THE IMPORTANCE OF SMALL AND MEDIUM ESTABLISHMENTS IN THE DEVELOPMENT OF THE ECONOMY

JOURNAL OF IQRO – ЖУРНАЛ ИҚРО – IQRO JURNALI – volume 18, issue 02, 2025 ISSN: 2181-4341, IMPACT FACTOR ( RESEARCH BIB ) – 7,245, SJIF – 5,431 www.wordlyknowledge.uz ILMIY METODIK JURNAL Akhmadjonov Khojiakbar Kodirjon ugli The student of Banking and Finance Academy of Uzbekistan THE IMPORTANCE OF SMALL AND MEDIUM ESTABLISHMENTS IN THE DEVELOPMENT OF THE ECONOMY Abstract:This article examines the role of small and medium-sized enterprises (SMEs) as a cornerstone of modern economic development. Drawing upon global practices and Uzbekistan’s recent reforms, it explores the contribution of SMEs to employment generation, innovation, and GDP growth. The paper provides a comparative analysis of SME performance across major economies (United States, European Union, China, Japan, India) and evaluates the latest official indicators for Uzbekistan using statistics from the Agency of Statistics under the President of the Republic of Uzbekistan (stat.uz). Two empirical charts visualize global and national patterns, and policy recommendations are offered to deepen SME impact on growth and inclusion. Keywords: small and medium enterprises, entrepreneurship, economic growth, innovation, employment, Uzbekistan, global economy, state policy. Introduction. Small and medium-sized enterprises (SMEs) are recognized as key engines of balanced and inclusive growth. Across advanced and emerging economies alike, SMEs underpin job creation, competition, innovation diffusion, and regional development. In Uzbekistan, SME development has become a strategic priority, with reforms focused on simplifying taxation, improving access to finance, strengthening property rights, and accelerating digital adoption. Literature Review. The World Bank and IFC consistently report that SMEs account for about 90% of firms and roughly half of global employment, while contributing around half of world GDP on average. OECD analyses further emphasize that SME ecosystems thrive when finance, innovation, trade facilitation, and skills policies work in tandem. In developing economies, targeted credit guarantees, export promotion, and digitalization programs have proved especially impactful. Global Overview and Comparative Analysis. SMEs dominate the firm population worldwide and contribute materially to GDP and employment, though magnitudes vary by region and measurement. In the United States, small businesses account for approximately 43.5% of GDP and employ about 46% of workers (U.S. SBA, 2024). In the European Union, SMEs generate a majority share of value added in the non-financial business sector and remain pivotal to employment and innovation (European Commission, 2023). China reports that SMEs contribute roughly 60% of GDP and about half of tax revenue, highlighting their centrality to growth, exports, and urban employment. International comparisons also reveal differing structural roles. In Japan, SMEs historically represent around 55% of value added and nearly 70% of private employment, underscoring their foundational place in supply chains. India’s MSME sector contributes about one-third of GDP and more than 45% of exports, reflecting rapid formalization and integration into domestic and global markets. Such differences arise from sectoral composition (manufacturing vs. services), firm size distribution, productivity gaps with large firms, and the maturity of finance and innovation systems. Policy frameworks are converging on a few pillars: (i) easing access to finance through credit guarantees and fintech-enabled lending; (ii) enabling SME internationalization via trade JOURNAL OF IQRO – ЖУРНАЛ ИҚРО – IQRO JURNALI – volume 18, issue 02, 2025 ISSN: 2181-4341, IMPACT FACTOR ( RESEARCH BIB ) – 7,245, SJIF – 5,431 www.wordlyknowledge.uz ILMIY METODIK JURNAL facilitation and e-commerce; (iii) boosting innovation capacity through incubators, tech parks, and R&D incentives; and (iv) closing skills gaps with vocational and digital training. OECD and World Bank reviews stress that bundling these levers yields stronger productivity effects than isolated interventions. Figure 1. Global SME Contribution to GDP (Selected Economies, latest available ~2023). Sources: U.S. SBA Office of Advocacy (2024); European Commission Annual Report on European