Analysis of Foreign Direct Investments in Azerbaijan and Directions for Improving the Legal Attraction Mechanism in Local Self-Government Bodies

Abstract

This paper provides a comprehensive analysis of foreign direct investment (FDI) in Azerbaijan and  explores avenues for enhancing the legal mechanisms employed by local self-governance bodies to  attract such investments. The study underscores the theoretical and practical significance of fostering  a more developed investment climate and improving the efficiency of local governance systems.  Given the critical role of investments in economic development, the creation of a favorable legal  environment by local governance bodies is deemed essential for attracting and protecting foreign  investments. The article examines the existing legal framework in Azerbaijan, identifies challenges  hindering the development of the investment climate, and outlines actionable steps for local self-  governance bodies in this domain. Additionally, it analyzes key economic indicators influencing the  investment environment, including import volumes, export volumes to foreign countries, industrial  output (goods, works, and services), GDP, and the consumer price index. The research methodology  employs econometric techniques, including the Augmented Dickey-Fuller (ADF) test, Fully Modified  Ordinary Least Squares (FMOLS) estimator, and Johansen Cointegration test, to investigate the  interrelationships among these economic indicators.