FOREIGN DIRECT INVESTMENT AND ECONOMIC DEVELOPMENT: AN INTERNATIONAL PERSPECTIVE

Aissara  Serikkyzy; Aigul  Bakirbekova; Saule  Baktymbet; Rakymzhan  Yelshibayev; Assem  Baktymbet

doi:10.2478/eoik-2024-0012

Authors

Aissara Serikkyzy School of Entrepreneurship and Innovation, Almaty Management University, Almaty, Republic of Kazakhstan
Aigul Bakirbekova Department of Economics, Kh. Dosmukhamedov Atyrau University, Atyrau, Republic of Kazakhstan
Saule Baktymbet Department of Economics and Management, Kazakh University of Technology and Business, Astana, Republic of Kazakhsta
Rakymzhan Yelshibayev School of Economics and Management, Narxoz University, Almaty, Republic of Kazakhstan
Assem Baktymbet Department of Economics and Management, Kazakh University of Technology and Business, Astana, Republic of Kazakhsta

DOI:

https://doi.org/10.2478/eoik-2024-0012

Keywords:

diversification, public policy, entrepreneurship, finance, diversification; public policy; entrepreneurship; finance; factors of production

Abstract

The present study examines the patterns of foreign direct investment (FDI) in Kazakhstan and draws comparisons with global trends. Based on statistical data spanning from 2000 to 2022, the study reveals that the growth of FDI in Kazakhstan has exhibited greater volatility and speed compared to developed nations. However, it is strongly associated with global FDI inflows and the growth of gross domestic product (GDP). This article aims to examine the patterns and determinants influencing FDI in Kazakhstan and to juxtapose these patterns with global trends. The main approach used in the study was systematic. The article’s contribution lies in its provision of novel insights into the dynamics of FDI in Kazakhstan and its correlation with economic growth. Furthermore, the article elucidates the various factors that contribute to the expansion of FDI in Kazakhstan, while also offering suggestions for the development of public policy in this domain. The article provides a comprehensive examination of FDI patterns in Kazakhstan, comparing them to global trends and identifying the factors that influence the dynamics of FDI. Furthermore, the article offers suggestions for expanding the economic base of Kazakhstan beyond its reliance on the oil and gas industry, enhancing focus on high-tech and innovative sectors, and enhancing the institutional framework.

References

Adeel-Farooq, R. M., Riaz, M. F., & Ali, T. (2021). Improving the environment begins at home: Revisiting the links between FDI and environment. Energy, 215, 1-6. https://doi.org/10.1016/j.energy.2020.119150

Amendolagine, V., Presbitero, A. F., Rabellotti, R., & Sanfilippo, M. (2019). Local sourcing in developing countries: The role of foreign direct investments and global value chains. World Development, 113, 73-88. https://doi.org/10.1016/j.worlddev.2018.08.010

Aust, V., Morais, A. I., & Pinto, I. (2020). How does foreign direct investment contribute to Sustainable Development Goals? Evidence from African countries. Journal of Cleaner Production, 245, 1-5. https://doi.org/10.1016/j.jclepro.2019.118823

Butenko, D., Zaslavska, K., & Sheianova, Yu. (2023). Scientific and methodological principles of organizational capital management and its assessment. Economics of Development, 22, 52-61. https://doi.org/10.57111/econ/3.2023.52

de Mello, L. (1997). Foreign direct investment in developing countries and growth: A selective survey. The Journal of Development Studies, 34, 1-34. https://doi.org/10.1080/00220389708422501

Dhrifi, A., Jaziri, R., & Alnahdi, S. (2020). Does foreign direct investment and environmental degradation matter for poverty? Evidence from developing countries. Structural Change and Economic Dynamics, 52, 13-21. https://doi.org/10.1016/j.strueco.2019.09.008

Dinh, T.T.H., Vo, D. H., Vo, A. T., Nguyen, T. C., & Nguyen, T. C. (2019). Foreign direct investment and economic growth in the short run and long run: Empirical evidence from developing countries. Journal of Risk and Financial Management, 12, 1-7. https://doi.org/10.3390/jrfm12040176

