Analysis of the relationship between foreign direct investment and economic growth in Kazakhstan

Abstract

The most important contribution expected from foreign investments for developing countries is thatit helps to ensure the commercial balance and economic growth of the country. Empirical studies investigatingthe relationship between foreign investments and economic growth have shown that capitalmovements have led to a high rate of economic growth in some developing countries, and also pavedthe way for economic crises in some countries. In this study, the effects of foreign direct investments oneconomic growth in Kazakhstan are tried to be revealed. For this purpose, the relationship between internationalforeign investments and economic growth in Kazakhstan has been tested by using quarterly dataon GDP, gross fixed capital formation, public expenditures, openness and foreign investments between2005-2020. Beginning with the Augmented Dickey-Fuller (ADF) unit root test, the analysis ended withthe Granger causality test, the VAR analysis. According to the results of the Granger causality test, theonly reason for the growth of the Kazakhstan economy in the sense of Granger is openness. Examples offoreign investment affecting growth have not been found in the causality test. On the other hand, therewas no statistically significant effect of foreign investments on economic growth.Key words: foreign direct investment, economic growth, Kazakhstan economy, VAR analysis, Grangercausality.