Divergent paths, divergent outcomes: linking differences in economic reform to levels of US foreign direct investment and business in Kazakhstan and Uzbekistan

Abstract

ABSTRACT This article compares two transition economies that have diverged in their progress on important economic reform areas and then seeks to link these differences to their resulting levels of investment and business. For this study, interviews were conducted with firm representatives that had invested or conducted business in Kazakhstan and Uzbekistan in order to determine the areas of reform that were the most important for their investment and business decisions. The analysis indicates a relationship between Kazakhstan's advanced economic reforms in such areas as foreign investment legislation, tax legislation, banking system reform, and higher levels of investment and business. Uzbekistan's lack of progress in these reform areas has affected the level of investment in the country, but not the number of firms conducting business. This was primarily because firms could secure financing for the business through the US Export–Import Bank.