INVESTMENT FLOWS AND ECONOMIC DEVELOPMENT IN UZBEKISTAN: AN ECONOMETRIC ANALYSIS

Abstract

This study investigates the impact of foreign direct investment (FDI) and domestic direct investment (DDI) on economic growth in Uzbekistan, a rapidly reforming economy in Central Asia. Over the past decade, particularly following structural reforms initiated under President Shavkat Mirziyoyev, Uzbekistan has intensified efforts to improve its investment climate, liberalize trade, and attract foreign capital. Despite notable progress, structural constraints—including its double-landlocked geography, institutional inefficiencies, and labor market pressures—continue to shape the effectiveness of investment-led growth.
Using recent time-series data, the study applies a Vector Autoregressive (VAR) model to examine the dynamic interrelationships between FDI, domestic investment, employment, trade openness, and GDP growth. The methodology captures lagged and bidirectional effects among variables, allowing for a comprehensive assessment of short- and long-run dynamics. In addition, hypothesis testing and complementary economic justification methods are employed to strengthen the robustness of the findings.