INTEGRATION OF UZBEKISTAN INTO INTERNATIONAL CAPITAL MARKETS: OPPORTUNITIES AND OBSTACLES
Abstract
This study examines Uzbekistan’s integration into international capital markets and how external capital and domestic financial deepening relate to output performance. Using quarterly World Bank Open Data indicators (80 observations), it estimates a baseline OLS model with heteroskedasticity-robust standard errors, linking GDP growth to FDI, portfolio equity inflows, domestic credit to the private sector, market capitalization, and the official exchange rate. FDI and market capitalization are positively associated with GDP growth, while portfolio equity inflows are negatively related, consistent with the contrast between relatively stable long-term capital and more volatile portfolio flows. Model diagnostics motivate robust inference and careful specification checks. Overall, the evidence frames capital-market integration as a dual process for Uzbekistan: it can support growth through durable investment and market development, yet it can also transmit external shocks via short-term portfolio channels, underscoring the need for sound institutions and risk management. These patterns inform sequencing of liberalization reforms.
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