Key Factors of Service Industry Development in Mahallas

The service sector has become a crucial component of economic development, significantly impacting the standard of living and the regional economy. In Uzbekistan, particularly in the Khorezm region, the role of the service sector in local development is growing. Despite this, there remains a lack of a unified approach to evaluating the sector across different territorial units. The growing demand for high-tech services, such as digital technologies and telemedicine, highlights this gap. Current models do not fully address the diverse needs of local populations or utilize innovative services at the regional level. This study aims to develop a comprehensive system for assessing the service sector’s  development at various territorial levels and to propose innovative service models for rural and urban areas. The research identifies key service sectors such as healthcare, education, and digital services that have seen substantial  growth, especially in rural regions. It provides a detailed analysis of service provision and the challenges related to service quality and accessibility. This study introduces a unique territorial-functional hierarchy for service facility placement, specifically tailored to meet local demands across different regions. The findings offer insights for  policymakers to refine the service sector’s development strategies, particularly through digital solutions, and ensure broader access to essential services in rural areas. The proposed system of indicators can guide future monitoring and enhance local governance in service provision.