Protection of Foreign Investment in Central Asia

Abstract

Central Asia, with its abundance of natural resources and low labor costs, is often seen as an attractive destination for foreign investment. The inflow of foreign investment into Central Asia has significantly increased in recent decades, and this phenomenon supports the improvement of both national economies and the welfare of the region. Still, Central Asia is not classified as a low-risk destination for foreign investment because of inadequate protection of foreign investment – particularly a lack of transparency and predictability in Central Asia states’ FDI (Foreign Direct Investment) regimes. Furthermore, international organizations (such as the OECD) indicate that some countries in Central Asia do not have clear investment policies. These points pose problems for foreign investors who desire to invest in the region. From this perspective, this article analyzes the consistency of the general principles of foreign investment in Central Asia with international investment standards.