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24THE ROLE OF SMALL BUSINESS IN ECONOMIC DEVELOPMENT
OF UZBEKISTAN
РОЛЬ МАЛОГО БИЗНЕСА В ЭКОНОМИЧЕСКОМ РАЗВИТИИ
УЗБЕКИСТАНА
Курбанов Музаффар Умматович, преп. кафедры «Общественных наук» Маматхожиева Ижода Курбоновна, преп. кафедры «Общественных наук»
Кокандский государственный педагогический институт, Узбекистан
В данноц статье рассмотрены основные аспекты развития малого бизнеса и частного предпринимательства. Раскрыта сущность предпринимательской деятельности, содержание её основных организационно-правовых форм и видов. Показана роль малого бизнеса в формировании рыночной экономики, его развитие и становление в Узбекистане. Раскрыты направления и меры государственной поддержки этого сектора экономики в республике.
Small businesses are vital to the success of the economy. Not only as they provide the success stories of the future, but also because they meet local needs (e.g. hairdresser, financial consultant, emergency plumber). They serve the requirements of larger businesses e.g. for photography services, printed stationery, catering and routine maintenance. Of course, you don't have to set up your own enterprise to be enterprising. Being entrepreneurial simply means developing the right skills, attitudes and initiatives to make an innovative contribution to an organisation.
Small businesses survive and prosper for many different reasons:
• Developing personal relationships - small businesses are well placed to build personal relationships with customers, employees, and suppliers. With a small business you know who you are dealing with; you can 'put a face' to the person you are in contact with. Person-to-person interaction is as important as ever in building strong relationships.
• Responding flexibly to problems and challenges - in a small business there is little hierarchy or chain of command. Large businesses may have set ways of operating and establish procedures that are hard to change. Small businesses are often far more flexible. It can also reach a quick decision on whether or not it can do what is required.
• Inventiveness and innovation - small businesses are well positioned to introduce and develop new ideas. This is due to their owners not having to report or seek approval from anyone else.
• Low overheads - due to the small scale of operation, small businesses have lower overhead costs. They operate in small premises with low heating and lighting costs, and limited rent and rates to pay. Low costs result in lower prices for consumers.
• Catering for limited or niche markets -large firms with high overheads must produce high levels of output to spread costs. By contrast, small firms are able to make a profit on much lower sales figures. They can therefore sell into much smaller markets: e.g. a local window cleaner serving a few hundred houses, a specialist jewellery maker with personal clients.
The main reason many people choose to set up a small business, is because it gives them independence. They also reap the rewards for themselves; these are two powerful incentives.
Many businesses start as one person's idea. The creator is often an entrepreneur who spots a gap in the market or a commercial opportunity. S/he turns the idea into a marketable product or service. There are four main types of business: manufacturing, wholesale, retail and service. Some characteristics found in successful entrepreneurs, show they are:
• prepared to take risks;
• driven by achievement;
• not put off by failure;
• self motivated;
• determined to stay ahead of the competition.
Today's small business sector creates many of the new ideas and innovations future generations will take for granted e.g. ingenious website designs, clockwork radios.
Small businesses do have some disadvantages. Running an enterprise on your own involves hard work and making most decisions on your own. Initially there is little time for holidays and considerable risks involved. Also, as the business is small, it is harder to find the economies of scale from which big firms are able to benefit. For example, because small businesses tend to buy relatively small quantities of raw materials and other supplies, they receive lower discounts than larger firms. The small firm cannot afford to employ a range of specialists and also find it more costly to raise finance. Setting up and running a business is something to be tackled by people who are energetic and enthusiastic. These people like hard work, enjoy challenges, are adaptable and are not put off by failure. It is vital to carry out careful research and think things through thoroughly, rather than rushing into it.
Planning is one of the most important steps at the start. Not only is the plan useful to the person setting up the business; it is also very important to anyone wanting to invest in it, or lend the business money. It needs to be based on detailed research e.g. market research. Market research is the process of systematically gathering and recording information about the market for a product or service. This can be carried out by using questionnaires, or bringing together people in small groups to discuss their views on the goods or services being offered. Alternatively, market research can draw on information already published e.g. surveys. One purpose of market research is to identify and provide evidence of market opportunities and challenges. It helps someone
starting a new business to get to know the environment they will be trading and competing in.
Other key ingredients of the business plan include:
• details of the business idea
• where the business will be run from the expected sales
• costs of running the business.
A government can use its financial strength to acquire goods and services, while at the same time watering many sources to improve the health, welfare, and security of its population. Economic development has been evasive to a significant section of the government programs have attempted to remedy the disparity. Small business is an engine of economic growth and job creation; and that not tapping it delays rather promotes growth. Small businesses must be part of the mantle to lead country to economic development.
The Republic of Uzbekistan has adopted a number of reforms and programs to develop small businesses and entrepreneurs. These include an enabling legal framework for establishing and operating small businesses, business registration by simple application, and a simplified tax regime. The government launched these special programs during the Year of Small Business, 2010 and the Year of Family Business, 2011. It has taken further steps to simplify registration and licensing procedures, reduce requirements for statistical and financial reporting, and streamline export and import procedures. The clarification of property rights aims to improve the business environment. The government continues to improve access to finance through targeted credit lines to financial intermediaries for onlending to small businesses and entrepreneurs. It is implementing the rural development program to promote rural small businesses in construction and finance for rural housing.
