Modeling of Social Effect of Foreign Direct Investment in the Regions of Kazakhstan

Abstract

In this paper, the authors have made an attempt to evaluate the social effect of foreign direct investment (FDI) in the regions of Kazakhstan. For this purpose, the dynamics of FDI for currently operating foreign-invested enterprises and six socio-economic indicators of the regions has been studied for the period 2003?2013 based on the database of the Agency of Statistics of the Republic of Kazakhstan. The experiment involved 16 regions of Kazakhstan (14 regions and 2 cities of republican status: Almaty and Astana). The study was performed using the mathematical apparatus of the “simplified” version of the analytic hierarchy process (AHP) developed by T. Saaty, and the MS Excel program. The developed economic and mathematical model for assessment of the FDI effect on the quality of life and well-being of the population in the regions is hypothetical since it uses expert evaluations of a hypothetical expert. The authors formulated a hypothetic possibility to get the tool for assessment of the social effect of FDI in the regions of Kazakhstan, i.e. the Rating of the regional priority of factors (RPF Rating). The obtained RPF rating has enabled a prioritization of the factors, which determine the quality of life in the regions of the country, and calculation of the cumulative social effect of FDI in Kazakhstan, highlighting the directions of its influence on each of the six factors in a regional context. The study did not reveal the negative impact of FDI on socio-economic development of the regions; moreover, the cumulative social effect of FDI was revealed to be positive for all regions of Kazakhstan. According to the authors, the RPF Rating can be an important tool to enhance the validity of the socio-economic policy in the development of public-private partnerships in the regions of Kazakhstan, as well as to strengthen the positive social effect of FDI in the future. All these will contribute to the long-term growth of the quality of life and well-being of the population in the regions of the Republic.