2.1.1 Macro and Micro FDI theories
The theory of investments is traditionally regarded by Western economic science as a centralproblem that can be solved both from micro and macroeconomic positions. The microeconomictheory of investments gives priority to the process of making investment decisions at the enterpriselevel, creating specific scientifically based methods for entrepreneurs to formulate optimalinvestment policies. Macroeconomic investment theory considers the problem of investing fromthe perspective of the national economy, paying particular attention to state investment policy,income and employment policy. Emphasis is placed on the relationship between investment andsavings. The foundation of macroeconomic equilibrium is the equality between the savings thatare made by consumers and the investments that the business considers it necessary to implement.According to neoclassical theory, the mechanism that balances these values is the rate of interest,which is automatically set at a level when savings and investments are equal. Such an interpretationof the mechanism of the investment process rejects market self-regulation.
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2.2 Sources of Data and Methods of Data Collection.
The analysis ultimately focused on secondary data that came from separate sources.Specifically, details were collected from the following issues: Central Bank of Uzbekistan (CBU)Republic State Committee on Economics, Statistical Reports and Statements of Accounts, as wellas the CBU Economic and Financial Reviews; Uzbekistan Ministry of Innovative Development;Industrial Growth and Finance. Other documents included: Working Papers on World Bank PolicyAnalysis, Publications of the United Nations Conference on Trade and Development (UNCTAD),IMF and OPEC Working Papers.
One of the innovation points we have is our variables selection. For our research we selectedForeign Direct Investment as a dependent variable, Gross Domestic Product, Exchange Rate,Current Account Balance and Trade Openness as independent variables. These independentvariables have significant linkage among each other and with dependent one. The trigger point forthat was the fact that, though many foreign researchers have conducted studies concerning therelationship between FDI and macroeconomic variables, very few have focused in CIS states,especially Uzbekistan choosing these variables. According to the literature reviews, foreignerresearchers have considered Exchange Rate as a significant trigger to attract FDI to the economies.However, those expectations are not fully accorded to Uzbek economy. Moreover, many foreignstudies show the relationship between FDI and Trade Openness as significant, we try to findwhether Trade Openness have such a weighty effect on drawing FDI in emerging Uzbek economy.Moreover, the relationship between the amount of FDI and the growth rate of GDP has clearlyconfirmed (Keynes model), but the question is Exchange Rate really necessarily attracting factorfor foreign investors as Uzbek Sum has shown itself in not stable way against foreign currency.The variables (FDI, GDP, EXR, CAB, TO) we used in this research are obtained from official website of World Bank (https//data.worldbank.org).
Table 4-2. Co-integrating Test Result between FDI and Macroeconomic variables
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Chapter Three Empirical Methodology Framework............................ 45
3.1 Unit Root Test......................... 45
3.2 Cointegratio
