Does FDI affect GDP in Kazakhstan?

Abstract

The aim of this research is to analyze the relationship between Foreign Direct Investment (FDI) and Gross Domestic Product (GDP) in Kazakhstan. As FDI is considered one of the accelerators of economic growth and the importance of attracting more foreign investments is one of the key topics for any country, we are keen to analyze it deeply. In order to test the effect of FDI on GDP in Kazakhstan and the hypothesis states that FDI positively affects GDP, we built an economic model and used time series data starting from 1991 until 2021 reported by the Bureau of National Statistics on GDP, FDI, Labor Force and Gross Capital Formation. Our results and findings demonstrate that FDI does not have a significant impact on GDP, however, Gross Capital Formation significantly affects GDP, which means that it plays a vital role in economic development in Kazakhstan. Based on the analysis made, the hypothesis that FDI has a significant effect on Kazakhstan’s GDP is not confirmed. Possibly, the effect of FDI on GDP is more complicated and, for example, routes via gross capital formation.