DETERMINANTS OF EUROPEAN UNION FOREIGN DIRECT INVESTMENT IN CENTRAL ASIA

This article explores the key factors that impact the foreign direct investment of the European Union in Central Asia. The study analyzes a panel data set of five Central Asian countries - Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan, and Tajikistan - between 2013 and 2022 to examine the correlation between EU FDI and seven critical factors. The study shows that market size is negatively correlated with EU FDI flows to Central Asia, whereas the labor force is positively correlated. However, natural resources, trade openness, infrastructure, corruption, and political stability are not significantly associated with EU FDI in Central Asia. The study suggests that EU investors seek to take advantage of the region’s abundant and low-cost labor rather than focus on natural resources or other commonly assumed factors. The findings have vital implications for policymakers and businesses operating in Central Asia, highlighting the importance of addressing market and labor force challenges to attract EU FDI.