Essandoh, O. K., Islam, M., & Kakinaka, M. (2020). Linking international trade and foreign direct investment to CO 2 emissions: Any differences between developed and developing countries? Science of the Total Environment, 712, 1-6. https://doi.org/10.1016/j.scitotenv.2019.136437

Fan, W., & Hao, Y. (2020). An empirical research on the relationship amongst renewable energy consumption, economic growth and foreign direct investment in China. Renewable Energy, 146, 598-609. https://doi.org/10.1016/j.renene.2019.06.170

Foreign direct investment, net inflows (BoP, current US$). (2023). https://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD

GDP (current US$). (2023). https://data.worldbank.org/indicator/NY.GDP.MKTP.CD Global assessment of the national statistical system of the Republic of Kazakhstan. (2022). https://unece.org/DAM/stats/documents/technical_coop/GA_Kazakhstan_Final_Report_RU.pdf

Grabara, J., Tleppayev, A., Dabylova, M., Mihardjo, L. W. W., & Dacko-Pikiewicz, Z. (2021). Empirical research on the relationship amongst renewable energy consumption, economic growth and foreign direct investment in Kazakhstan and Uzbekistan. Energies, 14, 1-5. https://doi.org/10.3390/en14020332

Herzer, D. (2010). How does foreign direct investment really affect developing countries’ growth? Göttingen: Georg-August-Universität Göttingen.

Ismayilov, V., Mammadov, S., Abbasova, N., Babayeva, V., & Sadigova, S. (2023). The current state and prospects for further development in the energy sector in Australia: reforms, foreign economic relations, investment climate. Polityka Energetyczna, 26, 105-120. https://doi.org/10.33223/epj/163451

Khashimova, N., Tillaeva, B., & Razzakova, B. (2020). Essence of investment potential and patterns of investment fields in the economy. International Journal of Scientific and Technology Research, 9, 5853-5855. https://www.ijstr.org/final-print/feb2020/Essence-Of-Investment-Potential-And-Patterns-OfInvestment-Fields-In-The-Economy.pdf

Korgan, B.B., Sabirovа, R.K., & Adietova, E.M. (2019). Innovative economy of Kazakhstan. News of the National Academy of Sciences of the Republic of Kazakhstan, 4, 123-128. https://doi.org/10.32014/2019.2224-5294.147

Kovalenko, V., Sheludko, S., Semenova, V., Kotsіurubenko, G., & Danylina, S. (2023). Credit and Investment support for the development of Ukraine’s agricultural and economy sector. Scientific Horizons, 26, 151-163. https://doi.org/10.48077/scihor5.2023.151

Kudrina, O., & Ivchenko, Yu. (2023). Organisational and economic mechanism for ensuring the innovation and investment potential of an enterprise in the context оf post-conflict transformation. Economic Bulletin of Cherkasy State Technological University, 23, 24-30. https://er.chdtu.edu.ua/handle/ChSTU/4735

Liang, C., Shah, S. A., & Bifei, T. (2021). The role of FDI inflow in economic growth: Evidence from developing countries. Journal of Advanced Research in Economics and Administrative Sciences, 2, 68-80. https://doi.org/10.47631/jareas.v2i1.212

Madiyarova, D., Łuniewski, A., & Ibraeva, A. (2019). Advancing competitiveness and developing the innovation and investment potential of industrial enterprises using cluster strategies. Journal of Advanced Research in Law and Economics, 10, 2417-2428. https://journals.aserspublishing.eu/jarle/article/view/5288

Madiyarova, D.M., & Argyngazinov, A.A. (2022). Export potential of small and medium enterprises of Kazakhstan: analysis of regional opportunities. Research in Economic Anthropology, 42, 207- 217. https://doi.org/10.1108/S0190-128120220000042020

Matsybora, T. (2023). Investment activity in Ukrainian agriculture during the war: New challenges and threats. Ekonomika APK, 30, 10-18. https://doi.org/10.32317/2221-1055.202305010

Melnyk, L., Kubatko, O., & Pysarenko, S. (2014). The impact of foreign direct investment on economic growth: Case of post communism transition economies. Problems and Perspectives in Management, 12, 17-24. https://www.businessperspectives.org/index.php/journals/problems-and-perspectives-inmanagement/issue-44/the-impact-of-foreign-direct-investment-on-economic-growth-case-ofpost-communism-transition-economies

