IDEAS home Printed from https://ideas.repec.org/a/rnd/arjebs/v17y2025i4p75-87.html

Foreign Direct Investment and Exports as A Capacity to Import Vis-À-Vis Trade Balance in Sub-Saharan Africa

Author

Listed:
  • Nahabwe Patrick Kagambo John
  • Kagarura Willy Rwamparagi

Abstract

We examine the interaction effect of foreign direct investment (FDI) and exports as a capacity to import (ECI) on trade balance in Sub-Saharan Africa (SSA). We utilize balanced annual panel data for 20 SSA countries from 2005 to 2024, obtained from the World Development Indicators. The Generalized Method of Moments (GMM) methodology is used to address endogeneity and unobserved heterogeneity. Empirical findings reveal a positive and statistically significant interaction between FDI and ECI. Specifically, the coefficient of the interaction term (FDI*ECI) is 0.217378, indicating that a simultaneous 10 percent increase in FDI inflows and ECI improves trade balance by approximately 2.2 percent. We recommend that SSA economies adopt integrated strategies that attract export-oriented FDI while promoting export diversification, industrial upgrading, and productive capacity development to achieve sustainable trade balance improvements.

Suggested Citation

  • Nahabwe Patrick Kagambo John & Kagarura Willy Rwamparagi, 2025. "Foreign Direct Investment and Exports as A Capacity to Import Vis-À-Vis Trade Balance in Sub-Saharan Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 17(4), pages 75-87.
    • Handle: RePEc:rnd:arjebs:v:17:y:2025:i:4:p:75-87
    DOI: 10.22610/jebs.v17i4(j).4796
    as

    Download full text from publisher

    File URL: https://ojs.amhinternational.com/index.php/jebs/article/view/4796/3202
    Download Restriction: no
    File URL: https://ojs.amhinternational.com/index.php/jebs/article/view/4796
    Download Restriction: no
    File URL: https://libkey.io/10.22610/jebs.v17i4(j).4796?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rnd:arjebs:v:17:y:2025:i:4:p:75-87. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Muhammad Tayyab (email available below). General contact details of provider: https://ojs.amhinternational.com/index.php/jebs .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.