Effective Reform

From Breakthrough towards a Dynamic and Motivated Society


     In 2018, the President adopted an important document aimed at uniting the efforts of public administration and executive bodies and organizations in innovative development – the Decree “On approval of the Strategy of Innovative Development of the Republic of Uzbekistan in 2019-2021”. This Decree approved the Strategy for Innovative Development of the Republic of Uzbekistan for 2019-2021. The main goal of the Strategy is to develop human capital. Also, Uzbekistan’s taking place among the top 50 countries of the world in the ranking of the Global Innovation Index by 2030 is set as one of the main tasks.
     As a result of reforms in the field of innovation in the country in recent years, Uzbekistan was re-included in the international ranking of the Global Innovation Index in 2020 after a five-year break, rising by 29 points compared to 2015.
Currently, the Ministry of Innovative Development has developed a Strategy for Innovative Development of the Republic of Uzbekistan for 2022-2030, which is currently being discussed with relevant organizations and institutions. This strategy is a logical continuation of consistent reforms that have taken place so far in the Republic of Uzbekistan to be among the top 50 developed countries in the Global Innovation Index by 2030.
     So, what fundamental work has been done in the field of science and innovation in the country in the past short period?
     First of all, the basic salaries of professors with doctoral degrees in higher education and research institutions are 3.2 times higher than in 2016, and the monthly salary of scientists in the country due to the introduction of additional payment for employees with scientific degrees engaged in pedagogical work increased 5 times.
     Three important documents defining the legal foundation for further development of science and innovation and strengthening the scientific potential of personnel were adopted – the Law “On Science and Research Activity,” the Law “On Innovative Activity” and the Law “On Education”.
     At present, the mechanism of state order for research work on the basis of international best practices has been introduced in our country. As a new procedure, the state order for thematic projects, where the final product and the amount of funding are clear, is regularly announced. As a result, a competitive environment has been created, with the opportunity to receive permanent grants. Compared to 2017, funding for one project increased by 3.5 times, and at least 40% of the funds were directed to procurement of necessary equipment, reagents and materials for research activities.
     The country has a startup ecosystem that covers all stages from idea to consumer in support of science-intensive startup projects. For the first time, a system of support and financing of startup projects has been formed at the expense of state grants, the total cost of which is 40.5 billion soums. 48 startup projects worth soums were financed and production of competitive new products was organized.
     Technology transfer has been introduced for rapid introduction of science-based new technologies into the country’s economy. Based on the transfer of advanced technologies, investment projects with the the total cost of 3.3 million USD have been implemented.
     In 2018-2020, 18 scientific organizations, 10 research centers and 4 techno parks were established. A new system of commercialization of scientific developments has been launched with participation of the trio “Scientist-Bank-Entrepreneur” based on interest in the commercialization of scientific developments. As part of the commercialization of scientific developments, projects worth 149.5 billion soums were developed, and the volume of products manufactured based on the research amounted to 62 billion soums.
     A simplified procedure for purchasing scientific laboratory equipment has been introduced. From 2018 to date, 69 pieces of laboratory equipment have been installed in 9 research institutions, and according to the new simplified procurement procedure, in 2020, more than 200 pieces of laboratory equipment were purchased for 15 research institutions. 30.4 million USD were allocated for the purchase of modern laboratory equipment for research institutions and 116 bln. soums were allocated for reconstruction of buildings and facilities. In addition, reagents for government organizations engaged in research activities are included in the list of goods purchased by government customers on the basis of direct contracts.
     To support the initiatives of talented young people and develop their scientific potential, the Youth Academy was established under the Ministry of Innovative Development. Currently, the Academy has more than 2,000 members and 15 leaders in all regions of the country.
     In 2020, the Youth Academy announced a call for practical and innovative projects worth 30.2 billion soums to support applied and innovative projects of young scientists.
     In April 2021, based on the needs of the real sector of the economy and the social sphere, the National Office for Innovation and Technology Transfer was established under the Ministry of Innovative Development to increase the efficiency of commercialization of research results, as well as to facilitate the technology transfer and localization of foreign technologies.
     Regional Innovative Development Departments were established in the Republic of Karakalpakstan and regions to further accelerate innovative activities in the regions, develop proposals for scientific and technical solutions to existing socio-economic problems, ensure the commercialization of regional research projects, to fully support the ideas and initiatives of the population, especially youth.