SMEs (2023); EU SME Centre (China, 2025); Government of India—PIB (2024/2025); stat.uz (Uzbekistan, 2023). SME Development in Uzbekistan (2023–2024). According to the Agency of Statistics under the President of the Republic of Uzbekistan, small business entities accounted for 51.2% of GDP in 2023. For January–June 2024, the share recorded 47.5% (reflecting within-year seasonality), while January–September 2024 data point to 53.8%. These figures confirm that SMEs consistently generate about half of national value added. Employment and sectoral structure: SMEs dominate employment, particularly in agriculture, construction, and services. Recent statistical releases indicate that the SME share in sectoral output is especially high in agriculture, forestry and fisheries (near 97%), and remains substantial in construction and services. Industrial SME output exceeded a third of total industrial production in recent releases, evidencing ongoing diversification. Exports and finance: Uzbekistan’s SME policies focus on export promotion (certification, logistics, trade finance), digitalization (tax e-filing, e-commerce), and access to finance (concessional lending and credit guarantees). Public programs are complemented by multilateral support (ADB Asia SME Monitor) and domestic initiatives promoting youth and women’s entrepreneurship. JOURNAL OF IQRO – ЖУРНАЛ ИҚРО – IQRO JURNALI – volume 18, issue 02, 2025 ISSN: 2181-4341, IMPACT FACTOR ( RESEARCH BIB ) – 7,245, SJIF – 5,431 www.wordlyknowledge.uz ILMIY METODIK JURNAL Regional dynamics: Growth of SMEs has been broad-based, with vibrant activity in Tashkent City and regions such as Samarkand and Fergana, while policy attention continues to address infrastructure and skills bottlenecks in less-connected areas. Over the medium term, green and digital transitions are expected to further raise SME productivity and export readiness. Figure 2. Uzbekistan—SME Share of GDP, recent data points (2019–2024 where available). Sources: stat.uz press releases: 'IX. Small business entities' (Jan–Dec 2023), GDP bulletin (Jan– Jun 2024), and analytical note (Jan–Sep 2024). Challenges and Policy Recommendations. Key constraints persist: collateral-heavy lending practices, uneven innovation capacity, export market frictions (standards, logistics), informality, and infrastructure gaps in lagging regions. Priorities include: scaling credit guarantees and alternative data for SME credit scoring; strengthening export services and supplier development programs; deepening university–industry linkages; and accelerating green and digital adoption. Conclusion. SMEs are pivotal to economic diversification, employment, and innovation worldwide. Uzbekistan’s experience—where SMEs consistently generate about half of GDP— illustrates the payoff from sustained reforms. Continued investments in finance, trade, skills, and technology will further unlock SME productivity and help embed the sector in global value chains. References (selected open sources): 1. World Bank – SME Finance: https://www.worldbank.org/en/topic/smefinance 2. U.S. SBA Office of Advocacy (2024) – FAQ: Small businesses are 43.5% of GDP: European Commission – Annual Report on European SMEs 2022/2023 (PDF): https://singlemarket-economy.ec.europa.eu/system/files/202308/Annual%20Report%20on%20European%20SMEs%202023_FINAL.pdf JOURNAL OF IQRO – ЖУРНАЛ ИҚРО – IQRO JURNALI – volume 18, issue 02, 2025 ISSN: 2181-4341, IMPACT FACTOR ( RESEARCH BIB ) – 7,245, SJIF – 5,431 www.wordlyknowledge.uz ILMIY METODIK JURNAL 3. EU SME Centre (2025 update) – China SMEs contribute ~60% of GDP: https://www.eusmecentre.org.cn/publications/sme-policy-environment-report-2025-update/ 4. Government of India – PIB (2024/2025) MSME share of GDP and exports: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2035073 5. Uzbekistan statistics (stat.uz) – IX. Small business entities (2023): https://stat.uz/files/428/choraklik-natijalar-yanvar-dekabr2023en/3181/9Small-business.pdf 6. Uzbekistan statistics (stat.uz) – GDP bulletin Jan–Jun 2024: https://stat.uz/files/460/quarterlyreportsjanuaryjune/3420/1GROSS-DOMESTIC-PRODUCT.pdf 7. Uzbekistan statistics (stat.uz) – Analytical note Jan–Sep 2024: https://stat.uz/img/ishbilarmonlikdan-eng-mb-press-reliz_p86983.pdf 8. ADB Asia SME Monitor – Uzbekistan: https://data.adb.org/media/13351/download