The analysis of the dynamics of investments in fixed capital of Uzbekistan by sectors of the economy

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The analysis of the dynamics of investments in fixed capital of Uzbekistan by sectors of the economy

The economy of Uzbekistan is one of the fastest growing economies in the world. Over the years of independence, one of the main goals of the investment and economic policy of the republic has been a radical change in the structure of the economy.

The main emphasis was placed on the transition from monocultural dependence (on cotton) to the diversification of the economy towards industry, engineering and chemistry, as well as ensuring food and energy self-sufficiency. According to the State Statistics Committee of the Republic of Uzbekistan, investments in fixed assets of industry for 1995-2018 ranged from 24.2% to 30.83%.

investment economic policy

According to ratestats.com in the 1995, rate of the USD was high. This is the highest rate in the last 25 years. In period of 1995-1998, the USD decrease. From 1999 until 2016 the rate rose and fell, although in 2001 it dynamically rose be 75.921 UZS. Then in 2017, the rate started to rise, but in 2018, it increase.

We can notice that in the second figure, the graph is different from the first. Investments do not increase in the same way. You can see that the change in the exchange rate, the growth of the dollar strongly influenced in 2017. Real result we can see in world level.

For a complete development of the economy of any country, a constant development and modernization of industry and agriculture are required. The development of the industry and agriculture are ones of the main criteria for the creation of a strong and viable market economy.

Of course, the state does not fully support the agricultural industry. However, it should be note that public investment today is not limited only to the injection of funds into this sector. The growing demand for products provides a new incentive for the development of the industry. Today, agricultural production closely connected with many industries, such as chemical, engineering, energy. To increase the volume of good-quality products, innovations are constantly required, which provided through state subsidies. The state through subsidies encourages those private investors who invest in this sector of the economy.

The attractiveness of the mining industry of Uzbekistan for investors is due to four main factors. Firstly, Uzbekistan has significant natural resources that open up a wide range of opportunities for increasing the capacity of existing enterprises or creating new ones. Secondly, the country has a highly developed and efficient mining industry, adequate infrastructure and a highly skilled workforce. In addition, many deposits can develop by the open pit method, which is the cheapest. Finally, in Uzbekistan, a relatively favorable investment climate and mining receives support from the state.

Investments in the agricultural sector are classified as promising investments that contribute to a steady long-term income, since agricultural products are valuable. This means that investment in the agricultural sector in the current economy is the most profitable and most significant. The state is developing a number of programs to attract investors to this industry. Quick income does not bring investment in the agricultural sector.

According to BCG Uzbekistan has significant the size of the textile sector, which contributes 3.8% to the country's GDP and has great development potential due to a number of competitive advantages. The industry benefits from local raw materials. Uzbekistan is the sixth largest producer of cotton in the world.

Agriculture accounts for more than 30% of the country's GDP. Advantages such as a favorable climate are relatively low salaries and domestic production of fertilizers allows you to grow some crops at competitive prices. The country has great potential in agricultural export products. Currently, the agricultural sector of Uzbekistan is oriented for domestic demand.

According to Cyberleninka attraction of investors, first, depends on the investment attractiveness of the object. To determine the investment attractiveness of a particular area in comparison with others, it is necessary to consider:

- The economic potential of the region (climatic conditions, infrastructure, etc.);

- Indicators of the effectiveness of its use (including labor, fixed and circulating assets, fertilizers, etc.);

- The expected effect of capital investments.

One of the priority areas for the development of the agricultural sector, an important area of ??the economy of Uzbekistan, is filling the domestic market with food, achieving self-sufficiency in the field of their production and ensuring food security. The effective implementation of these tasks allows us to solve such social problems as providing the population with jobs, improving the welfare of the population, and improving urban and rural areas.

Modern approaches to solving urgent problems associated with investing in the agricultural sector of the republic can provide conditions for a stable, effective, rational, providing expanded reproduction of the functioning of the agricultural sector. Thus, for the further development of investment potential in the agricultural sector of the Republic, it is necessary to improve the existing forms and methods of investment. The proposed options for the development of the existing system of financing investment in agriculture are aimed at successfully solving urgent problems; they suggest that agricultural producers reach a qualitatively new level of investment activity that ensures profitable production.

Pic. The economic growth of Uzbekistan by Solow model

Economic growth refers to the growth of the country's GDP per capita. In the R. Solow model, GDP growth is explained by population growth, technological progress and investment. In long-term development, GDP growth is determined by population growth and the rate of technological development. An increase in investment, although increasing GDP, is only in the short run. Thus, to achieve sustainable economic growth in the country, it is not “expansion" of capital that is required, but its "deepening", that is, with the help of technological progress. This model is a contrast to the Harrod-Domar economic growth model. In simple terms, the Solow model shows that the smaller the difference between investment and savings, the greater the country's GDP. This rule sets the government the task of stimulating investment activity among the country's population.

Uzbekistan, like all developing countries, should improve education, improve the field of science, and stimulate people to reduce consumption. By investing more, the country will be able to achieve good economic growth.

References

1.https://data.gov.uz/ru/datasets/76?page=2&dp-1-page=1&dp-1-sort=G1

2.https://www.economywatch.com/economic-statistics/economic-indicators/Investment_Percentage_of_GDP/

3.https://docplayer.ru/46100994-Ekonomika-uzbekistana.html

4.https://ratestats.com/uzbekistani-som/2016/#nav-chart

5.http://www.unece.org/fileadmin/DAM/hlm/prgm/cph/experts/uzbekistan/01_general_info/Almanach_Uzbekistana_2013_RUS.pdf

6.https://cyberleninka.ru/article/n/investitsii-kak-faktor-razvitiya-agrarnoy-sfery-respubliki-uzbekistan

7.http://media-publications.bcg.com/RUS-UZ-Tier_MAY-2019-FIN.pdf

8.https://www.researchgate.net/publication/269046334_Agriculture_and_its_place_in_economic_development_of_uzbekistan

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