International Economics

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Browsing International Economics by Subject "ARDL"

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    Determinants of Foreign Direct investment in Ethiopia: An Autoregressive Distributed Lag Approach
    (A.A.U., 2019-11) Amanuel, Tesfaye; Lakew, Alemu (PhD)
    This paper attempts to study the determinant of FDI in Ethiopia for the time period from 1980-2015. To this end, the study has reviewed theoretical explanations relating to the determinants of foreign direct investment and the study has also reviewed relevant empirical literatures focusing on the determinants of FDI in the context of developing countries. Using Data on foreign direct investment and number of telephone users that is obtained from United Nations Conference on Trade and Development (UNCTAD). Real effective exchange rate, inflation rate, export and import data were obtained from National Bank of Ethiopia (NBE), and Ethiopia Real GDP from Ministry of Finance and Economic Development (MoFED). By adopting model that was used by Erdal Demirhan etal (2008) this paper examine prominent determinants of FDI and finds that economic growth, macroeconomic stability, openness to trade are important determinants of foreign direct investment. The results suggest policy makers should give due attention to promoting liberalization and implementing sound economic policies that can ensure macroeconomic stability in the country.
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    An Empirical Investigation of Capital Inflow and Dutch Disease: Evidence from Ethiopia
    (Addis Ababa University, 2018-06) Mohammed, Yimam; Alemayhu, Geda (Prof)
    This study investigates the Dutch disease impact of capital inflow using a quarterly time series data from 2000/01 1st quarter to 2016/17 fourth quarter. The study employed three separate re-gressions to examine the impact of capital inflow on spending, resource movement and established the impact of real effective exchange rate shock on net export. Regression analysis was carried out using auto regressive distributed lag (ARDL) approach to examine the impact of Capital inflow on real effective exchange rate and traded to non-traded sector ratio and then applied Bayesian Vector Auto-regressive to find the impact of real effective exchange rate changes on net exports of Ethiopia. The findings reveal that, foreign direct investment and foreign aid inflow does not have Dutch disease impact through spending effect both in the short run and the long run model. In resource movement effect, foreign direct investment inflow does not have any impact on resource reallocation from the tradable agricultural and manufacturing sector to non-tradable service sec-tor. But in the long run, foreign aid exerts a pressure on the movement of labor from the tradable to non-tradable sector ratio. The changes in real effective exchange rate have negative impact on net export in Ethiopia. While, real effective exchange rate respond positively to a unit shock in foreign direct investment and remittance inflow. Again, its response is also insignificant following a unit shock in foreign aid. Hence, there is lack of empirical support of Dutch disease in Ethiopia, suggests that Ethiopia has been able to effectively manage a surge capital inflows.