A Strategy For The Encouragement Of Foreign Investment In The Kyrgyz Republic

The Comprehensive Development Framework (CDF) of the Kyrgyz Republic indicates clearly the desire and the need to attract additional direct foreign investment to the country. The need for foreign investment is for at least two reasons. First, it is needed to improve the efficiency and competitiveness of the Kyrgyz economy through the introduction of new technology, management know-how and access to external markets in order to stimulate economic growth. Second, it is needed to provide the financial investment in order to help offset the reduction in the level of public investment needed to facilitate macro-economic stabilization and ease the public debt service limitations facing the government. To realize this goal it will require a systematic and organized effort on the part of the government. The factors that are important to direct foreign investors vary considerably given the nature of the activity the investor wishes to engage in. For the purposes of designing appropriate policies it is useful to divide these activities into four general classes. Some of the factors that are important in the design of policies to attract each of these types of foreign investments are reviewed in this paper.