TY  - JOUR
T1  - The Role of Foreign Direct Investment in Promoting the Egyptian Exports with Reference to
the Role of Kuwait Investment in the Egyptian Economy
AU - Fahad Almai, Abrar AU - Gamal Eldin Awad, Amr AU - Zane El-Abdeen Aly, Samir 
JO  - International Business Management
VL  - 15
IS  - 5
SP  - 212
EP  - 228
PY  - 2021
DA  - 2001/08/19
SN  - 1993-5250
DO  - ibm.2021.212.228
UR  - https://makhillpublications.co/view-article.php?doi=ibm.2021.212.228
KW  - Kuwait
KW  -Foreign Direct Investment (FDI)
KW  -Non-oil
KW  -Egypt
KW  -export
AB  - The purpose of the paper is to illustrate the role
of Foreign Direct Investment (FDI) in promoting the
non-oil exports of Egypt with emphasis on the role played
by the Arab investments in Egyptian economic activities.
The paper uses econometrics analysis to shed light on
Egypt’s main exporting sectors and sub-sectors that
benefitted most from FDI flows in boosting their exports.
The paper is sought to measure the impact of non-oil FDI
on non-oil Egyptian exports to know whether the increase
of FDI is associated with an increase in exports or not. To
answer this question, the paper employs the integrated
time series analysis through the use of Vector
Autoregressive (VAR), Vector Error Correction Model
(VECM) and Panel data models for annual time series
data for the period 1975-2015. Before doing so, the paper
addressed the literature reviews, both theoretical and
empirical reviews of the effects of FDI on host country’s
export performance and the causal links between Foreign
direct investment and trade. There is a positive long-run
equilibrium relationship between two variables; foreign
direct investment flows to non-oil sectors and Egyptian
non-oil exports. The econometric analysis showed that the
process of correcting deviations (error equilibrium
correction) in the short run which takes place in the
movement of the two variables over time, is slow. And
that means the impact of foreign direct investment flow to
non-oil sectors on Egyptian non-oil exports is limited in
the very short run; The impact takes some time which
means that opportunities to stimulate non-oil exports by
attracting more FDI are rather promising in the long-run.
Therefore, there is a necessity for the economic policy to
be planned to focus on trade and industry in long-run to
attract more FDI to drive exports. The econometric
analysis adopted by the paper also shows that changes in
output, Foreign direct investment flows to non-oil sectors,
private investment and exchange rate explain about 52%
of non-oil export changes and the remaining 44% is explained by other variables that are mostly qualitative
variables not included in the model such as the efficiency
of export’s process management, technology levels, tariff
and non-tariff restrictions imposed by some countries on
their imports, quality standards and environmental
requirements for some markets, the extent to which
preferential agreements exist with some countries, etc. As
for panel data analysis, Foreign direct investment flows to
non-oil sectors has an influential role in stimulating
manufacturing and tourism services exports but it does
not affect exports of the agriculture sector, the ICT sector,
while the agricultural exports, industrial exports, tourism
boom, the thriving of ICT exports help attracting foreign
direct investment to non-oil sectors. Furthermore, the
panel data analysis found that FDI flows to manufacturing
play an influential role in exports from some
sub-industrial sectors-namely, textile sector, the
pharmaceutical sector and the food sector, while it did not
have a significant role in the exports of the chemical,
engineering, mining, metallurgical industries, building
materials and wood industries. Finally, the study
recommends investment targeted promotion which is the
use of various promotional resources to attract a particular
type or category of FDI; it is export-oriented FDI rather
than a focus on attracting FDI in general. The study also
recommends Egypt to take advantage of the experiences
of countries that have succeeded in promoting
export-oriented foreign direct investment by equipping
special export zones and turning them into industrial
complexes and focusing through legislation on targeting certain investments to create industrial zones dedicated to
a single activity in which Egypt enjoys competitive
advantages such as the food industry and the wood
furniture industry. In addition, Egypt is advised to
formulate a national program to invest in
high-value-added export sectors and to give preferential
advantages to FDI flows to these sectors to encourage
service exports, so as to transform these resources into
exportable value added. The issuance of the new
investment law (Law No. 72 of 2017) is a remarkable step
towards this, however, the government must guarantee the
proper implementation of this law and trying to make the
business environment more attractive for foreign
investors. Most of the previous studies conducted FDI
flows to Egypt focused on measuring its overall impact on
economic growth, or on variables such as productivity,
employment, or its role in certain sectors, or its
determinants. The value of this paper lies not only in its
focus on measuring the impact of FDI flows to non-oil
sectors on Egyptian non-oil exports but also in examining
the impact of FDI flows to the major export sectors on
exports of these sectors, as well as the impact of FDI
inflows into the industrial sector on the exports of each of
Egypt’s sub-industrial sectors which contributes to
guiding FDI policies in Egypt to achieve a positive impact
on exports and then on Egypt’s foreign trade. The paper
is very important for scholars, institutes, universities,
research centers, organizations and governments which
concern to know and study the appropriate policies which
are to be pursued to attract foreign direct investment and
promote exports.
ER  -