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Achieving sustainable development, increasing incomes and improving the living conditions of the population, in general, the socio-economic development of the country, largely depends on the volume and structure of investments attracted to certain areas and sectors of the national economy.

Consequently, the priority direction of the social and economic development of any state will be aimed at the formation of an attractive investment environment.

In this connection, for Uzbekistan, which has planned to reach the average level of economic development of developing countries in the near future, consideration of the issue of improving the investment environment for attracting foreign capital and domestic investment has a special significance.

 Everyday life we often encounter terms of investment, investor, investment activity, etc..

What is an investment?

Consider the meaning and essence of the concept of investment, which is an important element of investment activity. "Investment" from the English "Investments" means "capital investment".

Investment (capital) is the investment of funds for a certain period in entrepreneurial and other types of activity (in objects) in order to obtain profit.

It should be noted that at the current stage of development of the world community, no country can achieve the corresponding (desired) level of socioeconomic development without investment. 

Countries that do not have the opportunity to attract investment resources in a timely manner to the national economy, face a shortage of money, which causes a backlog in socio-economic development from the world's average developed countries.

The solution to this problem is to attract capital investments in developing countries from developed countries, where there are free cash.

What tasks can be solved with the help of investment?

            First, with the help of investments, it is possible to build new enterprises for the production of goods, including, import substituting and create new jobs.

            Secondly, it is possible to expand the production of operating firms and to replenish the private capital of national enterprises that ensure their development prospects.

            Third, to carry out technological renovation of the national economy and install modern equipment and new equipment at industrial enterprises, which will eventually allow the production of competitive goods.

            Fourth, there will be an opportunity for national producers to implement promising projects at the expense of credit funds.

            Fifthly, it will allow to integrate the national economy into the world economy.

            Thus, if investments are an important factor in macroeconomic (national economic) growth and micro (enterprise level) growth, the question arises as to what national producers should do to attract them.

            To attract investment in the economic activities of national business entities, the following tasks are required.

            First, we need to have a well-grounded, comprehensively considered developed prospective business plan. Investors are always willing to know the long-term results of capital investments in the project.

            Secondly, investors finance investment projects in organizations, which they strictly trust. Investing in dubious and illegal organizations is tantamount to losing profits, which obliges national enterprises to maintain their economic rating on the basis of successful financial and economic activity.

Thirdly, the activities of national enterprises should be open and flawed. To this end, accounting documents must meet modern requirements, established by domestic regulatory documents. The documents of the final results of the financial and economic activities of enterprises should be publicly disclosed to the public in the mass media.

Along with the above, it should be noted that capital investments by investors in the national economy depend not only on the rating of enterprises and the results of financial and economic activities, but also on the domestic policy of the state and the geographical location of the country, etc. Investors choose the most stable countries in all aspects of the development of society for capital investment. Therefore, all countries in the world try to reduce investment risk as much as possible. In all countries of the world, including in Uzbekistan, measures are being implemented to increase the attractiveness of the investment environment.

The question arises whether there are conditions for attracting foreign investments to Uzbekistan?

The conditions for attracting foreign investments to Uzbekistan are the following:
- political stability in the country;
- the formation of a legislative framework for the protection of private property and competition;
- development of infrastructure that supports the investment process;
- convenient geographical location of the country;
- increased potential for the development of the agro-industrial sector
and rich resources of the country's mineral and raw materials resources;
- availability of labor resources with high qualifications;
- sufficient level of breadth of the domestic market volume for trade.

Given preferences and a system of financial and economic incentives for foreign capital, is an important factor in investment attractiveness. This provides an opportunity to direct foreign investment in the production sector, in particular, in industrial production, where there is a high export potential.

Along with this, one of the directions for attracting foreign investments into the national economy is the formation of special economic zones. In our country, Navoi, Jizzakh, Angren, Gijduvan, Kokand, Urgut, and Khazaraspi free economic zones have been formed and are efficiently operating

Has the policy of attracting investments in the national economy been reflected in the increase in the volume of capital investments?

If we pay attention to the volume of capital investments directed to the economy and changes in their structure during the economic development of the country after the first decade of the 21st century,
you can see a qualitative improvement in the structure and growth in investment.

