THE ROLE OF SECTOR-SPECIFIC FDI IN SHAPING INDUSTRIAL TRANSFORMATION IN THE CIS REGION: THEORY AND ANALYSIS

Abstract

This article explores the transformative role of sector-specific foreign direct investment (FDI) in shaping industrial development across the Commonwealth of Independent States (CIS). Departing from the traditional resource-driven FDI patterns of the early 2000s, the study highlights a significant shift toward investments in renewables, ICT, and diversified manufacturing. Using a mixed-methods approach—including panel regressions and country case studies—the research demonstrates that targeted FDI in these sectors correlates with higher medium- and high-tech export shares and productivity gains. The analysis underscores the importance of strategic FDI facilitation, skills development, and regional integration for sustained industrial upgrading. Successful examples from Kazakhstan, Uzbekistan, and Armenia contrast with Belarus’s decline, reinforcing the need for stable institutions and coherent policy frameworks. The article concludes that CIS countries must adopt a sector-based investment strategy to accelerate structural transformation and reduce dependence on extractive industries.