R&D and Invesntment as key factors of Manufacturing Development in Uzbekistan

In this paper, the authors explore the complementary concerns of investment and innovation as far as the industrial development of Uzbekistan is concerned in the context of its recent economic transformation. The study evaluates the effects of gross fixed capital formation and innovation expenditures on manufacturing value added using an econometric model of OLS with HAC corrections using data of 2013-2022. The findings indicate that although investment in physical capital is the main force of industrial growth in initial stages of development, innovation has a greater effect on efficiency and longer-term effects of this investment. The two variables have a strong positive relationship, which attests to the fact that the industrial diversification relies on the concerted policies involving the combination of capital growth with technological advancement. The results are empirical evidence that Uzbekistan is shifting to a capital-driven model to the knowledge centric-based industrial policy, which requires the creation of innovation ecosystems, human capital building, and closer connection between science and industry.

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