CORPORATE GOVERNANCE QUALITY, FOREIGN DIRECT INVESTMENT, AND ECONOMIC GROWTH: A PANEL ECONOMETRIC ANALYSIS OF CENTRAL ASIAN COUNTRIES (2003–2024)..
DOI:
https://doi.org/10.5281/zenodo.20721376Keywords:
governance, Foreign Direct Investment, BTI Index, economic growth, reforms, Central AsiaAbstract
This study examines the relationship between governance quality, foreign direct investment (FDI), and economic
growth in Central Asia from 2003 to 2024. The research utilizes the Bertelsmann Transformation Index (BTI) and
a random-effects GLS panel model to analyze the direct and indirect effects of governance reforms on growth through
foreign direct investment (FDI). The results demonstrate that improvements in governance are positively associated with
FDI inflows, though insignificantly, indicating that existing institutional reforms have not yet increased the ability to attract
investment. Similarly, foreign direct investment brings about a positive and modest impact on economic growth, suggesting
limited spillover benefits. When all factors are analyzed simultaneously, governance demonstrates a significant
negative short-term impact on growth, while the indirect effect via FDI remains weak. The results indicate that Central
Asia is still in a transitional phase and implementing its governance reforms, while foreign direct investment continues to
rely on resources. To transform developments in governance into sustainable, investment-driven growth, it is essential to
enhance institutional confidence, diversify investments, and improve public sector efficiency.
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