FDI AND ADMINISTRATIVE DECENTRALIZATION: THE IMPORTANCE OF EMPOWERING LOCAL GOVERNMENTS

Abstract

This study analyzed the relationships between administrative decentralization, empowering local governments, and attracting foreign direct investments (FDI) based on an online questionnaire completed by government officials in Uzbekistan. The examined data suggests that empowerment of local governments is positively related to attracting foreign direct investments as mediating variable, while administrative decentralization does not directly affect foreign direct investments attraction. The paper presents the first comprehensive analysis of the mediating role of empowering local governments in Uzbekistan, and highlights policy implications that need to be implemented to establish a new legal status for local authorities. Further research is required on the specific way that the survey will be conducted only among government officials who are in charge of departments in investment policy. Based on the analysis, the study developed recommendations for changing the administrative environment that can create conditions that are more favorable for foreign investors. This study might help public administration, policy scholars, and, to be more specific, the policymakers, government officials to put better regulation into their agendas.