     According to international experience, the innovation ecosystem consists of interrelated “disruptive”, “sustainable” and “efficient” innovations. “Disruptive” innovations imply setting up the manufacturing of products or services that have completely different features and capabilities from traditional ones, and in most cases require huge funding. However it is of great importance as it leads to the creation of many new jobs. “Sustainable” innovations meant to ensure the sustainability and continuous improvement of “disruptive” innovations in a rapidly changing consumer market. They do not create new jobs and do not require large funding (they stabilize and keep attractiveness of the “disruptive” innovation market and consumers).
     In Uzbekistan, there is no integrated system for creation of a cyclical relationship of “disruptive” – “sustainable” – “efficient” innovations, which includes the cycle of attracting a capital by the innovation itself – “innovation-capital-innovation”, and its main processes remain very fragmented. One of our priority tasks to be accomplished by 2030 is to explain to participants of the innovative ecosystem the essence of such a cyclical innovative ecosystem, to create legal and financial conditions for its operation, and to define the tasks and responsibilities of each link.
     The number of young people under the age of 30 in our country is more than 18 million. This is about 55% of the population. It is also acknowledged that the official unemployment rate among 18-30 year-old population today is 17 %. By the end of 2021 alone, the demand for new jobs among young people will exceed 1,350,000. There is a stable dynamics in lists of individuals included in the “iron,” “women,” “youth” books, based on the need for employment in the country.
     Consistent reforms aimed at ensuring employment of the population, especially youth and women, are being carried out in the country. In particular, 2021 has been declared the Year of Youth Support and Public Health. New systems for working with young people are being introduced, and the proposals of boys and girls are being studied according to the “makhallabay” concept. In all regions of the country, employment is being organized to support youth entrepreneurship and provide them with vocational training.
     Today, the development of the regions of the republic is carried out through the extensive use of natural resources. The growing risk of depletion of existing natural resource calls for creation of industrial clusters that incorporate the best international practices of the world’s leading countries in increasing the share of science-intensive (innovative) products in the country’s gross domestic product (GDP).
     According to global experience, clustering covers about 50% of the economies of leading countries. In the United States, more than 55% of businesses operate in clusters. The share of clusters in GDP exceeds 65%. There are more than 2,000 clusters in European countries, which, by merging innovative enterprises, on the one hand, achieve effective innovation activity, on the other hand, provide employment to 38% of the population by creating new jobs.
     The analysis shows that creating a clustering system in Uzbekistan requires the development of a cluster policy and creation of public administration in ensuring its integration into the world economy, development of its regulatory framework, development of a single concept and compliance criteria, the formation of a cluster register, ensuring integration with research and higher education institutions, as well as the training of highly qualified specialists in the field.
At the same time, it is necessary to work on the task of creating a continuous mechanism for returning a certain part of the value created by innovation to creation of new products and jobs. The reason is that any “disruptive” innovation, which creates new product and jobs requires constant capital investment.
     In this regard, of course, although the main source of funding for “disruptive” innovations are the state budget and targeted innovation funds, effective innovators and stakeholders, including industry and cluster enterprises and commercial banks (other organizations) should continue to invest a part of the capital created by innovations back to the work on “disruptive” innovations based on mutual interest mechanisms.
     According to world experience, in the United States, Europe, Canada and the Organization for Economic Co-operation and Development (OECD) member states, there is a system of directing a part of the capital created by carbon and mining companies to research and development of “disruptive” innovations in the country and the system of various tax incentives for innovative activities. Following the reforms in the United States, since 2018 such practices have been introduced and strengthened in several other countries, such as Austria, Denmark, Hong Kong, New Zealand, Singapore, and Poland.
     The entry of the Republic of Uzbekistan into the list of 50 advanced countries with innovative development by 2030 requires development of flexible national infrastructure in accordance with market requirements, development of the country’s scientific potential, the effectiveness of research activities and the degree of their commercialization, ensuring the continuity of the entire supply chain in the industries and services from primary raw materials to the consumer. The low number of enterprises with international quality certificates, the high demand for new jobs shows the need to reduce poverty among the population, ensure the employment of youth and, as noted above, the development of a new and sustainable innovation ecosystem in Uzbekistan, and consistent reforms in science, technology and innovation.
