A Comparative Study of Foreign Direct Investment Activities in Georgia and Kyrgyz Republic

Abstract

This paper attempts to fill the knowledge gap in the area of foreign direct investment (FDI) research in the regions of Caucasus and Central Asia. Various dimensions of FDI were analyzed from a comparative perspective drawing on a number of selected case studies of inward investors in Georgia and Kyrgyz Republic. The results indicated that the FDI activity in Georgia and Kyrgyz Republic was a market-seeking type focusing heavily on location-specific attractions of the two countries. Although the issue of corruption affects foreign investors, it does not act as a major deterrent of FDI inflows. The most serious problem influencing the performance of FDI firms was found to be inefficiency of local labor force, excessive bureaucracy and red tape, and differences inherent in the business practices of host countries. In general, however, it was found that foreign investors have been satisfied with their performance largely due to the relatively smooth competition and the availability of several market niches in both host country markets.