Regional Economic Transformation: The Influence of Industrialization, Service Sector Expansion, and Investment

In this analysis, the author analyses the combined influences of industrialisation, growth in the service sector and investment in fixed capital toward economic growth of different regions in Uzbekistan using a panel of fourteen administrative regions from 2015 - 2024. To evaluate these variables, the author employs a pooled ordinary least squares analysis with robust standard error estimators for heteroscedasticity, in addition to performing Pearson correlation analysis and conducting a tier-based comparison on the elasticities of investment. The results demonstrate that fixed capital invested per capita served to predict regional gross product growth at the highest (β =0.0629 for each dollar invested or $100/person, p=0.0015), while the relationship between the share of industrial value-added and investment intensity was shown to be very strong (r =0.733). Additionally, the steepest slope in the investment-growth relationship was observed in the regions of the highest industrial tier, indicating that capital has a greater influence on growth compared to other forms of capital when based on an established industrial base.

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