“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
VOLUME 2, ISSUE 3, 2024. MARCH
ResearchBib Impact Factor: 8.654/2023 ISSN 2992-8869
298
IMPROVING THE ATTRACTION OF FOREIGN DIRECT
INVESTMENT IN THE MANUFACTURING INDUSTRY
Nazarova Asal Nuriddin qizi
Master of Tashkent State University of Economics
Email id:
Abstract:
This article provides feedback on the role and importance of foreign
direct investments in the manufacturing industry of our country, and the work being
done to attract them. Evaluation of its capabilities and determination of development
prospects are also emphasized.
Keywords
: investment, FDI (foreign direct investment), investor, investment
project, investment attractiveness, infrastructure.
Introduction.
In the conditions of economic liberalization, modernization of
the national economy and ensuring its integration into the world economy depends
to a large extent on the correct and based investment policy. Development of
investment activity in our country in accordance with the conditions of the economic
environment, ensuring their activity in all aspects of the economic life of the society,
modernization of the national production process and ensuring stable economic
growth is one of the important factors. Therefore, one of the main sources of the
agenda of the reforms implemented by our government every year is the issue of
attracting investments to the national economy.
In addition, many reforms are currently being carried out in our republic in
order to increase investment attractiveness, create a favorable business environment,
and conduct an active investment policy. The main goal of this was the socio-
economic development of our country, increase of population welfare, reduction of
unemployment, increase of real income of the population. In this matter, President
Shavakat Miromonovich Mirziyoyev, in paragraph 3.4 of the decree on "Strategy of
Actions on the Five Priority Areas of Further Development of the Republic of
Uzbekistan", states that "Improving the investment environment, foreign, first of all,
the main areas such as active attraction of foreign direct investments" have been
selected and work is being actively carried out in these areas.
Literature review.
While writing this article, we had to turn to several
literatures, including national and foreign materials. In order to further reveal the
“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
VOLUME 2, ISSUE 3, 2024. MARCH
ResearchBib Impact Factor: 8.654/2023 ISSN 2992-8869
299
essence of the topic, we will first clarify the concept of foreign direct investment,
cited by scientists.
Foreign direct investment (FDI) is an investment from a party in one country
into a business or corporation in another country with the intention of establishing a
lasting interest. Lasting interest differentiates FDI from foreign portfolio
investments, where investors passively hold securities from a foreign country. A
foreign direct investment can be made by obtaining a lasting interest or by expanding
one’s business into a foreign country.
An investment into a foreign firm is considered an FDI if it establishes a lasting
interest. A lasting interest is established when an investor obtains at least 10% of the
voting power in a firm.
The key to foreign direct investment is the element of control. Control
represents the intent to actively manage and influence a foreign firm’s operations.
This is the major differentiating factor between FDI and a passive foreign portfolio
investment.
Analysis and results.
Factors such as political and macroeconomic stability in
the country, a strong guarantee of protection of the rights of foreign investors and a
wide system of benefits create the most favorable conditions for entrepreneurs. In
addition, the low price of raw materials, materials, energy resources and highly
qualified labor force, which are important for production, attracts foreign
investments to our country. In addition, it is no secret that an active policy aimed at
accelerating the attraction of foreign investments is being carried out in the Republic
of Uzbekistan. Ensuring the conversion of the national currency according to current
operations and the strategy of implementing reforms will form a favorable basis for
the further liberalization of the economy in Uzbekistan and the implementation of
projects with the participation of foreign capital.
Foreign direct investment has its own conveniences and advantages:
•
Economic growth
The creation of jobs is the most obvious advantage of FDI, one of the most
important reasons why a nation (especially a developing one) will look to attract
foreign direct investment. FDI boosts the manufacturing and services sector which
results in the creation of jobs and helps to reduce unemployment rates in the country.
Increased employment translates to higher incomes and equips the population with
more buying powers, boosting the overall economy of a country.
“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
VOLUME 2, ISSUE 3, 2024. MARCH
ResearchBib Impact Factor: 8.654/2023 ISSN 2992-8869
300
•
Human capital development
Human capital involved the knowledge and competence of a workforce. Skills
that employees gain through training and experience can boost the education and
human capital of a specific country. Through a ripple effect, it can train human
resources in other sectors and companies.
•
Technology
Targeted countries and businesses receive access to the latest financing tools,
technologies, and operational practices from all across the world. The introduction
of newer and enhanced technologies results in company’s distribution into the local
economy, resulting in enhanced efficiency and effectiveness of the industry.
