FEATURES OF ATTRACTING FOREIGN DIRECT INVESTMENTS IN THE ECONOMY

Аннотация

The scientific thesis examines the theoretical and practical issues of attracting foreign direct investment. The issues of further development of the real sector of the economy by attracting foreign investment into the country's economy are analyzed. On the basis of research and analysis, the author's scientific conclusions are made. Foreign direct investment is one of the key factors in ensuring economic growth and economic development. One of the main goals of any country is to attract foreign investment. The role of foreign investment in achieving sustainable economic growth, structural reforms in the economy and improving the living standards of the population is significant. Focusing foreign direct investment on priority sectors of the economy and clearly defining their effectiveness, attracting science-based investment decisions, taking into account all the conditions of foreign financial resources on the basis of rational regulation of investment activities will determine the future of the national economy. Finding the necessary foreign investment for all sectors of the economy has become a prerequisite for economic growth. It is important that these criteria are taken into account at the current stage of reform and development of the national economy of Uzbekistan. Its main tasks are to increase the role of export potential in ensuring sustainable economic growth, increase the contribution of small business and private entrepreneurship, deepen the liberalization process and increase the effectiveness of state support for priority sectors of the economy . 134 SOLUTION OF SOCIAL PROBLEMS IN MANAGEMENT AND ECONOMY International scientific-online conference The attraction of foreign direct investment (FDI) is a pivotal objective for countries seeking to bolster their economic development and global competitiveness. Several critical factors influence a nation’s ability to draw in FDI, and among these, economic freedom, institutions, and the rule of law stand out as essential determinants. This dynamic interplay between political and economic factors not only impacts a country’s FDI inflows but also shapes its overall economic landscape and prospects for long-term prosperity. The influence of institutional characteristics on FDI is a topic of paramount importance in the realm of international economics and global business. Institutions, which encompass a country’s legal, regulatory, and governance frameworks, significantly impact the decisions of multinational corporations when considering investment destinations. These institutional characteristics serve as a critical lens through which investors assess the risks and opportunities associated with a particular host country. Democracy, as a system of governance characterized by political freedoms, accountability, and the rule of law, has often been associated with greater transparency and stability. Similarly, economic freedom, gauged by factors such as regulatory efficiency, property rights, and trade openness, creates an environment conducive to business activity. Institutions, including the quality of government institutions and their effectiveness in safeguarding property rights and enforcing contracts, play a pivotal role in shaping investor confidence. Moreover, the rule of law provides a foundation of legal certainty, which is essential for businesses operating within a country’s borders. Therefore, without attracting foreign investment, especially without expanding the participation of foreign investment in key sectors, it is impossible to carry out structural changes and modernization of the economy, re-equip enterprises with modern equipment and launch the production of competitive products. Attracting foreign investment in the economy of our country is important in accelerating the expansion of its economic potential, ensuring the economic power of the state through the use of domestic potential and reserves in all areas, the development of new equipment and technology, export-oriented goods, their production earns. The Atlantic Council’s Freedom Index plays a pivotal role in assessing the intricate interplay between a nation’s freedom environment and its attractiveness to foreign investors, particularly in the realm of FDI. This comprehensive tool evaluates a country’s overall level of freedom across economic, political, and legal dimensions. The literature on FDI already has 135 SOLUTION OF SOCIAL PROBLEMS IN MANAGEMENT AND ECONOMY International scientific-online conference extensively discussed the impact of a nation’s institutional quality on FDI inflows.1 We aim to use the index data to further investigate this relationship. Countries classified as “free” according to the Freedom Index exhibit the most robust FDI per capita, boasting an average of $2,200 of FDI investment per person in 2022. This remarkable FDI per capita suggests a strong correlation between economic freedom, political stability, and foreign investment, contributing to the