American Journal of Business Management, Economics and Banking ISSN (E): 2832-8078 Volume 34, March - 2025 P a g e | 49 www.americanjournal.org METHODS OF ASSESSING THE ECONOMIC EFFICIENCY OF THE INDUSTRIAL SECTOR AND THEIR IMPROVEMENT Kasimov Azamat Abdukarimovich Tashkent State University of Economics Associate Professor of Economics, DSc Email:a.kasimov@tsue.uz A B S T R A C T K E Y W O R D S This article examines in detail the economic efficiency indicators of the industrial sector and their calculation methods. Using existing methods, their improved methods and boundary criteria are proposed. Also, based on these methods, the economic efficiency of the industrial sector's resources is assessed and analyzed. In addition, proposals are developed to improve the economic efficiency of the industrial sector. Industry, efficiency, economic efficiency of the industrial sector, evaluation methods, evaluation criteria. Introduction In the current global crisis and geopolitical situation, there is a decrease in the level of economic and technological efficiency in the industrial sector, in particular, a decrease in the efficiency of labor and other economic resources in the sector. However, increasing efficiency in industrial production has always been a key indicator of the long-term well-being and development opportunities of societies. In particular, the share of industrial products in GDP is 24.4 percent in Germany, 25.2 percent in Poland, 20.7 percent in Switzerland, 20.4 percent in Italy, 28.6 percent in Kazakhstan [8] and 26.7 percent in Uzbekistan, as well as 32 percent of total employment in China, 27 percent in Germany and Italy, 24 percent in Japan, 22 percent in Kazakhstan and 13.5 percent in Uzbekistan [9]. Therefore, in recent years, our country has been implementing intensive reforms to effectively use and further develop the existing potential of the industry, modernize industrial production and diversify products, digitize processes, increase investment attractiveness, and increase the efficiency of the sector based on the effective use of existing factors in order to achieve sustainable economic development, improve the living standards of the population, and increase the share of industry in providing employment. In Uzbekistan, within the framework of the “Uzbekistan-2030” strategy, such important tasks as “Development of “driver” industries and full utilization of the industrial potential of the regions, bringing the value added in the industry to 45 billion dollars and creating 2.5 million high-income jobs, increasing the share of technological products produced in the industry from 25 to 32 percent, and doubling labor productivity in the processing industry” have been set [1]. In order to ensure the American Journal of Business Management, Economics and Banking Volume 34 March - 2025 P a g e | 50 www.americanjournal.org effective implementation of these tasks, it is necessary to conduct a deep analysis of the existing industrial potential in our country, ensure its effective use and further sustainable development, select the factors affecting it and economically assess its condition, as well as develop scientifically based proposals and practical recommendations by developing forecast indicators for the future. This reflects the relevance of the topic of this research. Analysis of literature on the topic The study of the level of development of industrial sectors over a certain period of time allows us to assess their resilience to external influences and to identify those sectors that have achieved economic growth and continue to develop in difficult conditions [2]. At the same time, the assessment based on efficiency indicators expresses the relationship between “inputs” and “outputs” of the sector's activities. It also helps to better understand how resources are allocated and used for various products [3]. In addition, the assessment of the efficiency of industrial production is useful for the effective organization of material and labor resources, as well as time-saving measures [4]. According to M. Mojaverian, economic growth in each sector requires an increase in the volume of production in this sector. According to the theories of production and supply, production can be increased in two ways: first, by increasing production by using more factors of production, and second, by using advanced technologies and using factors of production efficiently [5]. In our opinion, it is precisely in the conditions of today's uncertainty and market economy that it is appropriate to increase production volumes based on the "second theory" mentioned above. Because resources are limited and their cost continues to increase. This requires the efficient and optimal use of resources in industry, and this process is carried out on the basis of an assessment of economic efficiency in the sector. However, in practice, the economic efficiency of an industrial sector cannot be assessed by a single methodology or by a single method. Because this is a complex process, namely, the complexity lies in the fact that, firstly, it is not possible to measure the factors used in real time or accurately calculate the results (indicators), and also some factors cannot be measured at all (for example, quality factors and environmental factors). Therefore, there are different scientific views on this issue. In particular, according to AT Trofimova, the economic efficiency of industry should be assessed not by a single indicator, but based on the dynamics of a system of economic efficiency indicators. Including labor productivity, capital efficiency, material efficiency, cost indicators, reserve capacity of a production unit, material consumption, labor intensity, etc. Economists N.S. Kalita and G.I. Mantsurov emphasized that when assessing economic efficiency based on generalized methodologies, the following should be taken into account [7]: - reduce costs, taking into account savings in labor and material costs; - achieving growth rates in production volume