The Relationship between foreign direct investment and economic growth: An Empirical study on the former Soviet Union countries

Foreign direct investment (FDI) plays a significant role in the economic growth process by contributing to capital accumulation, creating employment, and promoting the transfer of technological knowledge. The impact of FDI on economic growth is particularly noteworthy in transition economies. Former Soviet Union countries are undergoing significant structural transformations during their transition to market economies, and the effect of FDI on growth remains a debated issue. This study conducts an analysis covering data from the 1996-2020 period, examining the impact of FDI on economic growth using panel data analysis. In this context, the generalized method of moments (GMM), which is suitable for dynamic panel models, is employed. The analysis results reveal that FDI has a positive effect on economic growth. Furthermore, the findings highlight that this relationship provides important insights into understanding the economic dynamics in transition economies.