THE ROLE OF FOREIGN INVESTMENT IN UZBEKISTAN'S ECONOMIC DEVELOPMENT

Abstract

This article examines the role of foreign investment in Uzbekistan's economic development, with particular attention to capital formation, industrial modernization, employment, productivity, export capacity, and structural transformation. The study combines a review of contemporary investment theory with descriptive analysis of official Uzbek statistics and recent assessments by the World Bank, OECD, and UNCTAD. The findings indicate that foreign investment has become a major source of fixed-capital financing in Uzbekistan, especially since the acceleration of market-oriented reforms after 2017. In 2025, foreign investments and loans accounted for 71.9 percent of total investment in fixed assets, compared with 56.7 percent in 2023. At the same time, the developmental impact of foreign capital depends on its sectoral composition, local supplier linkages, technology transfer, workforce skills, regulatory predictability, and competition. The article argues that Uzbekistan's next policy challenge is not simply to attract larger investment volumes, but to improve the quality, diversification, and domestic spillovers of foreign investment. Practical recommendations are proposed for strengthening investment governance, supporting local firms, encouraging export-oriented and green projects, and improving investor aftercare.