IDEAS home Printed from https://ideas.repec.org/a/arh/jrujec/v6y2020i2p162-176.html
   My bibliography  Save this article

The determinants of foreign direct investment in Central Asian region: A case study of Tajikistan, Kazakhstan, Kyrgyzstan, Turkmenistan and Uzbekistan (A quantitative analysis using GMM)

Author

Listed:
  • Sharofiddin Ashurov

    (Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia)

  • Anwar Hasan Abdullah Othman

    (Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia)

  • Romzie Bin Rosman

    (Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia)

  • Razali Bin Haron

    (Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia)

Abstract

Foreign direct investment (FDI) is viewed as one of the most crucial forms of capital inflows and significant drivers of economic growth in numerous countries. In particular, developing countries, emerging economies and countries engaged in the process of development have recognized the crucial importance of FDI as a critical contributor to their economic progress and increasing economic opportunities. The following research investigated and identified the determinants of FDI in the Central Asian countries, specifically Tajikistan, Kazakhstan, Kyrgyzstan, Turkmenistan and Uzbekistan, between 2000 and 2017. The methodology employed in the first part included comparative analysis of the foreign investment trends and gross domestic product (GDP), as well as an endogenous growth model. The result showed that five variables are robustly significant of FDI determinants: FDI (previous year), GDP, labor force, trade openness and tax. Additionally, this paper demonstrates that among the most significant FDI contributors are China, Russia and Japan as well as European countries because of the economic opportunities available; however, the USA is considered by Central Asian countries to offer the most opportunities for security control considerations rather than economic opportunities. Furthermore, the results suggest that the authorities in the Central Asia region should enhance the stability of their economic growth, labor force, trade openness and tax regulations to attract more FDI to the region.

Suggested Citation

  • Sharofiddin Ashurov & Anwar Hasan Abdullah Othman & Romzie Bin Rosman & Razali Bin Haron, 2020. "The determinants of foreign direct investment in Central Asian region: A case study of Tajikistan, Kazakhstan, Kyrgyzstan, Turkmenistan and Uzbekistan (A quantitative analysis using GMM)," Russian Journal of Economics, ARPHA Platform, vol. 6(2), pages 162-176, June.
    • Handle: RePEc:arh:jrujec:v:6:y:2020:i:2:p:162-176
    DOI: 10.32609/j.ruje.6.48556
    as