•
Increase in exports
Many goods produced by FDI have global markets, not solely domestic
consumption. The creation of 100% export oriented units help to assist FDI investors
in boosting exports from other countries.
•
Exchange rate stability
The flow of FDI into a country translates into a continuous flow of foreign
exchange, helping a country’s Central Bank maintain a prosperous reserve of foreign
exchange which results in stable exchange rates.
•
Improved Capital Flow
Inflow of capital is particularly beneficial for countries with limited domestic
resources, as well as for nations with restricted opportunities to raise funds in global
capital markets.
•
Creation of a Competitive Market
By facilitating the entry of foreign organizations into the domestic marketplace,
FDI helps create a competitive environment, as well as break domestic monopolies.
A healthy competitive environment pushes firms to continuously enhance their
processes and product offerings, thereby fostering innovation. Consumers also gain
access to a wider range of competitively priced products.
On the other hand there exist some disadvantages coming with FDI:
•
Hindrance of domestic investment
Sometimes FDI can hinder domestic investment. Because of FDI, countries’
local companies start losing interest to invest in their domestic products.
•
The risk from political changes
“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
VOLUME 2, ISSUE 3, 2024. MARCH
ResearchBib Impact Factor: 8.654/2023 ISSN 2992-8869
301
Other countries’ political movements can be changed constantly which could
hamper the investors.
•
Negative exchange rates
Foreign direct investments can sometimes affect exchange rates to the
advantage of one country and the detriment of another.
•
Higher costs
When investors invest in foreign counties, they might notice that it is more
expensive than when goods are exported. Often times, more money is invested into
machinery and intellectual property than in wages for local employees.
•
Economic non-viability
Considering that foreign direct investments may be capital-intensive from the
point of view of the investor, it can sometimes be very risky or economically non-
viable.
•
Expropriation
Constant political changes can lead to expropriation. In this case, those
countries’ governments will have control over investors’ property and assets.
•
Modern-day economic colonialism
Many third-world countries, or at least those with history of colonialism, worry
that foreign direct investment would result in some kind of modern-day economic
colonialism, which exposes host countries and leave them vulnerable to foreign
companies’ exploitation.
•
Poor performance
Multinationals have been criticized for poor working conditions in foreign
factories.
One of the main directions of the new strategy of the Republic of Uzbekistan
in the field of foreign economic relations, investments and trade is the attraction of
foreign investments. Currently, Uzbekistan has signed agreements on mutual
protection of investments with 47 countries. The Republic of Uzbekistan is a
member of a number of international financial organizations such as the World
Bank, the European Bank for Reconstruction and Development, the International
Monetary Fund, and the Islamic Development Bank. The Republic has been closely
cooperating with several international and regional economic organizations.
According to the statistics, in recent years, 31 billion dollars worth of foreign
direct investments have been attracted to our country for the purpose of industrial
“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
VOLUME 2, ISSUE 3, 2024. MARCH
ResearchBib Impact Factor: 8.654/2023 ISSN 2992-8869
302
development. Last year alone, 8 billion dollars of foreign direct investments entered
our economy. As a result, it can be seen that the industry has increased by 1.4 times
and exports by 1.5 times in the past 5 years. In the next 5 years, for the stable growth
of the economy, the goal is to increase the industry by another 1.5 times, to increase
the export to 30 billion dollars. For this, 120 billion dollars of investment is needed,
including 70 billion dollars of foreign investment, 11 billion dollars of direct foreign
investments were absorbed last year, 304 large and 3 thousand regional projects were
planned to be launched by the end of 2023. As a result of them, the tasks of starting
the production of products worth 10 trillion sums and using additional reserves in
industry sectors and regions, as well as the implementation of a number of tasks
aimed at increasing the competitiveness of products, were determined from Sh.
Mirziyoyev's report on investment and industry priorities on February 27, 2023 can
be seen.
Conclusion.
A number of measures and reforms to attract direct investments
are being actively implemented in Uzbekistan. The priority areas of investment are
production and energy, including electrical equipment, vehicles, building materials
production projects, projects in the chemical industry, and construction of solar
power plants.In recent years, Uzbekistan has been looking for ways to increase the
volume of foreign direct investments. Last September, the country's government
partnered with the International Finance Corporation (IFC), an organization that
offers investment, advisory and asset management services to less developed
countries, to attract more direct investment.For a wider attraction of foreign capital,
it is necessary to ensure state guarantees for property in Uzbekistan, the stability of
economic development, the development of a system of encouraging investment
activity in the country, as well as the formation and implementation of investment
legislation.