     To achieve the main objectives of the Strategy, further development of human capital in innovation management through the development of creativity, innovative entrepreneurship and rationalization skills at all stages of education is set as the main task. Special attention will also be paid to the development of infrastructure to support startup initiatives through the establishment of networks of innovative infrastructure entities (techno parks, startup accelerators, incubators and technology transfer offices). The strategy also aims to stimulate the demand for innovations by providing a comprehensive system of creating new types of products and innovative technologies from the idea to the final consumer, increasing the share of innovative active enterprises by improving institutional mechanisms of state support for innovative activities.
     Along with the development of human capital, the development of infrastructure to support startup initiatives will be carried out through the establishment of a network of innovative infrastructure entities (techno parks, startup accelerators, incubators and technology transfer offices).
     Through the introduction of innovations and the expansion of technology transfer centers, promising innovative projects, acceleration of startup initiatives, logistics and financing services will be provided. In turn, technology licensing centers will help to establish close cooperation between research institutes, universities and industry, prepare license agreements for the sale of intellectual property, locating the consumer market for the technology.
     Establishment of modern mechanisms for financing startup initiatives and projects such as venture, crowd funding, and expansion of simplified financing measures based on a competitive environment, such as “Future Scientist,” “Hackathon” competitions, “Techno ways” marathons will ensure the entry of new services and products into the market. A single management system for innovation centers will be established, providing regional innovation centers and technology parks with qualified personnel.
     The formation of the business environment and activities in higher education institutions, as well as technological transfers of research results are encouraged through the establishment of academic “spin-off” companies. They will ensure the entry of national brand products and services, including digital software products into the global markets.
     The first steps are being taken towards promotion of the interest of the private sector in research and development and strengthening its cooperation with research institutions, encouraging private sector participation in innovation and co-finance, including through special support measures for private enterprises engaged in research and development or financing activities.
     There is also a need to raise awareness among scientists and entrepreneurs and young people about the importance of protecting intellectual property. In this area, measures will be developed and implemented to strengthen the regulation of illegal use of intellectual property and increase accountability.
     Another important area is to increase the innovative activity of small business. In turn, the commercialization of local scientific, rationalization and startup developments will be expanded through the introduction of effective mechanisms aimed at establishing close cooperation of regional higher education and research institutions with community institutions for the continued support of small innovative manufacturing activities.
     In 2022-2025, the organization of small innovative production requires the formation and gradual implementation of a ready-made portfolio of “1000 innovative projects.” Also, regional programs of innovative development will be developed, taking into account the economic specialization, scientific and technical potential and available resources of the regions, with the transfer of successful small innovative manufacturing enterprises to other geographical regions of the country.
     To identify young talents in the regions, to encourage and engage them in science, a new generation of scientific communities and schools must be formed through initiating the “Academic Mobility” and “Future Scholar” programs in major higher education institutions, the Youth Academy and the Academy of Sciences.
     It is appropriate to mention successes and achievements in this area. For example, the transformation of Urgut district of Samarkand region, Altynsay district of Surkhandarya region, Chust district of Namangan region and Marhamat district of Andijan region into innovative ground was met with great interest by entrepreneurs and the population. The initiative of the President of the country to implement development projects based on the specifics of each region has fully justified itself.
     A number of measures are also planned to create capital through the development of a network of innovative clusters. In particular, taking into account international best practices, a single concept and law on “cluster” and “cluster policy” will be developed in our country. Establishment of innovative clusters or large enterprises on the basis of the mechanism of mutually beneficial “pinocytosis” (inclusion and development) of startups and small innovative enterprises, modernization of existing ones will lead to the expansion of the market of innovative and high-tech products.
     At the same time, based on international experience, it is planned to direct the mandatory allocations of one percent of the taxable profits of companies with a state share of 50 percent or more in the charter capital, as well as state-owned enterprises to create and implement “disruptive” innovations. A system will be established to provide for voluntary allocation of up to one percent of the value of products sold on a quarterly basis for scientific activities and “radically renewable” innovations by other enterprises and organizations, regardless of the type of incorporation.
     These are the plans and goals that are to be implemented in a historically short period of time. Such changes will certainly give a positive impetus to a number of industries that have lagged behind in introduction of modern innovations for many years, living with yesterday’s principles and concepts in a very wide range of industries, from property relations to manufacturing and services. Ultimately we will come to the innovative, active and enterprising society with a culture of regularly investing in “disruptive” innovations aimed at solving their needs and problems.
Minister of Innovative Development, Academician


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