In 2010, the amount invested in fixed assets amounted to 15 338.7 billion soums. Of the total funds for the share of the population and enterprises in 2010 accounted for 49.0%, bank loans and other borrowed funds - 9.7%, foreign investments and loans - 28.3%, state budget - 5.6% and out-of-budget funds (including funds of the Fund for Reconstruction and Development, Fund for Reclamation of Irrigated Lands) 7.4%.

According to the data of 2017, investments invested in fixed assets, relative to 2010 exceeded almost 4 times and amounted to 60,719.2 billion soums. The structure of investments in 2017 by sources was as follows: the funds of enterprises and the population amounted to 43.9%, bank loans and other borrowed funds 11.0%, foreign investments and credits 26.9%, state budget funds 5.5% and extra budgetary funds (including funds of the Reconstruction and Development Fund, the Children's Sports Development Fund) 12.7%.

The analysis shows that the provided conditions for foreign investors, in particular, the timely formed regulatory and legal framework led to an increase in foreign investment in 2017 relative to 2010 slightly less than 3 times.

It should be said that for the development of the country's economy a high proportion of foreign direct investment among foreign capital investments is a positive aspect. Since, the investor's capital investments in the country's economy without state guarantees means that they took on all the risks (liabilities) arising from the introduction of activities in the national economy.

The fact that the share of foreign direct investment in the total volume of foreign capital investments and loans in 2017 was 76%, once again demonstrates the formation of a favorable investment climate in our country.

At the same time, during the analyzed period, the share of funds of enterprises and the population in the total volume of investments decreased by 5.1% points. It should be noted that the amount of savings generated in the domestic economy depends on the volume of consumption and GDP of the country, which indicates the limited growth.

The practice of foreign countries, in particular the newly industrialized countries, Hong Kong, Singapore, South Korea and Taiwan, shows that with 10% economic growth, the share of investment in the economy of the country was 35-40% relative to the gross domestic product (GDP), where a significant part accounted for the share of domestic investment. In a word, in this period everything, beginning with the citizens of the country, including national economic entities, deemed it necessary to "tighten the belts a little", ie, reduced consumption, which contributed to the growth of savings..

Can the volume of investments in the economy of Uzbekistan ensure stable economic growth at present?

According to 2017, the share of investments in fixed assets was 24.4% of GDP. It should be noted that this indicator exceeds the average share of investments calculated for the countries of the world.

However, since our country has set strategic goals for socio-economic development at a moderately high level, it will be necessary to increase the amount of investments in the national economy.

This can be done, firstly, by increasing the volume of domestic investment, and secondly, by attracting foreign capital investments in the national economy.

As noted above, the amount of accumulation formed in the domestic economy is limited by consumption and GDP. To increase the volume of investments in the national economy on the basis of domestic investments, the following measures must be taken:

- the improvement of the existing mechanism in the national economy, the transformation of savings into investment;

- attraction by commercial banks in both national and foreign currency of the population's money resources, and their provision as loans to business entities;

- Involvement of funds accumulated from the population in the investment process through the stock exchange "Tashkent" and so on.

Obviously, attracting additional domestic investment in the national economy requires the development of a stimulating mechanism for converting savings into investment. However, this process is associated with a change in the consciousness of the population to participate in the economic activities of the country, which is associated with a certain time.

To increase the volume of capital investments in the national economy, foreign investment and loans are alternative to domestic investment.

Therefore, it is necessary to study and analyze all existing reserves and resources related to attracting foreign investment in the national economy, and to improve the mechanism for attracting foreign capital to national enterprises.

In conclusion, it should be said that a positive solution to the above issues contributes to an increase in the volume of domestic and foreign investments directed to the national economy, ensuring sustainable economic growth and, ultimately, accelerating the development of the country and improving the well-being of the population of our republic.

 

Siddikov Alisher Juraqulovich
Center for Retraining and Statistical Studies
State Statistics Committee of the Republic of Uzbekistan
Head. Chair "Macroeconomic Statistics and National Accounts", Candidate of Economic Sciences, Associate Professor

Tugmani bosing Tinglash