DOES DIGITALIZATION ATTRACT FOREIGN DIRECT INVESTMENT IN THE LOGISTICS SECTOR? EVIDENCE FROM EMERGING MARKETS AND CENTRAL ASIA

This study examines whether digitalization drives FDI inflows into the logistics sector across 35 emerging market economies over 2010–2024. Using fixed-effects panel regression models with World Bank Digital Adoption Index (DAI) and Logistics Performance Index (LPI 2.0) data, the research tests three hypotheses. First, digitalization has a statistically significant positive effect on logistics FDI — a one standard deviation increase in the DAI corresponds to a measurable rise in FDI as a share of GDP. Second, this effect is stronger in countries that already have efficient logistics systems, confirming that digital and physical infrastructure are complementary rather than substitutes. Third, the digitalization–FDI relationship is notably weaker in Central Asian countries despite their active reform programs, due to structural barriers including landlocked geography, underdeveloped transport networks, and weak institutions. Robustness checks using lagged variables and an alternative ICT penetration indicator confirm the consistency of the findings. The results suggest that digital reform must be accompanied by customs modernization, transport infrastructure investment, and improved regulatory frameworks in order to fully unlock its potential for attracting foreign investment.

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