Analysis of the relationship between foreign direct investment and economic growth in Kazakhstan

Abstract

The most important contribution expected from foreign investments for developing countries is that
it helps to ensure the commercial balance and economic growth of the country. Empirical studies investigating
the relationship between foreign investments and economic growth have shown that capital
movements have led to a high rate of economic growth in some developing countries, and also paved
the way for economic crises in some countries. In this study, the effects of foreign direct investments on
economic growth in Kazakhstan are tried to be revealed. For this purpose, the relationship between international
foreign investments and economic growth in Kazakhstan has been tested by using quarterly data
on GDP, gross fixed capital formation, public expenditures, openness and foreign investments between
2005-2020. Beginning with the Augmented Dickey-Fuller (ADF) unit root test, the analysis ended with
the Granger causality test, the VAR analysis. According to the results of the Granger causality test, the
only reason for the growth of the Kazakhstan economy in the sense of Granger is openness. Examples of
foreign investment affecting growth have not been found in the causality test. On the other hand, there
was no statistically significant effect of foreign investments on economic growth.
Key words: foreign direct investment, economic growth, Kazakhstan economy, VAR analysis, Granger
causality.