FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN CENTRAL ASIA THROUGH A PANEL DATA PERSPECTIVE
Keywords:
Foreign Direct Investment, Economic Growth, Central Asia, Transition Economies, Panel Data, Absorptive Capacity, Investment Policy.Abstract
This study examines the impact of Foreign Direct Investment (FDI) on economic growth in Central Asian countries over the period 2005–2020. Using panel data for Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, and Turkmenistan, the research applies a fixed-effects regression model to estimate the relationship between FDI inflows and GDP growth while controlling for trade openness, inflation, and human capital. The results indicate a positive and statistically significant association between FDI and economic growth, although the magnitude of this effect varies across countries. The findings suggest that FDI contributes to growth through capital accumulation, technology transfer, and productivity spillovers, but its effectiveness depends on domestic absorptive capacity and macroeconomic stability. The study also highlights the importance of the sectoral composition of FDI, noting that heavy concentration in extractive industries limits broader developmental benefits.
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