Category: Economics

Article reference:
// Humanities scientific researches. 2012. № 11 [Electronic journal]. URL: https://human.snauka.ru/en/2012/11/1917

View this article in Russian

Konstantin Kurpayanidi_phd,

Behzod Olimov_applicant

Ferghana Polytechnic Institute, Uzbekistan


Throughout the world, a small business focused on the industrial production and innovation plays an important role in the economy. Moreover, in the country it is established an effective model for the organization of production in the current competitive business environment, which is focused on the development of cooperative relations.

Today, one of the priority tasks in the modernization of industry of small enterprises is a further development of the production of consumer goods and their competitive ability in the world. Special attention and support are given to it by the state.


Table 1. Share of the Small business in total industrial output of Uzbekistan (in 2005-2011 years)


The growth rate of the previous period


Share in the total production



Small                          enterprises


Individual         entrepreneurship





Individual entrepreneurship























































The data presented in Table 1 shows that in 2010 the share of small business in the total volume of industrial production increased from 9.8 percent (in 2005) to 19.6 percent (in 2010), that is two times increase. Thus in 2005, the proportion of small enterprises and entrepreneurs in the total production was with a small gap (4.3 and 3.5 percent), while in 2010 this figure amounted to small enterprises – 11 percent, and individual enterprises – 4 , 1 percent, which is characterized  a significant increase in production of the small business entities, including small enterprises.

For further development of the industry, as a whole, as well as to increase the proportion of small enterprises in it  several resolutions were made in the Republic . Resolution of the President of the Republic of Uzbekistan on 15 December 2010, which is № Resolution of President-1442 “About  priorities of industrial development of Uzbekistan in 2011-2015″, approved 519 projects in the total amount of appropriations 47.5 billion in 2011-2015. Of them, in 2011, implemented 334 projects of $ 5.58 billion. Moreover, in accordance with the State program “Year of small business and private enterprise” and to create a more favorable environment for broad business development and further improvement of the procedure and reduce expands for the state registration of business entities approved by Resolution of the President of the Republic of Uzbekistan dated May 12, 2011  Resolution of President-1529  ”On measures to further improve the procedure for the organization and registration of business entities.” This resolution stated that the limit average number of employees in small companies from June 1, 2011 increases from 50 to 100 people. As a result, largest business entities have moved into the group of small enterprises. In the future, it helps to reduce the tax burden, a marked reduction of the tax and statistical reporting, the transition to simplified forms of reporting, and a number of other benefits for the payment of customs duties and bank credit. Using the benefits small enterprises will achieve greater increase for their industrial capacity, reduce costs payments to the budget, rise in exports of goods and the use of innovative technology in their operations.

In these regulations accented questions of formation of competitive ability of small enterprises and the further development of them in the industry.

Large enterprises are more competitive because they form around a broad system of suppliers, consisting of small enterprises: production, information, service offering legal, consulting and other services. This creates an industry cluster, aimed at the production of goods to large enterprise.

Under such conditions, an increase in flexibility of the dominant companies, which are becoming more familiar to changes in market demand. This can increase the speed of innovation, improve product quality, and a mass of other benefits.

A new model of industrial development should be created. It must be focused on the competitive environment, based on cooperation with the suppliers and inter-regional, global communications.

In fact, there is a need solving the problem – a priority the development of small business in the industry, the transition to the new cluster approach to industrial development.

Nowadays,  small business is more developed only in the trade branch. The share of innovative and industrial enterprises in the industrial structure of small business is extremely low.

The development of small business in the industry depends on various factors:

-        Availability of administrative barriers is an important but not the only problem in the development of the business. Administrative regulation is characterized by a complex system of certificates and licenses and the high cost of certification of products for small companies;

-        Lack the infrastructure of sales, which is why intermediary companies assign most of the potential benefits of independent small producers (farmers). One solution could be the development of cooperation in the region.

-        Forced competition of the local producers in the regional market with poor quality imports. Unequal competition with the network companies. The degree of restriction of competition in the industry is high, even when compared with trade;


-        The lack of the necessary infrastructure (clusters, industrial areas, etc.), and an acute shortage of production facilities to meet modern requirements. A significant part of small manufacturing firms operate on older facilities that are worn and outdated and do not suit  modern requirements. In addition, the ability of creating new modern production on older material and technical basis of bankrupt companies are greatly exaggerated. Almost all regions of an acute shortage of engineering and technological infrastructure;

-        The lack of skilled labor resources and a lack of motivation to work;

-        Low competence of middle and lower management level of regional administrations. The gap between science and industry is largely due to the lack of managerial personnel with relevant expertise, etc.

These factors adversely affect  beginning and rapidly developing members of small enterprises.

Tax system does not significantly stimulate the development of small enterprises, and makes them less competitive in comparison with foreign partners. It is not just about the size of the tax rates, but about the principles and approaches to the formation conditions of taxation.

One of the key problems in the development of the chemical cluster is the monopoly supplier of raw materials (chemicals) – the major manufacturers. For example, in Kazakhstan, to solve similar problem, it was provided large enterprises a certain quota of their products to small enterprises, located in the respective industrial area.

Concluding the review of the factors, that determine the development of small enterprises in the industry, it should be stressed – we should not expect results, solving selectively – only some, even very important issues. “Health” of the small enterprises depends on the whole “system factors” acting on them.

On the way to solving the problems of small business in the industry, some works are being done, such as reducing  many not peculiar functions and powers, seriously restricting the activities of small enterprises.

Expands the list of financial and consulting services, that are being done for entrepreneurs , education, and other things are getting more suitable to the needs of business.

Today in Uzbekistan, it must be finished building a system of promotion of entrepreneurship and small business development, which should be a tool for achieving national goals: economic diversification and the development of innovative capacity.

Expedient formation of separate, independent, holistic development of entrepreneurship and small enterprises in the industry. In this program, the development of entrepreneurship should be a national priority. This question becomes critical in the face of increasing competition with other goods-producing countries.

The development of departmental programs to promote small enterprises in selected industries and sectors is required too. Small business development should be a priority for sector ministries (such as requirements on the development of suppliers in the state order, including defense).

To overcome the differences and interagency coordination, it is necessary to have authority “over ministerial” coordination, the effectiveness of which has been confirmed by international practice. No less important is the problem of interagency coordination in the region. The State Committee of Republic of Uzbekistan on Demonopolization and Development of Competition and in Ministry of economy of the republic of Uzbekistan are working on small business, but not an industrial development, but the chamber of Commerce-Industry of Uzbekistan – on the contrary.

World experience shows the importance of business associations as institutions of cooperation, partnership institutions in the development and implementation of economic development, the formation of sector, regional, and other standards of quality goods and services. For example, to create a center for entrepreneurs and small enterprises engaged in manufacturing and related services in the industry.

Such centers – the initiators of the parity advisory bodies that define the strategic objectives and program of action in the development of clusters, including industrial.

Public control over the implementation of programs to support small enterprises is also required. This will ensure that they are adequate to the real needs of the business, as well as its transparency.

In our view, it would be better to enhance programs to support the development of business associations and mechanisms of their activities on the most popular destinations.

Business associations can act as an operator of public programs. For the further development of individual areas of the industry in the region to further develop the small business lending.

Development of small enterprises in the industry – this is an area where the interests of the state and big business are particularly coincide.

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