An interplay between the tax policy and foreign direct investment to promote the economic stability of developing countries
An interplay between the tax policy and foreign direct investment to promote the economic stability of developing countries

Summary/Abstract: In this study, we explore the nexus between foreign direct investment (FDI) and tax policy towards economic stabilization of the emerging economies, the focus being Uzbekistan. The findings show that a newly lowered corporate tax rate from 14% in 2018 to 7.5% in 2024, along with sectoral tax credits, has resulted in an 83% growth in the average foreign direct investment per year. In addition, there was a high positive correlation (91%) between the economic growth and FDI attraction. Despite the reduction of tax rates, tax revenues from investment-friendly branches exceeded expectations by 21.5%, demonstrating the positive effect of economic growth on government revenues. This study confirms the strategic relevance of tax reforms as a source of productive and sustainable investment as an engine of economic stability.

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