DECLINE IN THE SHARE OF SMALL BUSINESS IN THE REGIONS OF UZBEKISTAN: SHIFT-SHARE ANALYSIS (2017–2025)

Abstract

Relevance and purpose. From 2017 to 2025, the share of small business in Uzbekistan's national GDP decreased from 67.4% to 52.2%. This decline can stem from reduced small business shares within regions or economic growth concentrating in regions with lower small business contributions. Distinguishing these causes is vital for policy. This study aims to identify the regional structure of this decline and quantify its attribution to intra-regional changes versus inter-regional shifts. Data and methods. We used data from the Statistics Agency's SIAT database for Karakalpakstan, 12 regions, and Tashkent city, covering small business shares in GRP, employment, exports, and industry, plus GRP volumes. The national share change was disaggregated using a shift-share method into intra-regional changes, inter-regional shifts, and their interaction. Regional disparities were assessed via the coefficient of variation, and relationships through correlation and regression analysis. Results. Between 2017 and 2025, small business's GRP share decreased across all 14 regions, averaging a 10.6 percentage point drop. Largest declines were in Navoiy, Jizzakh, and Tashkent city; smallest in Fergana and Karakalpakstan. Shift-share analysis showed 77% of the 14.4 percentage point GRP decline was due to reduced shares within regions, 16% to production shifting towards lower-share regions, and 7% to interaction. Regions with fastest economic growth also saw the largest share decreases (r = −0.79). Regional disparities widened (coefficient of variation from 0.143 to 0.221), mainly due to Navoiy. Regression analysis confirmed a strong positive correlation between small business's share in exports/industry and its GRP share (R² = 0.89). Conclusions and recommendations. The decline is not solely due to rapid growth in industrial regions, as it was universal. We recommend integrating small firms into large enterprise supply chains in industrial areas (Navoiy, Tashkent) and enhancing export/processing potential in other regions. Regional program effectiveness should be measured by small business's GRP share and labor productivity, not just firm count.