The article confers urgency of establishing clusters in textile industry. Particular focus is given to resource interaction among compound elements of national textile cluster. Policy recommendations targeted to development of cluster in the textile sector of Uzbekistan are provided.Cluster, textile industry, competitiveness, cotton fiber, innovations., Industrial Organization, Marketing, Production Economics, L67, O25,

Nasirkhodjaeva, Dilyafruz

English

Research Papers in Economics

Perspectives of Innovations, Economics & Business, Volume 4, Issue 1, 2010          
www.pieb.cz 
54 
International Cross-Industry Journal  
 
FORMING A CLUSTER STRATEGY  FOR  
TEXTILE INDUSTRY DEVELOPMENT IN 
UZBEKISTAN 
 
  DILYAFRUZ NASIRKHODJAEVA, PH. D.    
 
Institute of Economics 
The Academy of Sciences, Uzbekistan  
JEL Classifications: L67, O25 
Key words: Cluster, textile industry, competitiveness, cotton fiber, innovations. 
Abstract: The article confers urgency of establishing clusters in textile industry. Particular focus is given to resource 
interaction  among compound elements of national textile cluster.  Policy recommendations targeted to development of 
cluster in the textile sector of Uzbekistan are provided.   
ISSN: 1804-0527 (online)  1804-0519 (print)    PP.54-56  
 
