The Effect Of Foreign Direct Investment On Trade Balance The Case Of Sub Saharan Africa

Economists usually consider that FDI affects import share and export sharernpositively. But the nature of FDI flow varies across regions there by havingrndifferent impacts on the region under study.rnThis paper examined the impact of FDI on trade balance and its componentsrn(export and import) for sub saharan africa region . This paper empirically provedrnthat FDI affects import share and export share positively and at a statisticallyrnsignificant level. The results from cross sectional and panel data regressionrnreveal that the impact of FDI up on trade share, import share and export share isrnstrong . Almost all the regression results indicate that FDI affects these variablesrnat a 1 % significance level. However the magnitude of FDI in import share isrnconsistently higher than that of export share; indicating that the net impact of FDIrnon trade balance is negative.rnmoreover this paper proved that import tax does not affect import share at arnstatistically significant level in the case of Sub Saharan Africa. This may be duernto the fact that most of sub Saharan Africa imports are structural and do notrnrespond sensitively to price increment

Get Full Work

Report copyright infringement or plagiarism