 (Efficiency-driven): Focus on higher education, market efficiency, and
technological readiness.
Stage 3 (Innovation-driven): Relies on business sophistication and innovation capacity.
Similarly, the PMI (Purchasing Managers' Index), compiled from monthly business surveys,
serves as a leading indicator for forecasting production volume, price levels, and industrial
employment.
The regulatory environment for doing business includes several key measurable aspects related
to entrepreneurial activity. These aspects cover areas such as starting a business, obtaining
construction permits, getting electricity, registering property, accessing credit, protecting
minority investors, paying taxes, international trade operations (exports and imports), enforcing
contracts, and resolving insolvency (Table 1).
Table 1: Regulatory Areas – Components of Doing Business Indicators
Area/Indicator
What it Measures
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Area/Indicator
What it Measures
Starting a Business
Number of procedures, time, cost, and minimum capital requirement.
Dealing
with
Construction Permits
Number of procedures, time, cost, and quality control mechanisms.
Getting Electricity
Procedures, time, cost, reliability of supply, and tariff transparency.
Registering Property
Procedures, time, and cost, quality of land administration.
Getting Credit
Legal rights index; credit information index; % of adults covered by
public and private registries.
Protecting
Minority
Investors
Related-party transactions and corporate governance protection:
transparency, director liability, shareholder litigation.
Paying Taxes
Number of tax payments, time, total tax rate, and compliance cost.
Trading Across Borders Documents, time, and cost for exports and imports.
Enforcing Contracts
Time, cost, and procedures for resolving commercial disputes.
Resolving Insolvency
Time, cost, and recovery rate.
Labor Market Regulation Flexibility in employment rules and job quality aspects.
It should be noted that this index does not consider macroeconomic policy, infrastructure quality,
workforce qualifications, exchange rate fluctuations, investor perceptions, security, or corruption
levels. Rather, it strictly reflects legal norms and regulatory procedures involved in setting up
and conducting business.
The Global Competitiveness Index (GCI) creators define competitiveness as the set of
institutions, policies, and factors that determine productivity levels — which in turn influence
economic prosperity. Higher productivity implies greater returns on investment, and national
competitiveness reflects the ability of institutions to sustain medium-term economic growth.
The GCI is based on data from surveys of top executives (about two-thirds of the data) and
objective statistics (about one-third). Its 113 indicators are grouped into 12 sub-indices, which
measure factors such as:
Quality of institutions
Infrastructure
Macroeconomic stability
Health and primary education
Higher education and training
Efficiency of goods and labor markets
Financial market development
Technological readiness
Market size
Business sophistication
Innovation capacity
Each sub-index contributes to understanding the strengths and weaknesses of a country's
economy, shaping a comprehensive profile of competitiveness.
Discussion
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Several macroeconomic indicators help investors and analysts assess a country’s investment
climate, including GDP, inflation, and employment rates. These indicators are crucial for market
analysis and investment decision-making. Additionally, economic and non-economic factors like
institutional quality, political stability, and structural reforms are important yet challenging to
quantify.
Investors often assess:
Demand and supply dynamics in goods markets.
Financial environment, credit accessibility, and tax burden.
Inflation and interest rates, affecting real investment values.
Sources and levels of public investment financing.
Current condition of fixed assets as an investment indicator.
Scholars also examine innovation-specific indicators, such as scientific and technical activity and
population savings convertible into investment.
Conclusion
In conclusion, a comprehensive approach is required to evaluate the investment and innovation
activity of national economic entities. Analysis shows that improving the current indicator
system can enhance economic efficiency. Indicators formed through diagnostic approaches,
international experience, and national specifics serve as essential tools for making strategic
decisions. Therefore, it is crucial to implement and use consistent assessment mechanisms in
practice.
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