According to research, creation a favorable investment climate in Uzbekistan
needs:
- create economic prerequisites, such as the provision of benefits for taxation
of profits, property and infrastructure to increase the flow of investment in the
economy;
- ensure the same legal regime for all investors;
- ensure transparency of business entities;
“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
VOLUME 2, ISSUE 3, 2024. MARCH
ResearchBib Impact Factor: 8.654/2023 ISSN 2992-8869
303
- every year to allocate lists of priority industries that require investment at the
state and regional levels;
- establish priority areas for the flow of foreign investment in enterprises of
those industries in which the importer has absolute advantages.
List of used literature:
1.
Report of the State Committee of the Republic of Uzbekistan on
Demographic Statistics //https: //stat.uz/ru/press-tsentr/novosti-komiteta/5260-
demograficheskayasituatsiya-4
2.
Speech by the President of the Republic of Uzbekistan Sh. Mirziyoyev
in his message to the Parliament of the Republic of Uzbekistan on December 22,
2017
//
http://uza.uz/ru/politics/poslanie-prezidenta-respubliki-uzbekistan-
shavkata-mirziyeev23-12-2017
3.
4.
World population statistics // https ://countrymeters. info/en
5.
Paltrinieri A., Hassan M.K., Bahoo S. & Khan A., A bibliometric
review of sukuk literature, International Review of Economics and Finance (2019),
In Press https:// doi.org/10.1016/j.iref.2019.04.004.
6.
Echchabi A., Abd.aziz H., Idriss U., 2016. Does sukuk financing
promote economic growth? An emphasis on the major issuing countries. Turk. J.
Islam. Econ. 3, pp. 63-73. 16. Global islamic finance report
7.
Ahmad N., Daud S.N., & Kefelia Z. (2012). Economic forces and the
sukuk market. Procedia: Social and Behavioral Sciences, 65, pp. 127-133.
8.
Beck T., Demirg-Kunt A., Merrouche O., Islamic vs. conventional
banking: business model, efficiency and stability. J. Bank. Finance 37, pp. 433-447.
9.
Набижонов, О., Шавкатова, Ш. ., & Сатторова , С. . (2022).
КОРХОНАЛАРДА
ИШЛАБ
ЧИҚАРИШ
ХАРАЖАТЛАРИНИ
МИНИМАЛЛАШТИРИШ
СТРАТЕГИЯСИНИНГ
НАЗАРИЙ
АСОСЛАРИ. Евразийский журнал права, финансов и прикладных наук, 2(7),
27–29. извлечено от
https://in-academy.uz/index.php/EJLFAS/article/view/1918
10.
Отабек Ганиевич Набижонов, Зохиджон Раббимқул Ўғли
Хужамқулов, and Ф. Б. Шакирова. "ИННОВАЦИЯЛАР НЕГИЗИДА
БАРҚАРОР ИҚТИСОДИЙ ЎСИШНИ ТАЪМИНЛАШНИНГ НАЗАРИЙ
“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
VOLUME 2, ISSUE 3, 2024. MARCH
ResearchBib Impact Factor: 8.654/2023 ISSN 2992-8869
304
ЖИҲАТЛАРИ" Central Asian Academic Journal of Scientific Research, vol. 2, no.
4, 2022, pp. 326-334.
11.
Otabek Ganiyevich Nabijonov, & Sh. A. Kholbutaeva (2022). THE
ROLE OF CONSULTING IN THE MODERN MARKET ECONOMY. Central
Asian Academic Journal of Scientific Research, 2 (2), 5-8.
12.
Ugli, A. S. O., Ganiyevich, N. O., Ugli, Y. S. Z., & Ugli, K. R. A.
(2021). About how cheap (actually very expensive) loans may not enrich the
poor. ACADEMICIA: An International Multidisciplinary Research Journal, 11(10),
2191-2193.
13.
Nabijonov
Otabek
Ganiyevich
(2021).
IQTISODIYOTDA
RAQOBATBARDOSHLIKNI
OSHIRISHNING
NAZARIY
ASOSLARI.
Scientific progress, 1 (3), 136-139.
14.
Otabek Ganiyevich Nabijonov, Shokhzod Otabek ugli Abdurazzokov,
Sanjarbek Zokhidjon ugli Yuldashaliyev Academic research in modern science 1
(1), 220-222, 2022
