An interplay between the tax policy and foreign direct investment to promote the economic stability of developing countries

Economic Annals-XXI: Volume 214, Issue (3-4), Pages: 4-9

Citation information
Isayev, J., Eshqulova, N., Fayzullaev, M., Durdiev, N., Sulaymonov, F., & Yusufov, S. (2025). An interplay between the tax policy and foreign direct investment to promote the economic stability of developing countries. Economic Annals-XXI, 214(3-4), 4-9. doi: https://doi.org/10.21003/ea.V214-01

Jakhongir Isayev
PhD (Industrial Economy),
Dean,
Faculty of Economics and Management,
Samarkand Agroinnovations and Research University
7 A. Temur Str., Dahbet Fortress, Akdarya District, Samarkand Region, Samarkand, 141001, Uzbekistan
isayevjahongir121@gmail.com
ORCID ID: https://orcid.org/0009-0007-1567-8614

Nasiba Eshqulova
MA (Education),
Lecturer,
Termez University of Economics and Service
41-B Farovon Massif Str., Termiz city, 190100, Uzbekistan
nasiba_eshqulova@tues.uz
ORCID ID: https://orcid.org/0009-0008-4177-4084

Maksud Fayzullaev
D.Sc. (Geography),
Shahrisabz State Pedagogical Institute
10 Shakhrisabz Str., Shakhrisabz city, 181301, Uzbekistan
strongwill001@mail.ru
ORCID ID: https://orcid.org/0009-0006-3544-0489

Normat Durdiev
PhD (Education),
Department of Use of Hydromelioration Systems,
«Tashkent Institute of Irrigation and Agricultural Mechanization Engineers» National Research University
39 Kori Niyazov Str., Tashkent, 100000, Uzbekistan;
Scientific Researcher,
Western Caspian University
31 Istiglaliyyet Str., Baku, AZ1001, Azerbaijan
normat8986@gmail.com
ORCID ID: https://orcid.org/0009-0005-0272-6344

Farrukh Sulaymonov
PhD (Education),
Kimyo International University in Tashkent
156 Shota Rustaveli Str., Тashkent, 100121, Uzbekistan
sulaymonovfsh@gmail.com
ORCID ID: https://orcid.org/0009-0002-7904-7831

Sardorbek Yusufov
PhD (Education),
Department of Architecture,
Urgench State University
14 Kh. Alimdjan Str., Urganch, 220100, Uzbekistan
sardorbeky795@gmail.com
ORCID ID: https://orcid.org/0000-0001-9974-4111

An interplay between the tax policy and foreign direct investment to promote the economic stability of developing countries

Abstract. In this study, we explore the nexus between foreign direct investment (FDI) and tax policy towards economic stabilization of the emerging economies, the focus being Uzbekistan. The findings show that a newly lowered corporate tax rate from 14% in 2018 to 7.5% in 2024, along with sectoral tax credits, has resulted in an 83% growth in the average foreign direct investment per year. In addition, there was a high positive correlation (91%) between the economic growth and FDI attraction. Despite the reduction of tax rates, tax revenues from investment-friendly branches exceeded expectations by 21.5%, demonstrating the positive effect of economic growth on government revenues. This study confirms the strategic relevance of tax reforms as a source of productive and sustainable investment as an engine of economic stability.

Keywords: Tax Policy; Foreign Direct Investment; Economic Stability; Developing Countries; Uzbekistan

JEL Classifications: Е24; Е41; Е64; I18; J28; J31

Acknowledgements and Funding: The authors received no direct funding for this research.

Contribution: The authors contributed equally to this work.

Data Availability Statement: The dataset is available from the authors upon request.

DOI: https://doi.org/10.21003/ea.V214-01

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Received 23.01.2025
Received in revised form 11.02.2025
Accepted 26.02.2025
Available online 29.04.2025