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

Abstract

Between 2017 and 2025, the share of small business in Uzbekistan's republican GDP decreased from 67.4% to 52.2%. As the national indicator is an average of regional shares, this decline can be attributed to two reasons: a decrease in the share of small businesses within the regions themselves, or economic growth concentrating in regions with a low share of small businesses. These two scenarios require different policy measures. The study aims to determine the regional structure of this decline and to assess which part of it occurred due to changes within regions and which part due to shifts between regions. The study utilized data from the Statistics Agency's SIAT database for the Republic of Karakalpakstan, 12 regions, and Tashkent city, covering the share of small businesses in GRP, employment, exports, and industry, as well as GRP volume at current prices. The change in the national share was divided into three components using the shift-share method: changes within regions, shifts between regions, and their interaction. Regional disparities were measured using the coefficient of variation, and relationships were assessed using correlation and regression analysis. From 2017 to 2025, the share of small business in GRP decreased in all 14 regions, by an average of 10.6 percentage points. The largest decreases were observed in Navoiy, Jizzakh, and Tashkent city, while the smallest were in Fergana and Karakalpakstan. Shift-share analysis showed that the main part of the decline occurred within regions: out of a 14.4 percentage point decrease in regional GRP, 11.0 points (77%) were due to a decrease in shares within regions, 2.2 points (16%) due to a shift of production towards regions with lower shares, and 1.1 points due to interaction. Furthermore, the share decreased most significantly in regions with the fastest economic growth (r = -0.79). Regional disparities also widened, with the coefficient of variation increasing from 0.143 to 0.221, though this was mainly linked to Navoiy. Regression analysis indicated that regions with a higher share of small business in exports and industry also had a higher share in GRP. The decline in the share of small business is not solely due to the rapid growth of industrial regions; the share decreased in all regions. Therefore, it is recommended to involve small firms in the supply chains of large enterprises in industrial regions like Navoiy and Tashkent, and to enhance the export and processing potential of small businesses in other regions. The effectiveness of regional programs should be evaluated not by the number of firms, but by the share of small business in GRP and labor productivity.