ANALYSIS OF THE FACTORS AFFECTING THE TRADE BALANCE OF EGYPT
Keywords:
Trade Balance, Egypt, Foreign Direct Investment, Gross National Income, Exchange Rate, Inflation, Ordinary Least Squares (OLS), International Trade, Macroeconomic Determinants.Abstract
This study investigates the determinants of the trade balance in Egypt over the period 1991–2020. Trade balance is an important indicator of a country's macroeconomic performance and international competitiveness, reflecting the difference between exports and imports. Despite extensive research on trade balance determinants, limited studies have focused specifically on Egypt. Using the Ordinary Least Squares (OLS) regression approach, this paper examines the impact of several macroeconomic variables, including exchange rates, inflation, money supply, tariffs, government consumption, personal remittances, Gross National Income (GNI), and Foreign Direct Investment (FDI), on Egypt’s trade balance. The empirical findings reveal that only Gross National Income and Foreign Direct Investment have a statistically significant influence on the trade balance. GNI exhibits a negative relationship with the trade balance, while FDI significantly affects trade dynamics. In contrast, exchange rates, inflation, money supply, tariffs, remittances, and government consumption were found to have no significant impact. The study contributes to the literature on Egypt’s external sector and highlights the need for further research on the role of domestic and foreign income in shaping trade balance performance.
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