Analyzing the Impact of Foreign Investment on Trade Balance in Iraq: Evidence From 2005 to 2023
DOI:
https://doi.org/10.33095/hbzaze45Keywords:
Foreign Investment, Trade Balance, Exports and Imports, Economic Diversification, Vector Autoregressive (VAR) Model.Abstract
The paper investigates the impact of foreign investment on Iraq's trade balance between 2005 and 2023, particularly on exports and imports. Given the extreme reliance of the nation upon oil revenues and political-economic fluctuations, seasonal capital inflows are evaluated with respect to their influence on the trade dynamics of the country. Annual data and econometric methodological techniques, including stationary tests, cointegration analysis, Granger's causality test, and Vector Autoregressive (VAR) model, will be used to assess the long-run relationship between foreign investment and trade balance.
Results show a significant and long-run relationship between foreign investment and Iraq's exports and imports. Foreign investment enhances export competitiveness and affects the patterns of imports. The channels of impact may differ across various states of the economy. The study calls for policy amendments to attract sustainable investment, improve business regulations, and lessen reliance on oil exports.
The insights generated by the study shall be very useful for policymakers in charting a way to benefit foreign investment in the economic stability of the state. It stresses the need for economic diversification, improved investment laws, and infrastructure developments so as to maximize trade benefits. Future studies on Iraq should consider including important macroeconomic factors like GDP growth, exchange rates, and inflation to provide an integrated view of the economic future of Iraq.
Downloads
References
Aitken, B., Hanson, G. H., & Harrison, A. E. (1997). Spillovers, foreign investment, and export behavior. Journal of International Economics, 43(1–2), 103–132.
https://doi.org/10.1016/S0022-1996(96)01464-X
Aizenman, J., & Noy, I. (2005). Nber Working Paper Series Fdi and Trade-Two Way Linkages? June. http://www.nber.org/papers/w11403
Al-Dabbagh, S. F. A.-W. (2023). Analysis And Measurement Of The Impact Of Foreign Direct Investment On The Gross Domestic Product In Iraq For The Period 2004-2022. American Journal of Business Management, Economics and Banking (pp. 150–162).
Aziz, A. A. and, & Al-Ajrawi, Y. (2023). Tikrit Journal for Agricultural Sciences. Tikrit Journal for Agricultural Sciences, 23(1), 189–201. https://doi.org/Tikrit Journal for Agricultural Sciences (2023) 23 (1): 189-201 https://doi.org/10.25130/tjas.23.1.21
Dahal, A. K., Bhattarai, G., & Budhathoki, P. B. (2024). Impact of foreign trade and foreign direct investment on economic growth: Empirical insights from Nepal. Problems and Perspectives in Management, 22(1), 390–400.
https://doi.org/10.21511/ppm.22(1).2024.32
Devkota, S. (2023). Impact of Exports, Imports, Foreign Direct Investment, and Government Expenditure on the Economic Growth of Nepal. Nepalese Journal Of Insurance And Social Security | VOL 06 | ISSUE 01 | JAN-DEC, 2023, 06(01), 51–59.
https://doi.org/https://doi.org/10.58665/njiss.38
Encinas-Ferrer, C., & Villegas-Zermeño, E. (2015). Foreign Direct Investment and Gross Domestic Product Growth. Procedia Economics and Finance, 24(July), 198–207. https://doi.org/10.1016/s2212-5671(15)00647-4
HAILU, Z. A. (2010). Impact of Foreign Direct Investment on Trade of African Countries. International Journal of Economics and Finance, 2(3), 122–133.
https://doi.org/10.5539/ijef.v2n3p122
Hanna, G., Ghassan Faraj Hanna, B., Saleh Hammoud, M., Faraj Hanna α, G., & Saleh Hammoud σ, M. (2014). The Impact of National Cultural Distance on Foreign Direct Investment in Iraq The Impact of National Cultural Distance on Foreign Direct Investment in Iraq. Type: Double Blind Peer Reviewed International Research Journal Publisher: Global Journals Inc, 14(June 2014). https://www.researchgate.net/publication/348907549
Imomkulov, T. (2023). the Impact of Foreign Direct Investment on Economic Growth in Uzbekistan. Economics and Education, 24(6), 28–33.
https://doi.org/10.55439/eced/vol24_iss6/a4
Karimov, M. (2019). The Impact of Foreign Direct Investment on Trade (Export and Import) in Turkey. European Journal of Interdisciplinary Studies, 5(1), 6.
https://doi.org/10.26417/ejis.v5i1.p6-17
Keho, Y. (2020). Foreign Direct Investment and Import Demand in Cote d’Ivoire. International Journal of Trade, Economics and Finance, 11(2), 24–31.
https://doi.org/10.18178/ijtef.2020.11.2.661
Marantika, A., Hasan, S., Fasa, M. I., & Faizah, I. (2020). The Nexus Between Foreign Direct Investment And Export Toward Economic Growth Of Indonesia, China, And India. International Journal of Future Generation Communication and Networking, 3(13), 2398-2406. August.
Shameem, D. A. (2021). Foreign Direct Investment and its Impact on Insurance Sector. Emperor Journal of Economics and Social Science Research, 03(05), 171–179.
https://doi.org/10.35338/ejessr.2021.3520
Tascón, J., Working, E., & History, E. (2018). The long run impact of foreign direct investment , exports , imports and GDP : evidence for Spain from an ARDL approach Society EHES W ORKING P APERS IN E CONOMIC H ISTORY | N O . 128 The long run impact of foreign direct investment , exports , imports an.
Uzma Tabassum, M. N. and A. A. S. (2012). Impact of FDI on Import Demand and Export Supply Functions of Pakistan: An Econometric Approach. Journal of Basic & Applied Sciences, 8(1), 151–159. https://doi.org/https://doi.org/10.6000/1927‐5129.2012.08.01.16
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Journal of Economics and Administrative Sciences
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Articles submitted to the journal should not have been published before in their current or substantially similar form or be under consideration for publication with another journal. Please see JEAS originality guidelines for details. Use this in conjunction with the points below about references, before submission i.e. always attribute clearly using either indented text or quote marks as well as making use of the preferred Harvard style of formatting. Authors submitting articles for publication warrant that the work is not an infringement of any existing copyright and will indemnify the publisher against any breach of such warranty. For ease of dissemination and to ensure proper policing of use, papers and contributions become the legal copyright of the publisher unless otherwise agreed.
The editor may make use of Turnitin software for checking the originality of submissions received.
