The Panel Analysis of the Effects of FDI and Export on the Economic Growth of CIS Countries

Abstract

Purpose – This paper aims to examine the effects of foreign direct investment (FDI) and export on the economic growth of the Commonwealth of Independent States (CIS) and, based on the research results, provide some policy implications for the government of Uzbekistan. Design/Methodology/Approach – A panel data regression model and a panel dataset covering the period 1997 to 2020 were utilized for empirical investigation. The collected data were divided into two groups by income level and two groups by period, namely before and after the global financial crisis of 2008. This paper analyzes the aforementioned groups separately and provides a summary. Pooled OLS, fixed-effects models, and random-effects models were applied through panel data, and the Hausman test and the Breusch-Pagan Lagrange Multiplier test were performed. Findings – The findings corroborate the study’s hypothesis by proving that FDI facilitates growth in the former Soviet republics. Similarly, the comprehensive findings demonstrate that export is crucial for the economic growth of CIS countries, but the fixed-effects regression results for the first country group indicate that the influence of export on economic growth is insignificant when examined separately. Research Implications – The paper recommends that the government of the Republic of Uzbekistan enhance multilateral trade agreements to improve its international trade balance and adopt an export-stimulating strategy. To encourage FDI, the government should take steps to improve the country’s investment climate.