and labor productivity; - conditional savings in capital investments resulting from the efficient use of fixed production assets; - saving management costs resulting from improving the entire structure and organization of management. As noted above, it is appropriate to consider the economic efficiency of the industrial sector by areas of activity. In particular, management efficiency, economic efficiency, financial efficiency, innovation efficiency, investment efficiency, and social efficiency. American Journal of Business Management, Economics and Banking Volume 34 March - 2025 P a g e | 51 www.americanjournal.org Research Methodology This study examines the methods of assessing the economic efficiency of the canoe network and empirical studies and theoretical views on their improvement. Also, based on empirical studies and theoretical views, the methods of assessing the economic efficiency of the canoe network were improved. The study used analysis and synthesis, deduction and induction, tabular, graphical, economic and mathematical methods, as well as the works of local and foreign scientists on the topic. Analysis and Results As noted above, economic efficiency ( efE ) are important indicators, and according to classical and non-classical economic theories, it is generally expressed as follows. F R Eef = (1) here, R – total income, F – total resources. This formula is a general expression of the assessment of economic efficiency, and its components are the following assessment methods. 1) Efficiency of fixed and working capital (return) in the industrial sector ( f bE and f wE ). BF Q E f b = (2) here, Q – volume of industrial products, BF – the annual average value of fixed assets. WF Q E f w = (3) here,WF – the annual average value of working capital. 2) Capital efficiency in the industrial sector ( kE ). K Q Ek = (4) here, K – capital volume. 3) Labor productivity in the industrial sector ( pL ). L Q Lp = (5) here, L – labor costs. This can be used to make an assessment of all resources used in the industry. It is also important to economically assess the efficiency of working capital use in industrial enterprises in a market economy. Because in such conditions based on strong competition, the marginal revenue of enterprises is equal to their marginal cost ( MCMR = ). This represents the optimal state in which the enterprise can achieve the highest efficiency. Therefore, it is necessary to find an answer to the question "is it in an optimal state where it can achieve high efficiency or not?" for each industrial enterprise. In this case, the financial assessment of the efficiency of the activities of industrial enterprises is a general assessment method, which does not indicate whether the enterprise is using financial resources optimally. Therefore, it is appropriate to American Journal of Business Management, Economics and Banking Volume 34 March - 2025 P a g e | 52 www.americanjournal.org economically assess the efficiency of the use of each financial resource (factor) used in industrial enterprises. Based on this study, we propose the following methods for calculating the main indicators of the economic efficiency of the industrial sector: efficiency of fixed and circulating funds (return), capital efficiency, labor productivity, efficiency of investment return and innovation efficiency (Table 1). Table 1 Indicators for assessing the economic efficiency of an industrial sector and methods for calculating them1 Efficiency indicator Calculation method Note Fixed assets efficiency ( f bE ) 100/1 BF Q E f b −= Q – volume of industrial products, BF – the annual average value of fixed assets. Working capital efficiency ( f wE ) 100/1 WF Q E f w −= WF – the annual average value of working capital. Capital efficiency ( kE ) 100/1 K Q Ek −= K – capital volume. Labor productivity ( pL ) 100/1 L Q Lp −= L – labor costs. Return on investment efficiency ( ef wI ) (the volume of additional output per investment cycle) w ef w K Q I  = , → 21 QQ  Q – additional production volume, wK – turnover of working capital. Innovation efficiency ( ef innIn )* 4 2222 ef inn ef inn ef inn ef pef inn TPRACL In +++ = ef pL – contribution of talented personnel, ef innAC – contribution to innovative activities, ef innPR – innovative product contribution, ef innT – the contribution of innovative technologies. Note:* The integral indicators used to calculate this indicator are defined as follows. 1) Contribution of qualified personnel ( ef pL ). t pef p L L L = (6) 1Developed by the author. American Journal of Business Management, Economics and Banking Volume 34 March - 2025 P a g e | 53 www.americanjournal.org here, pL – the number of skilled workers employed in the industry (or their labor input), tL – the total number of employees employed in the industry. 2) Contribution of innovative activity ( ef innAC ). t innef inn AC AC AC = (7) here, innAC – the number of newly established innovative activities (directions), tAC – total number of activities (directions). 3) Contribution of innovative products ( ef innPR ). t innef inn PR PR PR = (8) here, innPR – the volume of newly produced innovative products (services), tPR – total volume of products (services). 4) Contribution of innovative technologies ( ef innT ). t innef inn T T T = (9) here, innT – newly introduced innovative technologies, tT – total technologies. The proposed (Table 2) threshold criteria for assessing the economic efficiency of the industrial sector can be expressed as follows. Table 2 Evaluation criteria and threshold values of economic efficiency indicators of the industrial sector2 No. Evaluation indicators Evaluation criteria and threshold values 1 Fixed assets efficiency ( f bE ) This indicator 1< − f bE It accepts interval values and can be evaluated in 4 ways according to the following threshold criteria: - the efficiency level is zero, in which 1=f bE if; - low efficiency, in which 1<<0 f bE if; - the level of efficiency is medium, in which 0=f bE if; - high level of efficiency, in which 0