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ACHIEVING ECONOMIC GROWTH ON THE BASIS OF THE DEVELOPMENT OF
INDUSTRIAL SECTORS OF THE REPUBLIC OF UZBEKISTAN
Kakhorova Anora Nusratovna
Tashkent State University of Economics, 2 st year doctoral
student of the Department of "Economic Theory"
Botirova Xulkar Olimdjanovna
Tashkent State University of Economics,
Assistant of the Department of “Economic Theory”
h.botirova@tsue.uz
Abstract:
The Gross Domestic Product (GDP) in Uzbekistan expanded 6.40 percent in the
second quarter of 2024 over the same quarter of the previous year. GDP Annual Growth Rate in
Uzbekistan is expected to be 6.20 percent by the end of this quarter, according to Trading
Economics global macro models and analysts expectations.In this article, the comparison of
various models related to macroeconomic balance and economic growth is studied on the basis
of various graphs, formulas and tables, and their comparisons are made. In addition, the specific
characteristics of the models and their application in what period and for what economic systems
are covered in detail. Economic growth refers to an increase in the size of a country's economy
over a period of time. The size of an economy is typically measured by the total production of
goods and services in the economy, which is called gross domestic product (GDP).
Key words:
economic growth, capital, labor, goods market (IS), money market (LM), balance of
payments (BP), interest rate, return on capital, technologies, capital accumulation, accumulation
level.
Introduction.
In the new stage of reforms in Uzbekistan, special attention is paid to the issues of “...ensuring
the well-being of the population through sustainable economic growth”, in this area “doubling
the size of the economy by 2030 and joining the ranks of “upper-middle-income countries”.
However, despite the fact that a number of positive results have been achieved in the structural
policy pursued in the republic over the past five years, the issue of ensuring sustainable growth
rates remains one of the most pressing problems due to the existence of varying degrees of
imbalances between certain sectors and areas of the economy. Therefore, the establishment of the
tasks of “bringing the volume of GDP to $160 billion by 2030 and per capita income to $4
thousand, and increasing the share of technological products produced in industry from 25
percent to 32 percent” has made the issue of effective implementation of rapid structural changes
in the economy one of the most pressing problems today. The statistical book contains
information on the types of industrial production and the main industries: electricity, fuel,
metallurgical,
chemical
and petrochemical industries, mechanical engineering and metalworking, forestry, wood
processing and pulp and paper industry, building materials industry, light and food industries.
The
statistical
book
contains
data
on industrial production, available production facilities and their use, as well
as on the number of people employed in the industry.
Literature review.
The post-soviet development of Uzbekistan can be divided into two time
frames: 1991-2016 and 2017 to the present day. The economy of Uzbekistan during the 25 years
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can be characterized as a planned, and state-managed distribution of resources and products,
followed by an economy focused on import substitution, hence with little competition in local
markets. The government determined foreign exchange and interest rates. The economy
developed due to heavy industry, great use of natural resources and physical capital, and
subsidizing of inefficient state-owned companies (Popov, V., Chowdhury, A., 2005). Thus,
Uzbekistan did not follow its comparative advantages in choosing its industries, so resources
were misallocated and limited labor mobility. GDP growth started only from 1996-2%, 1997-5%,
from 1998 to 2003 was about 4% (IMF, 2003). According to scholars L. Alcorta, N. McGregor,
B. Verspagen, and Adam Szirma (2021), industrialization has two critical determinates: internal
and external determinants. Local determinants consist of market size, consumption, investment,
endowments, and human capital. In contrast, external determinants consist of openness to trade
degree, capital account liberalization, depreciation of the national currency as the main currency
of foreign trade, etc. A group of scholars led by N. Haraguchi, B. Martorano, and M. Sanfilippo
(2019) found that successful industrialization correlates to the country's high organizational
stability, which can also be found in the characteristics of East Asian Newly industrialized
countries. Market lead and state facilitated approach (Lin, 2021) would enable a certain level of
industrialization, and a politically more powerful government would adopt more gradual reforms
(Wang, 2014) toward better industrial upgrading. According to this scientist, economic growth
means an increase in aggregate supply, or in other words, an increase in the volume of real and
potential GDP. Growth (in economics) is a repetition of the volume of goods and services
produced in a country in an increased amount compared to previous years (periods) Ensuring
economic growth is the main goal of any country's economic policy.Economic Growth is based
on the development of leading sectors of the economy. Economic growth is based on an
advanced production structure, high labor productivity, the production of competitive products
that are in high demand in the domestic and foreign markets, and the sale of products in
favorable markets. In other words, economic growth means a constant increase in the real
volume of product production and, at the same time, an improvement in technological, economic
and social characteristics in the development of society. In determining and calculating
Economic Growth, the gross domestic product (GDP), which is the most general indicator of a
country's economic development, serves as the basis and shows the positive change in the
volume of real GDP over a certain period of economic growth. Economic growth rates are
reflected in the growth rates of GDP. Economic Growth represents the general state of
development of the country's economy. Although the change in real GDP provides information
about the state and dynamics of the country's economy, it does not fully reflect economic growth.
For example, the growth rate of the country's population was 3%, and the growth rate of real
GDP was also 3%. In this case, although the GDP volume has increased, people's incomes
remain unchanged. Therefore, another indicator is used to fully reflect economic growth - the
change in real GDP produced per capita. There are also qualitative factors of economic growth,
which include the productivity of labor, capital and land (natural) resources. Economic growth
that occurs due to qualitative factors is called intensive growth. The limitation of production
factors limits the possibilities of extensive growth. Therefore, intensive growth is considered
effective in conditions of limited resources. The development of science and technology also
stimulates intensive economic growth. In recent years, a number of social indicators have been
considered as a condition and result of economic growth. In the growth sector - the dynamics of
employment; in the distribution sector - the dynamics of real incomes of the population and a
number of other indicators; in the exchange sector - the development of the material base of trade
and public catering, the dynamics of retail trade turnover; in the consumption sector - the growth
of consumption and non-production savings.
