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No. 3 (2025)
Marketing

Articles

RESEARCH ON THE EFFECTS OF INTEREST RATE, INFLATION RATE AND GROSS DOMESTIC PRODUCT (GDP) ON THE LEVEL OF FOREIGN DIRECT INVESTMENT (FDI) INFLOWS (EVIDENCE FROM UZBEKISTAN)

Published 2025-03-28

Authors
Azimov Shakhzod
Affiliation
Management Development Institute of Singapore in Tashkent Independent researcher
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Abstract

This study investigates the macroeconomic determinants of foreign direct investment (FDI), focusing on the effects of interest rates, inflation, and gross domestic product (GDP) on FDI inflows. Using a log -linear Ordinary Least Squares (OLS) regression mod el and a dataset comprising 33 annual observations, we examine the relationship between the natural logarithms of FDI, interest rates, inflation, and GDP. The results indicate that inflation has a statistically significant and negative impact on FDI, sugge sting that rising inflation discourages investment inflows. Interest rates exhibit a positive and marginally significant effect on FDI, while GDP does not show a statistically meaningful relationship. Variance Inflation Factor (VIF) and Belsley - Kuh-Welsch diagnostics suggest moderate multicollinearity, particularly involving GDP, but not at a level requiring model revision. These findings highlight the sensitivity of FDI to macroeconomic stability, especially inflation, and underscore the importance of main taining a favorable investment climate.

Keywords

Variance Inflation Factor (VIF), Belsley -Kuh-Welsch diagnostics, A log -linear Ordinary Least Squares (OLS), Inflation, FDI, GDP, Uzbekistan, Interest rate

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