AN ASSESSMENT OF THE INVESTMENT CLIMATE AND ITS ROLE IN ATTRACTING FOREIGN DIRECT INVESTMENT IN UZBEKISTAN

This article provides a comprehensive assessment of Uzbekistan's investment climate and examines its effectiveness in attracting foreign direct investment (FDI) amidst the country's ongoing economic transformation. Since 2017, Uzbekistan has implemented wide-ranging reforms aimed at liberalising its economy, modernising the legislative framework, and improving the business environment. Drawing on recent data from international financial institutions and empirical studies, this paper analyses FDI trends, the legal and institutional framework for investment, and the remaining challenges that constrain foreign capital inflows. The findings indicate that while FDI has grown significantly—reaching USD 2.2 billion in 2023—it remains concentrated in capital-intensive sectors such as energy and manufacturing, with limited diversification by origin and geography. Foreign-owned firms demonstrate labour productivity 63.8% higher than domestic enterprises and contribute positively to exports, innovation, and skills development. However, spillover effects to the broader economy are constrained by regulatory uncertainty, institutional fragmentation, and limited absorptive capacity among local small and medium-sized enterprises. The article concludes with policy recommendations to enhance the investment climate, including strengthening the investment promotion agency, reducing regulatory unpredictability, and fostering greater linkages between foreign investors and domestic firms.