Muhammad, B., Khan, M. K. K., Khan, M. I., & Khan, S. (2021). Impact of foreign direct investment, natural resources, renewable energy consumption, and economic growth on environmental degradation: evidence from BRICS, developing, developed and global countries. Environmental Science and Pollution Research, 28, 21789-21798. https://doi.org/10.1007/s11356-020-12084-1

National Bank of the Republic of Kazakhstan. (2023). Analytical information about foreign direct investments. https://www.nationalbank.kz/file/download/92277

Opoku, E. E. O., & Boachie, M. K. (2020). The environmental impact of industrialization and foreign direct investment. Energy Policy, 137, 1-7. https://doi.org/10.1016/j.enpol.2019.111178

Osei, M. J., & Kim, J. (2020). Foreign direct investment and economic growth: Is more financial development better? Economic Modelling, 93, 154-161. https://doi.org/10.1016/j.econmod.2020.07.009

Paul, J., & Feliciano-Cestero, M. M. (2021). Five decades of research on foreign direct investment by MNEs: An overview and research agenda. Journal of Business Research, 124, 800-812. https://doi.org/10.1016/j.jbusres.2020.04.017

Podlevska, O., & Podlevskyi, A. (2023). Development of circular economy in modern conditions. ECONOMICS - Innovative and Economics Research Journal, 11, 97-112. https://doi.org/10.2478/eoik-2023-0025

Rakhmatullayeva, D., Khajiyeva, A., & Abduraimov, O. (2021). Foreign direct investment in Kazakhstan: A success story over the years of independence of the republic. Central Asian Journal of Social Sciences and Humanities, 7, 4-15. https://doi.org/10.26577/CAJSH.2021.v7.i4.01

Rakhmatullayeva, D., Kuliyev, I., Beisenbaiyev, Z., & Tabeyev, T. (2020). Assessment of the influence of FDI on the economic growth of the host country: evidence from Kazakhstan. E3S Web of Conferences, 159, 1-6. https://doi.org/10.1051/e3sconf/202015906007

Rausch, P., & Suchanek, M. (2021). Socioeconomic factors influencing the prosumer’s investment decision on solar power. Energies, 14, 1-7. https://doi.org/10.3390/en14217154

Sabir, S., Rafique, A., & Abbas, K. (2019). Institutions and FDI: Evidence from developed and developing countries. Financial Innovation, 5, 1-8. https://doi.org/10.1186/s40854-019-0123-7

Sarkodie, S. A., & Strezov, V. (2019). Effect of foreign direct investments, economic development and energy consumption on greenhouse gas emissions in developing countries. Science of the Total Environment, 646, 862-871. https://doi.org/10.1016/j.scitotenv.2018.07.365

Sinha, M., & Sengupta, P. P. (2022). FDI inflow, ICT expansion and economic growth: An empirical study on Asia-Pacific developing countries. Global Business Review, 23, 804-821. https://doi.org/10.1177/0972150919873839

Štilić, A., Mastilo, A., Vuković, K., & Mastilo, D. (2023). Innovative solutions for economic growth: Exploring the impact of economic freedoms on foreign direct investment attraction. ECONOMICS - Innovative and Economics Research Journal, 11, 29-44. https://doi.org/10.2478/eoik-2023-0013

Trusova, N.V., Cherniavska, T.A., Kyrylov, Y.Y., Hranovska, V.H., Skrypnyk, S.V., & Borovik, L.V. (2021). Ensuring security the movement of foreign direct investment: Ukraine and the EU economic relations. Periodicals of Engineering and Natural Sciences, 9, 901-920. http://pen.ius.edu.ba/index.php/pen/article/view/2319/933

Vdovenko, L., Ruda, O., Koval, O., Horlachuk, M., & Herasymchuk, V. (2023). Strategy of investment attraction for the development of rural areas for the economic restoration of the agricultural sector. Scientific Horizons, 26, 137-150. https://doi.org/10.48077/scihor5.2023.137

Wada, І., Faizulayev, A., Khademolomoom, A. H., & Alzubi, A. (2020). Energy use, real output-growth, FDI, energy-intensity and CO2 emission; the case of Kazakhstan. Journal of Public Affairs, 22, 1-8. https://doi.org/10.1002/pa.2300