The foreign direct investment-Export performance nexus: An ARDL based empirical evidence from Ethiopia

Gebremariam, Teamrat Kahssay; Sun, Ying Article The foreign direct investment-Export performance nexus: An ARDL based empirical evidence from Ethiopia Cogent Economics & Finance Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Gebremariam, Teamrat Kahssay; Sun, Ying (2022) : The foreign direct investment-Export performance nexus: An ARDL based empirical evidence from Ethiopia, Cogent Economics & Finance, ISSN 2332-2039, Taylor & Francis, Abingdon, Vol. 10, Iss. 1, pp. 1-15, https://doi.org/10.1080/23322039.2021.2009089 This Version is available at: https://hdl.handle.net/10419/303541 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Cogent Economics & Finance ISSN: (Print) (Online) Journal homepage: www.tandfonline.com/journals/oaef20 The foreign direct investment-Export performance nexus: An ARDL based empirical evidence from Ethiopia Teamrat Kahssay Gebremariam & Sun Ying To cite this article: Teamrat Kahssay Gebremariam & Sun Ying (2022) The foreign direct investment-Export performance nexus: An ARDL based empirical evidence from Ethiopia, Cogent Economics & Finance, 10:1, 2009089, DOI: 10.1080/23322039.2021.2009089 To link to this article: https://doi.org/10.1080/23322039.2021.2009089 © 2021 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license. Published online: 22 Dec 2021. Submit your article to this journal Article views: 6227 View related articles View Crossmark data Citing articles: 16 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oaef20 GENERAL & APPLIED ECONOMICS | RESEARCH ARTICLE The foreign direct investment-Export performance nexus: An ARDL based empirical evidence from Ethiopia Teamrat Kahssay Gebremariam 1 * and Sun Ying 1 Abstract: Ethiopia is one of the top FDI destinations in Africa and the leading FDI receiver in east Africa. However, little is known about the direct impact of the FDI on the Ethiopian export performance. This study was conducted to fill this gap. As a result, the main objective of this study was to examine the empirical relationship between foreign direct investment and export performance in Ethiopia by using an annual time series data for the period 1992–2018. The analysis was based on the autoregressive distributed lag (ARDL) model. The long-run model result, which was estimated after a proper application of pre-estimation tests, displayed that the relationship between FDI and export performance was insignificant. The estimated long-run equation also revealed that an increase in the real GDP resulted in an improved export performance in Ethiopia. The coefficient of the real effective exchange rate index in the long-run equation implies that depreciation of the exchange rate improves the export performance. According to the short-run and long-run estimation results, the study provides recommendations to improve Ethiopian export performance. First, national economic policies have to be directed toward keeping the overall health of the economy safe and achieving fast and Teamrat Kahssay Gebremariam ABOUT THE AUTHOR Ying Sun is a Professor and the Director of Teacher Development Center, School of Economics and Management, University of Science and Technology of Beijing. She has a PhD in management. She is a well-known teacher of higher education in Beijing. Her area of research belongs to international economics and industrial organization; international marketing; strategic management; international business; foreign direct investment; multinational enterprises. Teamrat Kahssay Gebremariam received his bachelor degree in Economics from Addis Ababa University and his master’s degree in Economics with specialization of International Trade from the University Science and Technology Beijing. His research interests include trade and international economics, fiscal policy, and welfare economics. PUBLIC INTEREST STATEMENT Foreign direct investment has long been recognized as a crucial economic activity by academicians, research experts, multinational corporations, and various government and nongovernmental organizations. Historically, foreign direct investment was concentrated in and dominated by handful rich countries. However, the favorable investment environment created and the encouraging policies adopted by certain developing countries in the last four decades confirmed a dramatic shift in FDI destination in favor of the newly emerged economies. There is a general consensus that, despite some undesirable impacts, FDI plays a decisive positive and promoting role in a nation’s economy, both directly and indirectly. Empirical evidences in the topic also conform to this widely held belief. Our study was meant to investigate the possible contribution of FDI to Ethiopia’s export performance. Consequently, this study provides variety of suggestions in order to create a suitable situation in which FDI helps improve the export performance of Ethiopia. Gebremariam & Ying, Cogent Economics & Finance (2022), 10: 2009089 https://doi.org/10.1080/23322039.2021.2009089 Page 1 of 15 Received 2 December 2020 Accepted 17 November 2021 *Corresponding author: Gebremariam Teamrat Kahssay,School of Economics and Management, University of Science