Foreign direct investment in Central Asia: Kyrgyzstan’s experience

This paper explores the dynamics of foreign direct investment (FDI) in Central Asia, with a specific focus on Kyrgyzstan. As one of the region’s most open economies, Kyrgyzstan has actively pursued FDI to accelerate economic growth, enhance industrial capacity and foster sustainable development. However, despite its investment-friendly policies, the country faces significant challenges, including political instability, regulatory inefficiencies and infrastructural limitations. Drawing on data from UNCTAD and OECD databases, the research analyzes FDI inflows, sectoral distribution and regional disparities within Kyrgyzstan. The findings indicate that while extractive industries and energy sectors attract the majority of foreign investment, other crucial areas such as manufacturing and high-tech industries remain underdeveloped. Additionally, FDI is highly concentrated in urban centers, exacerbating economic imbalances between regions. The study highlights key determinants of FDI attractiveness, including economic liberalization, legal frameworks and regional integration efforts under initiatives like the Eurasian Economic Union (EAEU) and China’s Belt and Road Initiative (BRI). Policy recommendations emphasize the need for institutional reforms, investment in infrastructure and enhanced transparency to improve investor confidence. By fostering a stable business environment and diversifying FDI sources, Kyrgyzstan can strengthen its economic resilience and integration into global markets. The research concludes that targeted policy interventions and sustained cooperation with international partners are crucial to unlocking the full potential of FDI as a driver of economic modernization and sustainable development in Kyrgyzstan.