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Can Development Aid Help Promote Foreign Direct Investment? Evidence from Central Asia

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  • Annageldy Arazmuradov
Abstract
There is a continuing debate on the effectiveness of development aid. One less obvious angle on this issue is the question of the likely impact of aid on foreign direct investment (FDI). This paper tests whether aid had any impact on incoming FDI in Central Asian economies during the period 1993–2008. A simple panel model suggests that (a) aid had a moderate complementary effect on inward FDI, (b) there was a crowding-out effect such that domestic investment reduced FDI stocks, (c) natural resources were a key attraction for private capital, and (d) increases in development aid offset the crowding-out effect of domestic capital on FDI. It is argued that donors should target aid to enhance the climate for inward investment.

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  • Annageldy Arazmuradov, 2015. "Can Development Aid Help Promote Foreign Direct Investment? Evidence from Central Asia," Economic Affairs, Wiley Blackwell, vol. 35(1), pages 123-136, February.
    • Handle: RePEc:bla:ecaffa:v:35:y:2015:i:1:p:123-136
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    File URL: http://hdl.handle.net/10.1111/ecaf.12102
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    12. Polyxeni, Kechagia & Theodore, Metaxas, 2019. "An empirical investigation of FDI inflows in developing economies: Terrorism as a determinant factor," The Journal of Economic Asymmetries, Elsevier, vol. 20(C).
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    14. Metaxas, Theodore & Kechagia, Polyxeni, 2016. "Literature review of 100 empirical studies of Foreign Direct Investment: 1950-2015," MPRA Paper 71414, University Library of Munich, Germany.
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    16. Metaxas, Theodore & Kechagia, Polyxeni, 2015. "FDI in Peru and Uzbekistan: A comparative analysis in brief," MPRA Paper 63849, University Library of Munich, Germany.
    17. (Corresponding author) Tae Yong Jung & Jaewan Kim & Jongwoo Moon & Yong Gun Kim, 2023. "Assessment Of The Enhanced Nationally Determined Contributions Of The Republic Of Korea And The Strategies For The 2050 Net-Zero Target," Asia-Pacific Sustainable Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 30(1), pages 43-66, May.
    18. Kechagia, Polyxeni & Metaxas, Theodore, 2016. "FDI in Central Asia: Uzbekistan," MPRA Paper 71326, University Library of Munich, Germany.
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    20. ESCAP secretariat, 2023. "Accelerating Climate Action In Asia And The Pacific For Sustainable Development," Asia-Pacific Sustainable Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 30(1), pages 1-17, May.
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