Аңдатпа
In the context of the transformation of post-socialist economies and increasing global competition for capital, the analysis of institutional factors in attracting foreign direct investment is of particular importance. The aim of the study is to assess the short– and long-term impact of economic freedom on the inflow of foreign direct investment in five Central Asian countries over the period 1998-2024. Using a panel autoregressive distributed lag (ARDL) approach with the Pooled Mean Group (PMG) estimator, the analysis distinguishes between short-run and long-run effects while accounting for cross-sectional dependence and heterogeneity across countries. Panel unit root tests indicate that the variables are integrated of mixed order, justifying the application of the panel ARDL framework. The results showed that there is a stable long-term relationship between economic freedom and investment inflows. The long-term coefficient of economic freedom is 0.095 (p < 0.01), which indicates a positive and statistically significant impact of institutional quality on the investment attractiveness of the region. In the extended model specification, this effect persists (0.114; p < 0.01). The error correction factor is -0.65 (p < 0.01), which indicates a correction of about 65% of short-term deviations from equilibrium during one period. The short-term effects turned out to be statistically insignificant, which confirms the inertial nature of investment decisions. The results have important policy implications, highlighting the need for sustained institutional reforms aimed at improving economic freedom to foster stable and long-term foreign investment inflows.