    Download full text from publisher

    File URL: https://rujec.org/article/48556/
    Download Restriction: no
    File URL: https://libkey.io/10.32609/j.ruje.6.48556?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Louis T., Jr. Wells & Nancy J. Allen & Jacques Morisset & Neda Pirnia, 2001. "Using Tax Incentives to Compete for Foreign Investment : Are They Worth the Costs?," World Bank Publications - Books, The World Bank Group, number 13979.
    2. Mottaleb, Khondoker Abdul, 2007. "Determinants of Foreign Direct Investment and Its Impact on Economic Growth in Developing Countries," MPRA Paper 9457, University Library of Munich, Germany.
    3. Arshad Hayat, 2018. "FDI and economic growth: the role of natural resources?," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 45(2), pages 283-295, May.
    4. Annageldy Arazmuradov, 2012. "Foreign Aid, Foreign Direct Investment, and Domestic Investment Nexus in Landlocked Economies of Central Asia," Economic Research Guardian, Weissberg Publishing, vol. 2(1), pages 129-151, May.
    5. Malgorzata Jakubiak & Alina Kudina, 2008. "The Motives and Impediments to FDI in the CIS," CASE Network Studies and Analyses 0370, CASE-Center for Social and Economic Research.
    6. Hansson , Åsa & Olofsdotter, Karin, 2010. "Tax differences and foreign direct investment in the EU27," Working Papers 2010:3, Lund University, Department of Economics.
    7. Wamboye, Evelyn, 2012. "External debt, trade and FDI on economic growth of least developed countries," MPRA Paper 39031, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vanessa da Silva Mariotto Onody & Ana Catarina Gandra de Carvalho & Eduardo Polloni-Silva & Guilherme Augusto Roiz & Enzo Barberio Mariano & Daisy Aparecida Nascimento Rebelatto & Herick Fernando Mora, 2022. "Corruption and FDI in Brazil: Contesting the “Sand” or “Grease” Hypotheses," Sustainability, MDPI, vol. 14(10), pages 1-18, May.
    2. Scalamonti, Francesco, 2024. "The foreign investments-growth nexus in underdeveloped countries: the state-of-art of research analysing a selected and recent empirical literature (2020-2022)," Technological Forecasting and Social Change, Elsevier, vol. 198(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Miguel Cruz Vásquez & Alfonso Mendoza Velázquez & Beatriz Pico González, 2019. "Foreign direct investment, economic opening and economic growth in Lat," Contaduría y Administración, Accounting and Management, vol. 64(1), pages 15-16, Enero-Mar.
    2. Cieślik Andrzej & Gurshev Oleg, 2020. "Determinants of inward FDI in Ukraine: Does political stability matter?," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 56(3), pages 243-254, September.
    3. Sabina Silajdzic & Eldin Mehic, 2022. "How Effective Is Tax Policy in Attracting Foreign Direct Investments in Transition Countries?," Central European Business Review, Prague University of Economics and Business, vol. 2022(1), pages 19-39.
    4. Sanjida Nusrat & Mohona Biswas & Dr. Mohammad Mizanur Rahman Chowdhury & Dr. Zahurul Alam & Dr. Shelina Akhter, 2024. "Factors of Foreign Direct Investment Inflows: A Study on Korean Investment in the EPZs of Bangladesh," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(5), pages 1928-1941, May.
    5. Dašić Miloš, 2022. "Political Risk and Quality of Governance as Determinants of Foreign Direct Investments in the Transition Countries," Economic Themes, Sciendo, vol. 60(3), pages 343-367, September.
    6. Sundas Rauf & Rashid Mehmood & Aisha Rauf & Shafaqat Mehmood, 2016. "Integrated Model to Measure the Impact of Terrorism and Political Stability on FDI Inflows: Empirical Study of Pakistan," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(4), pages 1-7, April.
    7. Miroslav Mateev & Iliya Tsekov, 2014. "Are there any top FDI performers among EU-15 and CEE countries? A comparative panel data analysis," Financial Theory and Practice, Institute of Public Finance, vol. 38(3), pages 337-374.
    8. Toumi, Sofiane, 2009. "Facteurs d’attractivité des investissements directs étrangers en Tunisie," L'Actualité Economique, Société Canadienne de Science Economique, vol. 85(2), pages 209-237, juin.
    9. Haga Elimam, 2017. "Determinants of Foreign Direct Investment in Saudi Arabia: A Review," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(7), pages 222-227, July.
    10. Giorgio Barba Navaretti & Anthony J. Venables, 2013. "Multinationals and industrial policy," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 29(2), pages 361-382, SUMMER.
    11. Codruta DURA & Imola DRIGÃ, 2013. "The Rise of Emerging Multinationals from Russia – Models, Drivers and Internationalization Strategies," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 14(3), pages 387-399, July.
    12. Muhammed BENLI, 2020. "The effect of external debt on long run economic growth in developing economies: Evidence from heterogeneous panel data models with cross sectional dependency," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(624), A), pages 127-138, Autumn.
    13. Tong, Tong & Chen, Xiaoyue & Singh, Tarlok & Li, Bin, 2022. "Corporate governance and the outward foreign direct investment: Firm-level evidence from China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 962-980.
    14. Nathan M. Jensen & Michael G. Findley & Daniel L. Nielson, 2020. "Electoral Institutions and Electoral Cycles in Investment Incentives: A Field Experiment on Over 3,000 U.S. Municipalities," American Journal of Political Science, John Wiley & Sons, vol. 64(4), pages 807-822, October.
    15. Muddassar Sarfraz & Shuangqin Liu, 2015. "Influence of Foreign Direct Investment on Gross Domestic Product; an Empirical Study of Pakistan," American Journal of Economics and Business Administration, Science Publications, vol. 7(2), pages 94-100, July.
    16. Dorożyński Tomasz & Kuna-Marszałek Anetta, 2016. "Investments Attractiveness. The Case Of The Visegrad Group Countries," Comparative Economic Research, Sciendo, vol. 19(1), pages 119-140, March.
    17. Dorota Wawrzyniak, 2013. "Opodatkowanie przedsiębiorstw jako determinanta bezpośrednich inwestycji zagranicznych w krajach Unii Europejskiej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 37-55.
    18. Mukesh Kumar & Nargis & Azeema Begam, 2020. "Export-Led Growth Hypothesis: Empirical Evidence from Selected South Asian Countries," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 8(1), pages 1-15, March.
    19. Azam, Muhammad & Khan, Hashim & Hunjra, Ahmed Imran & Ahmad, H. Mushtaq & Chani, Muhammad Irfan, 2011. "Institutions, macroeconomic policy and foreign direct investment: South Asian countries case," MPRA Paper 32480, University Library of Munich, Germany.
    20. Saleh, Emad Alchikh, 2023. "The effects of economic and financial crises on FDI: A literature review," Journal of Business Research, Elsevier, vol. 161(C).

    More about this item

    Keywords

    foreign direct investment FDI economic growth determinants of FDI GDP Central Asian countries;

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arh:jrujec:v:6:y:2020:i:2:p:162-176. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Teodor Georgiev (email available below). General contact details of provider: https://rujec.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.