Foreign Direct Investment and Electricity Consumption During Uzbekistan’s Green Transition

This study examines the relationship between foreign direct investment inflows and energy consumption inthe context of Uzbekistan. The analysis employed time series data obtained from the World Bank, covering the periodfrom 1991 to 2023. This study utilizes the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary LeastSquares (DOLS) models to examine the relationship between foreign direct investment inflows and power consumption inthe context of Uzbekistan. The findings from the Johansen cointegration test indicated the existence of cointegration linkagesamong the variables examined in the study. The findings of the FMOLS and DOLS models indicated a statisticallysignificant negative association between electricity consumption and foreign direct investment inflows in Uzbekistan, aswell as an insignificant link in the case of DOLS. Additional findings indicate that there exists a statistically significant andpositive correlation between economic growth and the influx of foreign direct investment. The Granger causality analysisyielded findings indicating a one-way causal relationship, with economic growth exerting a causal influence on the inflowsof foreign direct investment. The study suggests that a revision of policies pertaining to power consumption and economicgrowth is necessary for the purpose of attracting foreign direct investment inflows in Uzbekistan. It emphasizes the importanceof involvement from the government and policymakers in this endeavor.

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