| The inflows of Foreign Direct Investment(FDI)to an economy have always been vital for a country’s trade and industry and future development.But the world market for FDI has developed more competitive than ever in the past.The Central Asian countries,particularly Uzbekistan,has great potential to attract more FDI.These countries have many advantages,such as strategic geographical location,rich natural resources and fast-growing economy.However,FDI is very unevenly distributed among the three Central Asian countries.Uzbekistan is rich in natural resources and has an adequate labor force.As one of the countries independent of the former Soviet Union,the country faced many financial problems.In the first year of independence,foreign direct investment was relatively low,and almost all of the money went to oil and raw materials.Kazakhstan and Uzbekistan received some FDI into other manufacturing industries,including machinery manufacturing,food processing and textiles.In addition to hydroelectric plants in Tajikistan,railway facilities in Uzbekistan,energy and transport infrastructure received relatively small shares of foreign direct investment.Public-private partnerships are still at an early stage of development in the region.The EU,the Russian Federation and China they are the main economic partners of Uzbekistan.According to the World Bank,in 1991 in the year of independence,the country attracted $9mln,while in comparison,Kazakhstan in the same year received $99,5mln.From the other level,Uzbekistan’s economy seems to be largely untouched by the global recession.In comparison,FDI inflows were higher in 2009 and 2010 compared with in 2008(UNCTAD,2011).Under the influence of economic reforms,property relations and the law on the exchange and distribution of expanded overproduction,Uzbekistan’s GDP has grown steadily by more than 8% in the last 10 years.In 2016-2017,Uzbekistan became one of the five fastest growing countries in the world,according to the World Economic Forum’s report.President of Uzbekistan Shavkat Mirziyoyev also set the task of maintaining such growth indicators in the future.Before the independence of Uzbekistan,the annual growth rate of national income was only 1-1.5%.This paper empirically analyses the relationship between FDI and four macroeconomic variables,namely Gross Domestic Product,Exchange Rate,Trade Openness and Current Account Balance via quarterly data on Uzbekistan for the 1997-2018 period.One of the innovation points is our variables selection.For our research we selected Foreign Direct Investment as a dependent variable,Gross Domestic Product,Exchange Rate,Current Account Balance and Trade Openness as independent variables.These independent variables have significant linkage among each other and with dependent one.The trigger point for that was the fact that,though many foreign researchers have conducted studies concerning the relationship between FDI and macroeconomic variables,very few have focused in CIS states,especially Uzbekistan choosing these variables.Although,many foreign studies show the relationship between FDI and Trade Openness as significant,we try to find whether Trade Openness have such a weighty effect on drawing FDI in emerging Uzbek economy.Moreover,the relationship between the amount of FDI and the growth rate of GDP has clearly confirmed(Keynes model),but the question is Exchange Rate really necessarily attracting factor for foreign investors as Uzbek Sum has shown itself in not stable way against foreign currency.The variables(FDI,GDP,EXR,CAB,TO)we used in this research are obtained from official web site of World Bank.Four out of five variables have co-integrating equations with less than.5 probability(5%)and all of them shows high significance.Our exemplary results point on the association among variables on long-term runs.Nevertheless,appreciation or depreciation of Uzbek Sum showed no influence towards FDI.Having analyzed the results,we decided that the Uzbek government should support private sector controlled advance and the creation of facilitating environment,especially infrastructure for the private sector in Uzbekistan to be intensified.As our primary focus on attracting more investors,it should be absolutely necessary to create safe and convenient investment environment for investment income.Moreover,our results confirm the FDI theories expressing that the relationship between FDI and trade is non-monotonic.This relationship is positive for high values of trade,where FDI and trade behave as complements.But it becomes negative for low values of trade,with trade and FDI then behaving as substitutes.To sum up all those theoretical analysis and empirical results appeared in this paper,several worthwhile and neglected information can be provided to the government of Uzbekistan and individual investors. |