Methodology.
The article uses systematic analysis, statistical-economic and scientific
abstraction, comparative and structural analysis, and a number of other methods.
Results and analysis
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Industrial Indicators
Source:
https://www.portaldaindustria.com.br/statistics/industrial-indicators
In January 2025, real turnover, hours worked, and employment in the manufacturing industry
advanced, showing a recovery compared to the performance in December. On the other hand,
real wage mass and the real average earnings of industrial workers declined, reflecting the
difficulty for workers' earnings to maintain their purchasing power in the face of the level of
inflation that has been recorded in the economy.
Source:
https://www.portaldaindustria.com.br/statistics/industrial-indicators
For 74% of companies, the investments made were aimed at technological innovation. In
addition, 58% of companies invested seeking the improvement of human capital.
Table 1: Estimation technique of methodology
Methodology Model
Specification
Data Base
Nature of Observed
Impact
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Inter-industry
cross/panel
section
regression
(1) MVA growth is a
function of various
determinants
Various
factors,
including TO have
significant effects on
MVA performance
Various determinants,
including a positive
impact
of
trade
openness
to
industrialization, are
mainly obtained via
scale benefits from
comparatively
advantaged
sectors
due to low factory
price ratios
Industrial Policy, the trade openness index, average import tariff, exchange rates, inflation rate,
average wage, tax rate, FDI, and industrial policy are independent variables. At the same time,
the manufacturing value-added as a share of GDP is measured as dependable variables. The data
used in the study was mainly collected from 1994 to 2020 years. Expected years of schooling,
employment in industry, and gross fixed capital formations are considered as control variables.
To achieve the specified objectives of this work, the author carried out work to identify the key
determinants of industrialization in the case of Uzbekistan using quantitative and qualitative
approaches of methodology. Econometric simple and multiple linear regression is an effective
tool for the scientific justification of the correlation between multiple factors and
industrialization and other factors affecting industrialization.
Leading sectors of the industry are: cotton cleaning, machine building, textile, gas, precious
metals, electronics, instrument making, aviation, oil processing, car making,and agricultural
processing.
Other sectors, including chemical and oil and chemical, power, metallurgy, sector of construction
materials and light industries are developing fast.
Uzbekistan has powerful thermoelectric power stations, which generate almost 90 percent of
electric
power
in
the
country.
The metallurgical industry is comprised of companies that extract, treat and process raw, ferrous
and non-ferrous metals, This sector makes more than 10 percent out of the total of industrial
production. There are many predicted reserves of gold, silver, copper, uranium, lead, zinc,
tungsten, molybdenum, lithium, aluminum, and other rare metals and minerals in the country.
Given that, the share of the metallurgy is expected to further rise in the total amount of industrial
production. Products put out by the industry, especially those of non-ferrous and precious metals,
are considered to be a rare at the world market, and will serve a good reason to extend their
export
with
a
view
of
enriching
the
country's
currency
fund.
The non-ferrous metallurgy, with its main base in the Angren and Almalyk mining industrial area,
includes production of copper, refractory and heatproof metals, and gold, respectively. The
largest enterprise of the sector is the Almalyk Mining and Smelting Enterprise. Over the last
years, the share of the heavy industry within the total amount of industrial production has
increased. And accordingly, the share of the light and food industries has decreased. The given
tendency calls for creation of the new independent national economy.
During the first stages of economic reforms, the country chose to limit the consumer market by
redirecting all the efforts and funds onto structural changes in the economy, and grounding the
foundation for the modern export-oriented production, equipped with the latest technology.
The light and textile industry is also significant in creating and extending the industrial complex
of the country. More than third of the total number of industrial companies in Uzbekistan are
concentrated in the given sector, as well as make up the country's basic funds and number of
personnel engaged, huge share of the foreign trade balance, and currency revenues. Given the
specific features of the country with its large farming practice, the diverse light industry was put
in place incorporating production of the cotton-fiber, cotton and silk cloths, raw silk, ambary
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fiber, hosiery, upper and linen knitted wear, ready-made garments, footwear, and other. The
making of carpets, haberdashery, and china-faience ware is considered to be a part of the
country's light industry.
Summary
To conclude from the above, structural reform and development of the economy requires the
introduction of a modern and inclusive institutional system based on rapid identification and
elimination of existing problems and obstacles. Including:
- ensuring consistency between macroeconomic stability, economic growth goals and structural
reforms;
- introduction of effective systems and mechanisms based on modern forecasting models for
managing economic cycles caused by external and internal factors;
- the absence of a comprehensive system and coordinating state div, regulatory framework,
criteria and evaluation methodology for the development and implementation of measures aimed
at reducing poverty.
List of used literature
1. 1. Decree of the President of the Republic of Uzbekistan "On the development strategy of
New Uzbekistan for 2022-2026" of January 28, 2022, No. PF-60.
2. 2. President of the Republic of Uzbekistan Shavkat Mirziyoyev United Nations Tashkent 2021
– 280 B
3. Djumaev Z.A. Macroeconomics. Study guide. "Innovative development" publishing house,
2018. -164 pages. /
4. Dzhumaev Z.A. Macroeconomics. Instructional manual: "Innovative Development Publishing
House", 2018. -164 pages.2.
5.
https://www.portaldaindustria.com.br/statistics/industrial-indicators
6. stat.uz
