Trade Openness and <scp>FDI</scp> 's Conditional Role in Economic Growth: Evidence From Central Asia

ABSTRACT When does foreign direct investment support economic growth in Central Asia? Drawing on 25 years of panel data on five Central Asian economies (2000–2024), this study tests whether trade openness and digital readiness moderate the FDI–growth relationship using fixed‐effects models. We find that FDI alone has no direct effect on growth. Trade openness emerges as the most robust correlate of growth in the present sample, though it does not amplify FDI's impact. Digital readiness shows similarly weak moderation effects. Governance, while theoretically central to the framework, cannot be tested with available data and remains a priority for future research. Overall, the evidence suggests that in Central Asia, the capacity to integrate foreign capital productively—particularly through trade openness—may be more important than FDI volumes alone. The conditional‐integration perspective provides a useful conceptual framework for interpreting the heterogeneous effects of FDI in transition economies, though empirical validation of its governance dimension awaits improved data.

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