Export performance and foreign direct investment in Zimbabwe: An ARDL Approach

Abstract

Zimbabwe’s international exposure after the attainment of independence in 1980 and through the introduction of structural adjustment programs was meant to, among other macroeconomic objectives, enhance export performance. The Zimbabwe Agenda for Sustainable Socio–Economic Transformation (Zim-ASSET), a developed economic blue print for the country, with the intention of re-engaging the international community has motivated this research study to investigate export performance in Zimbabwe. Therefore, the purpose of this research study is to examine the effect of FDI on Zimbabwe’s export performance considering the influence of other variables such as economic growth and terms of trade. To investigate such a relationship, the research study employed the Autoregressive Distributed Lag Analysis (ARDL) on time series data for the period 1980 to 2016. The results show a positive relationship between export performance and FDI. Furthermore, other control variables such as economic growth and terms of trade were also positively related to exports. Thus the study recommends the government of Zimbabwe to maintain political stability in the economy to attract FDI. Moreover, the government should loosen the local industrial laws to promote exports.