Econometric Assessment of the Impact of Investment Activity on the Efficiency of Small Business (on the Example of Surkhandarya Region)

The article presents an econometric assessment of the impact of investment activity on the efficiency of the small business sector on the example of Surkhandarya region of the Republic of Uzbekistan. The empirical analysis is based on a balanced panel of fourteen districts and the city of regional subordination of Surkhandarya region for 2019–2025 (98 observations). Small business efficiency is measured by the real gross output of small business entities per capita, while investment activity is represented by investment in fixed capital per capita, bank credit to small business per capita, the density of small business entities, and the level of digitalization of business services. Pooled OLS, fixed effects and random effects specifications of a log-linear model are estimated, and the choice between them is verified by the F-test for individual effects and the Hausman test; the robustness of the results is confirmed by heteroskedasticity, autocorrelation and multicollinearity diagnostics. The estimates show that a one percent increase in investment in fixed capital per capita is associated, other things being equal, with an increase in small business output per capita of about 0.49 percent; the elasticities with respect to bank credit and small business density amount to 0.15 and 0.26 respectively, and a ten percentage point increase in digitalization coverage adds about 3.7 percent to sectoral output. The results substantiate the priority of investment-oriented instruments of regional small business policy and allow the expected effects of investment programs in the districts of Surkhandarya region to be quantified.