Being one of the most prospective branches of national 
economy,  textile  industry  contributes  essentially  to 
providing  employment  and  production  of  industrial  and 
consumer  goods.  State  Joint  Stock  Company 
Uzbekyengilsanoat  (Uzbek  Light  Industry)  currently 
prioritizes  the  issues  of  determining  sustainable 
development strategy, extensive support to enterprises for 
encouraging  foreign  investments,  creating  of  new 
production facilities, technical modernization and upgrade 
of  existing  capacities,  increase  of  personnel  qualification 
and  promotion  of  local  products  in  domestic  and 
international markets. 
It  is  well-known  that  Uzbekistan  is  the  largest  cotton 
producer  in  the  Central  Asian  region  holding  5
th  rank  of 
largest  cotton  producing  countries  and  second  cotton 
exporter in the world. The importance of textile industry in 
Uzbek economy can be judged by the following facts: the 
sector  concentrates  one-third  of  industrial  workers  of  the 
country, it shares 20% of total industrial production volume 
and over 50% of consumer goods.       
There are all preconditions available in Uzbekistan for 
developing textile industry, including substantial resources 
of  raw  materials,  mainly  high  quality  cotton  fiber,  low 
power supply cost, skilled and cheap manpower, capacity of 
regional  markets  etc.  Therefore,  in  order  to  enjoy 
competitive advantages of this sector, formation of cluster 
strategy is required.   
Strategically,  in  the  developed  countries  a  cluster  is 
considered  as  a  tool  for  implementing  industrial 
development  policy  of  the  region  or  the  whole  country. 
Also, there are approaches proposing a cluster as a vehicle 
for enhancing competitiveness of industrial sector.  A key 
aspect of such strategic approaches (Zakharov, 2006) is a 
final objective, which by-turn, determines the type of cluster 
(industrial, competitive, innovative).  
Cluster development practice in he developed countries 
reveals that clusters: 
-  offer  privileged  and  cheap  access  to  specific 
production  factors  (e.g.  technology,  qualified  personnel 
etc.); 
- allows to accumulate specific information /knowledge, 
access to which bears less expenditures; 
- ensure complementarity of activities increasing quality 
and efficiency (Porter, 2000). 
In  many  countries  government  created  conditions  for 
developing  clusters,  thus  providing  macroeconomic 
stability,  capacity  building,  innovations;  developing 
production and market infrastructure, logistics; supporting 
SMEs  and  forming  good  business  environment.  In  this 
process,  initiatives  of  local  authorities  and  business 
community to use efficiently  available sectoral or regional 
competitive  advantages  played  essential  role.  Such 
approach has become known as “cluster initiative” that can 
be determined as “organized attempt to accelerate growth 
rate and competitiveness of cluster in a certain region by 
engaging cluster firms, government or research institutes” 
(Solvell et al., 2003). 
Research  of  cluster  initiatives  is  mainly  based  upon 
particular examples or case studies. Denmark, Netherland, 
Belgium, Canada, Finland, as well as South Africa, France 
and  Italy  represent  those  example  countries  which  have 
been developed cluster strategies (Tsikhan, 2003). It should 
be noted, though, that cloning of cluster strategy of some 
country is not possible. Efficiency of cluster strategy rests 
on  particularities  of  each  country,  region  and  economic 
sector, which become sources of competitive advantage. 
International  practice  shows  that  for  the  developing 
countries  establishing  cluster  strategy  based  upon 
competitive  advantages  of  individual  industries  becomes 
increasingly important. Selecting priority economic sectors 
providing  competitiveness  both  on  domestic  and 
international level appears to be an important part. Limited 
resources of a developing country require focusing on few 
bearing sectors that have capacity to sustain international 
competition.  These sectors certainly should be leveraged by 
free  market  tools,  stimulated  through  institutional  and 
infrastructure conditions created by government.    
In  Uzbekistan  the  textile  and  apparel  industries 
represents  those  sectors  which  are  labour-intensive, 
provided  with  sufficient  stock  of  material  resources, 
developed  infrastructure  and  innovation  basis.  Successful 
experience  of  China,  Korea,  Turkey  and  other  countries 
confirms  that  mentioned  industrial  sectors  should  form  a 
foundation for further implementation of cluster strategy.  
That assumes interaction between every single structural 
elements of the cluster in the relation with the cluster’s key 
activities, which is, in this case, textile industry. Apart from 
that, this model proposes inclusion of the cluster in regional, 
national and global economy, thus its openness for resource 
flows from outside.  
Resources  circulating  within  the  cluster  are  extremely 
diverse.  Table  1  structures  the  interrelation  between 
structural components of regional textile cluster in terms of 
supply, consumption, circulation and transformation of the 
resources. Perspectives of Innovations, Economics & Business, Volume 4, Issue 1, 2010          
www.pieb.cz 
55 
International Cross-Industry Journal  
TABLE 1. RESOURCE INTERACTION OF STRUCTURAL ELEMENTS IN REGIONAL TEXTILE CLUSTER 
Type of 
resource 
Resource components   Supply source  Level and components of 
interaction 
Conditions for better 
efficiency 
Human  Manpower: 
-  workers 
-  specialists 
-  office workers 
-  labour market including  the 
one inside cluster 
-  universities 
-  colleges 
-  personnel training department 
of enterprises 
-  internal environment of cluster 
-  main interaction direction 
“education infrastructure  - 
textile industry” 
-  interaction with other cluster 
participants   
-  more efficient use of 
manpower requires  
consolidation of efforts of 
cluster participants  
-  synergy effect is possible 
Material  -  plant raw materials 
(cotton fiber) 
-  raw material of animal 
origin (silk, wool) 
-  chemical fibers 
-  yarn, dyes, auxiliary 
substances and 
materials 
-  ginning factories 
-  chemical and petrochemical 
enterprises 
-  textile enterprises 
-  internal environment of cluster 
-  interaction levels: «raw material 
suppliers - textile industry»; 
«auxiliary materials suppliers - 
textile industry»; inside textile 
industry by production 
processes 
-  more efficient use assumes  
higher quality of supplies 
Facility and 
equipment 
-  textile production 
machinery 
-  technologies  
-  spare parts 
-  textile machine engineering 
plants 
-  instrument making plants 
 
-  internal environment of cluster 
-  interaction level “supplier of 
machinery - textile industry” 
-  long-term established 
links result in better 
production planning 
Energy  -  electricity, heat, steam, 
water, gas, black oil 
-  power plants 
-  oil and gas industry 
-   internal environment of cluster 
-  main interaction level 
“innovative infrastructure  - 
textile industry» 
-  interaction with other cluster 
elements   
-  more efficient use of 
energy is possible at 
expense of applied energy 
saving technologies   
Innovation  -  know-how 
-  patents 
-  licenses 
-  developments 
-  technologies 
-  research institutes 
-  design bureaus 
-  scientific production 
associations 
-  university research divisions 
-  technology transfer offices 
-  techno-parks 
-  more efficient use of 
R&D potentials requires 
consolidation of efforts of 
cluster participants 
-  synergy effect is possible 
Information  -  IT 
-  software 
-  services 
-  telecommunication enterprises 
-  information centers 
-  universities 
-  IT companies 
-  internal and external 
environment 
-  interaction level “information 
infrastructure - textile industry” 
-  interaction with other cluster 
elements   
-  more efficient use of 
information resources 
requires consolidation of 
efforts of cluster 
participants 
-  synergy effect is possible 
Finance  -  cash 
-  loans 
-  state budget 
-  debt capital 
-  banks 
-  financial companies 
-  investment funds 
-  government 
-  enterprises 
-  internal and external 
environment 
-  interaction level “financial-
credit infrastructure - textile 
industry” 
-  interaction with other cluster 
elements   
-  consolidation provides 
easier access to financial 
resources due to higher 
credibility 
-  synergy effect occurs 
automatically 
Source:  Prepared by the author  
 
