The Role of FDI in Central Asian Economic Growth: A Comparative Study of Tajikistan and Uzbekistan

This study conducts a comprehensive comparative analysis of the role of Foreign Direct Investment (FDI) in the economic growth of Tajikistan and Uzbekistan from 2003 to 2022. Utilizing secondary data from the World Bank’s World Development Indicators and national statistical offices, the analysis examines the impact of FDI and other macroeconomic variables, including gross capital formation (GCF), labor force participation rate (LFPR), remittances (REM), and exports (EXPG), on real gross domestic product (RGDP). The findings reveal significant positive impacts of exports, labor force participation, and FDI on economic growth in Tajikistan, while remittances and exports significantly drive economic growth in Uzbekistan. The study identifies key factors influencing the effectiveness of FDI, providing actionable insights for policymakers to enhance economic performance through targeted policies and reforms. The results underscore the importance of bolstering export sectors, improving labor market efficiency, fostering conducive environments for FDI, and promoting investments in infrastructure and productive assets. The study also highlights the need for tailored labor market policies to address structural issues in Uzbekistan. Future research should address the limitations related to data constraints, model specification, and generalizability, offering a more nuanced understanding of the relationship between FDI and economic growth in Central Asia.