International Journal of Management and Economics Fundamental
93
https://theusajournals.com/index.php/ijmef
VOLUME
Vol.05 Issue 05 2025
PAGE NO.
93-97
10.37547/ijmef/Volume05Issue05-19
Innovation Activity of Small Businesses and Micro firms
In The republic Of Uzbekistan
Mamataliev Dilshodbek Khamidovich
Andijan State Technical Institute, Department of Accounting and Management, Senior Lecturer, Uzbekistan
Received:
31 March 2025;
Accepted:
29 April 2025;
Published:
31 May 2025
Abstract:
This article examines the innovative activities of small businesses and micro-firms in the Republic
of Uzbekistan, focusing on their contribution to the nation’s socio
-economic development. It highlights the
strategic importance of innovation as a driving force for enhancing competitiveness, productivity, and
sustainability in small enterprises. The study explores the current state of innovative practices, identifying
key areas where these businesses have excelled, such as adopting digital technologies, developing new
products, and improving services. It also analyzes the challenges they face, including limited access to financing,
insufficient infrastructure, and a lack of skilled personnel.
The article evaluates government initiatives and reforms aimed at fostering innovation in small businesses,
including financial incentives, tax benefits, and the establishment of business incubators. Drawing on
empirical data, it provides insights into how these measures have influenced the entrepreneurial ecosystem.
By presenting examples of successful innovative projects, the study underscores the potential of small businesses
to become engines of economic growth. The article concludes with recommendations for enhancing the
innovation capacity of small businesses through policy adjustments, increased investment, and
international collaboration.
Keywords:
Innovation, small businesses, micro-firms, Uzbekistan, entrepreneurship, competitiveness, digital
technologies, government reforms, economic growth, sustainability.
Introduction:
Small businesses and micro-firms play a
pivotal role in the economic development of the
Republic of Uzbekistan, contributing significantly to
job creation, poverty reduction, and regional
development. Over the past decade, the government of
Uzbekistan has recognized the importance of fostering
innovation in this sector to sustain economic growth
and adapt to the challenges of globalization and
technological advancement. According to the State
Statistics Committee, as of 2023, small businesses and
micro-firms accounted for approximately 56.2% of the
country’s GDP and employed over 78% of the
workforce. These figures underscore the sec
tor’scritical
role in the nation’s economy. The innovative capacity
of small businesses is crucial in increasing
productivity, diversifying economic activities, and
enhancing competitiveness in both domestic and
international markets. Uzbekistan has seen a steady
increase in innovation-driven enterprises, especially
after the introduction of the *Strategy of Actions on
the Development of Uzbekistan for 2017-2021*. This
strategic framework emphasized modernization,
technological advancement, and innovation as key
priorities
for
the
nation’s
socio
-economic
development. For example, the adoption of digital
technologies in agriculture, textiles, and services has
significantly improved efficiency and output.
In 2022, exports from small and micro-enterprises
reached $5.8 billion, driven largely by innovative
practices.
Despite these achievements, challenges remain.
Small businesses and micro-firms in Uzbekistan often
face barriers such as limited access to financing,
insufficient infrastructure, and inadequate legal
support for intellectual property protection.
According to a 2021 report by the Ministry of
Economic Development and Poverty Reduction, only
32% of small businesses engaged in innovative
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
activities, with the majority citing financial
constraints as the primary obstacle. Additionally, the
lack of skilled personnel and outdated technologies
continues to hinder the full realization of their
innovative potential.
In recent years, the government has intensified its
efforts to address these challenges by implementing
reforms aimed at creating a more conducive
environment for innovation. Key initiatives include
the establishment of innovation support funds, tax
incentives for research and development (R&D), and
the launch of business incubators and technology
parks. For instance, the Yashnobod Innovation
Technopark in Tashkent has been instrumental in
fostering partnerships between small businesses and
research institutions, leading to the commercialization
of innovative solutions.
Furthermore, international collaboration has become a
vital component of Uzbekistan’s strategy to enhance
innovation. The government has signed agreements
with international organizations and foreign investors
to facilitate technology transfer and provide
technical assistance. For example, the partnership
with the Asian Development Bank (ADB) under the
“Innovation and Entrepreneurship Development
Project”, launched in 2021, has provided $100 million
in funding to support small and micro-enterprises in
adopting advanced technologies.
The socio-economic impact of these efforts is becoming
increasingly evident. According to World Bank data,
Uzbekistan’s ease of doing business ranking improved
significantly from 166th in 2012 to 69th in 2020,
reflecting enhanced regulatory and institutional
frameworks. The introduction of digital platforms
such as "Soliq" for tax administration and
"Monomarkaz" for workforce training has further
streamlined operations for small businesses, enabling
them to focus on innovation.
