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Trade and Investment in East AfricaThe Effect of Foreign Direct Investment and Trade Openness on the Firms' Export Competitiveness and Products Diversification Among East African Community Members

Trade and Investment in East Africa: The Effect of Foreign Direct Investment and Trade Openness... [This chapter examines the effect of Foreign Direct Investment (FDI)Foreign Direct Investment (FDI)and trade opennessTrade opennesson competitivenessCompetitiveness and diversification among East African Community (EAC)East African Community (EAC) members. Unlike previous studies, we investigated this issue in the emerging region of EAC. This chapter uses fixed and random effects panel estimates from 2010 to 2019, inclusive. We find that the effect of FDIForeign Direct Investment (FDI) on a firm’s export competitiveness and trade diversification is positive and statistically significant. However, the effect of trade opennessTrade openness is positive and statistically significant for export diversification but insignificant for export competitiveness. Results are robust to the alternative dependent variable, control variables, specifications and estimation methods. Policy reforms to improve economic freedom, technological development, and strengthening the inter-relationship of the domestic sector with FDIForeign Direct Investment (FDI)and trade opennessTrade openness are required to improve export competitiveness and diversification.] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

Trade and Investment in East AfricaThe Effect of Foreign Direct Investment and Trade Openness on the Firms' Export Competitiveness and Products Diversification Among East African Community Members

Part of the Frontiers in African Business Research Book Series
Editors: Demena, Binyam Afewerk; Van Bergeijk, Peter A.G.
Albiman, Masoud Mohammed; Yussuf, Huda Ahmed; Hemed, Issa Moh’d
Trade and Investment in East Africa — Nov 2, 2022
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Publisher
Springer Nature Singapore
Copyright
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022
ISBN
978-981-19-4210-5
Pages
185 –212
DOI
10.1007/978-981-19-4211-2_9
Publisher site
See Chapter on Publisher Site

Abstract

[This chapter examines the effect of Foreign Direct Investment (FDI)Foreign Direct Investment (FDI)and trade opennessTrade opennesson competitivenessCompetitiveness and diversification among East African Community (EAC)East African Community (EAC) members. Unlike previous studies, we investigated this issue in the emerging region of EAC. This chapter uses fixed and random effects panel estimates from 2010 to 2019, inclusive. We find that the effect of FDIForeign Direct Investment (FDI) on a firm’s export competitiveness and trade diversification is positive and statistically significant. However, the effect of trade opennessTrade openness is positive and statistically significant for export diversification but insignificant for export competitiveness. Results are robust to the alternative dependent variable, control variables, specifications and estimation methods. Policy reforms to improve economic freedom, technological development, and strengthening the inter-relationship of the domestic sector with FDIForeign Direct Investment (FDI)and trade opennessTrade openness are required to improve export competitiveness and diversification.]

Published: Nov 2, 2022

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