"Measures to improve the business environment and create more favorable conditions for development of small business and private entrepreneurship deserve all kind of support", - said the President of the Republic of Uzbekistan at the meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development of the country in 2014 and main priorities of economic program for 2015.
Implementation of "one window" principle when registering property, land allocation, obtaining licenses to engage in certain activities, the issuance of permits for the construction, connection to power networks from day to day is going widespread. An important decision in the system of measures to stimulate small business development in labor-intensive industries such as textiles, food and construction materials, has become a marginal increase in the number of employees from 100 to 200 people.
Commercial banks of Uzbekistan also play big role in the development small business. They are supporting small business with their credits. Commercial banks in 2014 allocated loans to small businesses and private entrepreneurship over 9 trillion soums, or 1.3 times more than in the previous year, including mi-
crocredits - nearly 2 trillion soums, with growth of 39 percent. Over the past five years, the volume of lending to small business has increased by almost 5 times. Significantly expanded access of private entrepreneurs to resources, primarily due to the increase of their implementation on the exchange and fair trades. So, in 2014 they purchased raw materials at the Republican commodity exchange for almost 3 trillion soums, or 1.6 times more than in 2013. Along with this, through exchanges they have realized their own products in the amount of 1 trillion 500 billion soums, or growth to the previous year by 1.7 times. In the result of adopted measures to stimulate the development of small business and private entrepreneurship during the past year created more than 20 thousands of new small businesses excluding private and dekhkan farms, and their total number amounted to more than 195 thousand, which is by twice more in comparison with 2000.
The share of small business and private entrepreneurship in the formation of GDP has increased over the period since 2000, from 31 percent to 56 percent, and industrial production - from 12.9 to 31.1 percent. Currently, this sector of the economy employs more than 76.5% of the total employed population against 49.7% in 2000.
Currently, small business plays a significant role in the country's economic development. The formation of small market structures in all sectors and areas of the national economy is in line with the mainstream trends unfolding these days in the global economic process. All over the world a great number of small enterprises successfully operate in virtually all industries. Today, the Uzbek economy is represented by big, mid-sized and small enterprises, as well by economic establishments, which are based on individual and family labour.
Their sizes depend on the specificity of sectors, in which they operate, their technological peculiarities and a so called "effect of scale". Some sectors are characterized by a high level of capital intensity and big production volumes. There are also sectors, where smaller enterprises prove preferable, because they are much more productive.
The efficient functioning of small production forms is associated with a series of their advantages in comparison with large-scale production. These include: the proximity to local markets and quicker adaptation to clientele's demand; production of small batches, which is not profitable for bigger enterprises; elimination of some superfluous links of management etc. Small-scale production benefits from the differentiation and individualization of demand in the sphere of industrial and personal consumption. The development of small and mid-scale production, in turn, is a highly propitious environment for an overall economic rehabilitation, as it stimulates sound competition, creates additional jobs, facilitates the restructuring processes and expands the consumer sector. What's more, the development of small enterprises makes it possible to quickly satiate the home market with goods and services, leads to exportpotential increases and a better exploitation of locally-mined raw materials. Small enterprises have a vital role to play throughout the globe. In the last few
years, the small business sector has been taking on special significance in Western Europe, the US and Japan, where it is represented by a whole spectrum of small and mid-sized enterprises. It should be emphasized at this point that small enterprises, with a staff of no more than 20, make up a lion's share of that number, accounting for a 2/3 increase in the creation of new jobs. It is thanks to this very factor that the countries mentioned above have managed to significantly cut unemployment.
There are some factors that can develop small business in Uzbekistan:
• Political and macroeconomic stability;
• Sound legal base;
• Rich raw material base;
• Diversified industrial base;
• Advantageous geographical location;
• Well educated human resources.
Uzbekistan is the most densely populated country in the region, with one
72
third of the population under the age of 29 and half residing in rural areas . As 800,000 people under the age of 29 join the labor market every year, job generation is an urgent and challenging priority. Small businesses play an important role in Uzbekistan's economy, and have the capacity to generate growth, exports, and particularly jobs.
Small businesses currently represent 90 percent of all businesses in Uzbekistan and they generate nearly 75 percent of all new jobs in this country. Moreover, small businesses are generally considered to be the first line of employment and thus the initial training grounds for this nation's workforce. There are four hundred thousand eighty five small businesses in the Uzbekistan.
Small businesses in Uzbekistan are defined by the number of employees and
73
include individual entrepreneurs and micro and small enterprises . The
74
threshold number of employees varies by sector . There is no legal definition for medium-sized enterprises. Small business end entrepreneurships contribution to gross domestic product (GDP) increased from 35.0% in 2003 to 54.6% in 2012 and is expected to increase to 57.2% by 2015. Small businesses are important in agriculture (contributing 98.0% of total output), construction (70.7%), retail trade (45.3%), and services (44.7%). The small business share of exports increased from 10.2% in 2000 to 15.8% in 2012. Small businesses contributed 75.7% of total employment in 2012.
72 Average population growth rate is 2.5% per year. State Committee on Statistics. 2011.
73 The average number of employees in a micro enterprise should not exceed 20 in industry and 10 in services. A small enterprise has up to 100 employees in industry and up to 25 employees in services. in labor-intensive industries such as textiles, food and construction materials, has become a marginal increase in the number of employees from 100 to 200 people
74 The definition of small business is stipulated in Article 5 of Law N 69-II, enacted on 25 May 2000 and amended on 2 May 2012, which states that small business includes individual entrepreneurs, microfirms, and small enterprises.