This article delves into the innovative activities
of small businesses and micro-firms in Uzbekistan,
examining their current state, challenges, and the
impact of government policies and international
partnerships. By analyzing economic indicators
such as GDP contributions, employment rates, and
export
performance,
the
study
provides
a
comprehensive understanding of how innovation
drives growth in this sector. It also highlights
successful case studies, offering valuable insights into
the strategies and practices that have enabled small
businesses to thrive in a competitive environment. [1]
Fostering innovation in small businesses and micro-
firms is essential for Uzbekistan’s long
-term economic
resilience and prosperity. By addressing existing
barriers and leveraging opportunities for growth,
these enterprises can become key drivers of
sustainable development, aligning with the
government’s vision of transforming Uzbekistan into a
modern, competitive economy.
METHODOLOGY
Turaevna, S. N. (2024). The author's research
analyzes innovative approaches to ensuring
employment of the population in the process of
developing private entrepreneurship in the Republic
of Uzbekistan. The article considers new innovative
opportunities in the fields of digital economy, remote
jobs, startups and technoparks, green economy and
ecological entrepreneurship, as well as agribusiness
and services. The methods of creating new jobs
through the introduction of innovative technologies,
training and retraining programs for new
professions, diversifying the economy and achieving
sustainable development are analyzed. The article
reveals the importance of innovative approaches in
the issues of entrepreneurship and employment of
the population in the country.[2]
Rustam, T. (2024). In his research, the author analyzed
the concept of cloud technology ('cloud'), its
importance (role) in storing and analyzing data in
business entities, and similar current operations. The
importance, relevance, advantages (the literature
review cites its use in various areas) of the use of
this technology as a service (SaaS, PaaS and IaaS)
in various areas of entrepreneurship, including
possible harms, the essence of the technology
implementation, and practical recommendations are
given. These services provide entrepreneurs with
virtual computers, servers, templates and any system
needed to manage the network. This provides
entrepreneurs with services to install their own
necessary computer infrastructure.[3]
ANALYTICAL RESULT The analysis of innovative
activities among smallbusinesses and micro-firms in
Uzbekistan reveals significant progress in fostering
innovation-driven growth, despite persistent
challenges. Over the past five years, small
enterprises have increasingly adopted advanced
technologies and innovative practices, contributing
to economic diversification and enhanced
productivity. According to the State Statistics
Committee, small businesses accounted for 31.4%
of industrial production in 2023, reflecting their
growing role in the national economy.
Government reforms, including tax incentives for
innovation and the establishment of technology parks,
have been pivotal in this progress. The Yashnobod
Innovation Technopark, for instance, supported over
International Journal of Management and Economics Fundamental
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
120 projects between 2020 and 2023, leading to
the commercialization of innovative solutions in
sectors such as agriculture, healthcare, and energy.
Additionally, the export performance of small and
micro-enterprises improved significantly, with
innovative products accounting for 18% of their total
exports in 2022, valued at approximately $1 billion.
However, challenges persist, including limited access
to financing and skilled personnel. Only 34% of small
businesses reported engaging in R&D activities,
indicating a need for further support. Nevertheless,
the results demonstrate the potential of innovation
to transform small businesses into dynamic
contributors
to
Uzbekistan’s
socio
-economic
development, aligning with the country’s strategic
goals. Also, Table 1 below analyzes the innovations
introduced by small businesses and micro-firms in
Uzbekistan.[4]
Table 1:Innovations introduced by small businesses and micro-firms
No
Republic and
regions
2019-yea
2020-
year
2021-yea
2022-
year
2023-
year
1
O‘zbekiston
Republic
1443
3535
2974
1635
1815
2
Qoraqalpog‘iston
Republic
15
16
6
43
87
3
Andijon
53
57
22
252
65
4
Buxoro
47
243
191
77
78
5
Jizzax
46
128
38
7
20
6
Qashqadaryo
54
35
147
269
37
7
Navoiy
402
293
408
70
147
8
Namangan
50
188
38
19
18
9
Samarqand
14
190
178
207
340
10
Surxandaryo
113
147
108
52
276
11
Sirdaryo
177
112
134
16
27
12
Toshkent
105
521
247
77
138
13
Farg‘ona
84
225
234
64
37
14
Xorazm
30
20
29
181
70
15
Toshkent city
253
1360
1194
301
474
The table illustrates the regional and national trends in
innovations introduced by smallbusinesses and micro-
firms across Uzbekistan between 2019 and 2023. A
close examination of the data reveals significant
regional disparities and fluctuations in innovation
activity over the years, reflecting the varying levels of
development, support, andopportunities in different
regions.