Practical  utility  of  this  principle  textile  cluster  model 
consists of the following facts: 
a. all interrelations between structural components of textile 
cluster can be seen; 
b. functions of each element or units, their importance and 
role can be determined; 
c. the cluster itself can be assessed form the point of its 
completeness  taking  into  account  its  structure  and 
composition (what elements  are excessive or should be 
added); 
d.  it  contains  potentials  in  optimizing  the  cluster’s 
structure and composition; 
Review of studies reveals that the cluster approach to 
economic development of the country has attracted greater 
focus last years. Some researchers argue to develop textile 
holdings (clusters), incorporating production of yarn, fabrics 
and ready-made garments (CER, 2005).  Another group of 
economists  (Alimov  et  al.,  2005)  suggest  that  cotton 
production  complex  might  serve  as  core  platform  for 
establishing  cluster.  It  is  proposed  that  several  textile 
clusters should be set up to meet regional conditions and 
advantages of individual companies, competitively selected. 
Based on the peculiarities of national textile sector, the 
following issues need to be solved to establish cluster policy 
of the country, namely:   
-  technical and technological modernization of the sector 
on  the  basis  of  government’s  target  programs  of 
industrial development and public-private partnership in 
the sector; 
-  integration  of  technological  chain  from  raw  materials 
and resources  to final products. Development links of 
textile  production  should  be  correlated  not  only  with 
manufacturing  sectors  but  also  agriculture  (e.g. 
selection, agrotechnology, etc,); 
-  enhancing  the  growth  of  clothing  industries.  Share  of 
clothing  industry  in  textile  production  is  still 
insignificant.  Ready-made  products  are  not  still 
competitive both in domestic and international market. Perspectives of Innovations, Economics & Business, Volume 4, Issue 1, 2010          
www.pieb.cz 
56 
International Cross-Industry Journal  
Therefore,  this  sector  needs  substantial  technology 
modernization; 
-  further  manpower  development  through  targeted 
services of higher educational institutions and vocational 
education/training; 
-  development  of  tolling  business  operations  in  textile 
sector. Consolidation of such operations in activities of 
regional holdings/associations can induce cluster’s inner  
market and long-term strategic partnership; 
-  development  of  logistic  networks,  sector’s  trade 
complexes,  commercial  and  storage  terminals, 
concentration  of  wholesale  and  retail  trade  of  textile 
products at production sites; 
-  sufficient  provision  of  textile  enterprises  with  quality 
products of domestic chemical industry; 
-  fostering  innovation  processes  to  match  industry’s 
requirements.  That  needs  coordination  of  innovation 
activities  for  full-fledged  implementation  of  scientific 
potentials,  and  development  of  infrastructure  of 
innovative activity. 
Thus,  realization  of  competitive  advantages  in  textile 
and  apparel  industries  requires  implementation  of  cluster 
strategy  considering  both  positive  and  negative  trends 
affecting on its formation and development. This approach 
urges  governmental  policy  aimed  at  building  and  further 
growth of clusters in textile sector.                                                                                                                                          
References 
Zakharov, V., 2006.  “Industrial clusters and economic growth”, 
Issues of theory and practice of management, Moscow, 2006, 
N12, pp. 19-23. 
Tsikhan, V., 2003. “Cluster theory of economic growth”, Theory 
and practice of management, Moscow, N5, pp. 23-33. 
Porter,  M.,  2000.  Competition,  Translated  from  English,  M.: 
Williams. 
Solvell, O., Lingvist, G., Ketels, C., 2003. The Cluster Initiativee 
Greebook,  The  Competitiveness  Institute  /VINNOVA, 
Gothenburg. 
CER, 2005. “Problems and prospects of Uzbekistan textile sector 
development”,  Center  of  Economic  Research,  UNDP, 
Tashkent. 
Alimov, R., Kamilova, M., Kurbanova, D., 2005. Cluster concept 
of economic growth, Tashkent. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

FORMING A CLUSTER STRATEGY FOR TEXTILE INDUSTRY DEVELOPMENT IN UZBEKISTAN

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