At the national level, the number of innovations
introduced peaked in 2020, with 3,535 innovations,
a dramatic increase from 1,443 in 2019. This surge
coincides with government efforts to foster innovation
through policy reforms, financial incentives, and
technological support under the “Strategy of Actions
on the Development of Uzbekistan for 2017
–2021”.
However, the numbers declined in subsequent years,
reaching 1,815 in 2023, possibly due to the
economic disruptions caused by global events, such as
the COVID-19 pandemic.
Regionally, the Tashkent region and Tashkent City
emerged as leaders in innovation throughout the
five years. Tashkent City recorded a remarkable
1,360 innovations in 2020 and maintained consistent
performance, ending with 474 in 2023. This
dominance can be attributed to better access to
resources, skilled labor, and technological
infrastructure, as well as the presence of innovation
hubs like the Yashnobod Technopark.
Other regions such as Navoiy, Samarqand, and
Surxandaryo also showed notable activity. Navoiy,
benefiting from its mining and industrial base,
introduced 408 innovations in 2021, although the
number fell to 147 in 2023. Similarly, Samarqand
exhibited steady growth, reaching 340 innovations in
2023, a significant increase from just 14 in 2019.
Surxandaryo saw a resurgence in innovation activities
in 2023 with 276 innovations, reflecting efforts to
diversify and modernize the region's economic base.
On the other hand, some regions faced challenges in
sustaining
innovation.
For
instance,
Sirdaryo
experienced a decline from 177 innovations in 2019 to
just 27 in 2023. Similarly, Andijon’s innovation
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
numbers peaked at 252 in 2022 but fell to 65 in
2023, indicating volatility in innovation efforts. To
better understand the changes in the cross-section of
regions, the following diagram 1 was used.
diagram 1
The data underscores the critical role of regional
economic and institutional conditions in driving
innovation. While the national framework supports
innovation, the uneven distribution of resources
and infrastructure across regions highlights the
need for targeted interventions. Enhancing
innovation capacity in underperforming regions
through investments in technology, training, and
financing could balance the disparities and further
contribute
to
Uzbekistan’s
socio
-economic
development. This analysis demonstrates that
fostering regional innovation is key to unlocking the
full potential of small businesses and micro-firms in the
country.[5]
DISCUSSION The innovative activities of small
businesses and micro-firms in Uzbekistan
demonstrate a dynamic but uneven pattern across
regions and industries, reflecting both progress and
persistent
challenges. The significant increase in innovations
between 2019 and 2020, fueled by government
initiatives such as tax benefits, grants, and innovation
hubs, highlights the effectiveness of policy-driven
support. However, the subsequent decline in
innovation activity, as seen in the national total of
1,815 innovations by 2023, suggests a need for
sustained efforts to maintain momentum.
Regional disparities remain a critical concern.
Tashkent City and regions like Navoiy and
Samarqand have emerged as innovation leaders due
to better access to resources, infrastructure, and
skilled labor. In contrast, regions such as Sirdaryo and
Jizzax lag behind, underlining the need for targeted
investments and support mechanisms to foster
innovation in underperforming areas.
Moreover, while sectors like textiles, agriculture, and IT
services have benefited significantly from innovation,
others face barriers such as limited financing and
inadequate workforce training. Only 34% of small
businesses engaged in research and development
activities in 2023, indicating room for improvement in
fostering a culture of innovation.
To bridge these gaps, the government must focus
on enhancing access to financing, improving
infrastructure, and promoting regional innovation
ecosystems. Collaboration with international partners
can further accelerate progress.
CONCLUSION The innovative activities of small
businesses and micro-firms in Uzbekistan play a crucial
role in driving economic growth, enhancing
productivity, and fostering competitiveness across
various sectors. The progress observed from 2019 to
2023 highlights the impact of government policies,
such as tax incentives, innovation hubs, and financial
support, in promoting innovation. The contributions
of small businesses, accounting for 31.4% of
industrial production by 2023 and generating $5.8
billion in exports in 2022, underline their importance in
Uzbekistan’s econom
ic landscape.
Despite these achievements, challenges remain.
Regional disparities in innovation, limited access to
financing, and insufficient R&D engagement hinder
thefull realization of innovation potential. The data
shows that only 34% of small businesses actively
participate in research and development,
emphasizing the need for targeted interventions to
address these gaps.
To sustain and accelerate innovation, Uzbekistan
must prioritize investments in technology
infrastructure, expand financial access, and foster
International Journal of Management and Economics Fundamental
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
partnerships between businesses, academic
institutions, and government entities. Strengthening
regional innovation ecosystems will also be vital in
ensuring balanced growth.
While the foundation for innovation in small businesses
and micro-firms is strong, focused efforts to overcome
barriers will be key to unlocking their full potential and
aligning with the nation’s long
-term development
goals.
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