and Technology Beijing, Beijing, China E-mail: [email protected] Reviewing editor: Juan Sapena, Economics Department, Catholic University of Valencia, SPAIN Additional information is available at the end of the article © 2021 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license. sustainable growth. Second, with regarding to exchange rate management, longterm effects need to be considered. Finally, attracting more foreign firms to engage in value addition activities for the primary agricultural products would also play a role in enhancing the export performance. Subjects: Economics; Finance; Industry & Industrial Studies Keywords: Export Performance; FDI Inflows; Autoregressive Distributed Lag; Bounds Test; Ethiopia 1. Introduction Investment has proven to be a major economic activity that allows an economy to step forward to a higher position than it was. Obviously, it is very important catalyst for economic growth. Despite the key role it plays in bringing a fast economic growth, investment believed to contribute a lot in reducing unemployment and expanding urbanization. Broadly speaking, this investment streams from international and national (domestic) sources. Foreign direct investment (FDI), being a component of an international investment, becomes an intriguing macroeconomic variable as it impacts various aspects of a country. According to OECD (2008), foreign direct investment is a category of cross-border investment made by a resident in one economy with the objective of establishing a lasting interest in an enterprise that is resident in an economy other than that of the direct investor. According to the UNCTAD annual report (2018), the global FDI flows has fallen by 13 percent to $1.3 trillion in 2018. FDI flows to developed economies reached the lowest point since 2004, declining by 27 percent. Conversely, flows to developing countries remained stable, rising by 2 percent. As a result of the increase and the anomalous fall in FDI in developed countries, the share of developing countries in global FDI increased to 54 percent, a record. Furthermore, FDI flows to Africa rose by 11 percent to $46 billion, despite declines in many of the larger recipient countries. The increase was supported by continued resource seeking inflows, some diversified investments and a recovery in South Africa after several years of low-level inflows. Ethiopia continued to be one of the top five foreign direct investment destinations in Africa and the biggest recipient in East Africa. In 2018, FDI inflows to Ethiopia, declined by 18 percent from the preceding year, was estimated to be $3.3 billion (UNCTAD, 2018). Basically, the issue of FDI and its multilevel influences have long been recognized by the academicians and practitioners in the field of international trade. When it comes to the developing countries, where the domestic savings appeared to be insufficient to support the level of domestic economic growth, FDI is significant in the sense that it is one of the major channels for acquiring a foreign exchange as inadequate foreign exchange remained to be a critical challenge for growth. The reason why a bunch of scholars has been attracted to scrutinize about FDI is due to the fact that FDI has a multidimensional influences, inter alia, it enables the host country to build up physical capital, create employment opportunities, develop productive capacity, enhance skills of local labor through transfer of technology and managerial know-how, and help integrate the domestic economy with the global economy (Zhang, 1999). As far as the effects of FDI on export performance of the host country is concerned, the mainstream theory proposed the occurrence of direct effect that runs from FDI to export growth. This happens when the giant actors in the global FDI flows, the multinational corporations, engage themselves in the production of goods and services, be it in the form of green or brown field investments in the host country, and able to export those products to the rest of the world. However, it is important to keep in mind that the effect of FDI on the export growth does not only confined to the direct effect where the direct investor involved in the export-oriented Gebremariam & Ying, Cogent Economics & Finance (2022), 10: 2009089 https://doi.org/10.1080/23322039.2021.2009089 Page 2 of 15 industries of the host country. This justifies the fact that FDI has an indirect effects. FDI leads to create technological spillovers, which less developed countries could benefit from, enhance labor skills, instigate management practices and organizational structures, and also stimulate further investments and economic growth in a host country. In scrutinizing the spillover effects of FDI in Uruguay, Kokko et al. (2001) evidenced that the labor productivity of local firms is positively related to the presence of foreign affiliates in their industry in which the local firms gained some knowledge and skills associated with export from the already existed foreign direct investors. It is unanimous that many developing countries have been experiencing a trade deficit. This trade deficit reflects the situation where the monetary value of goods and services that those countries export to the rest of the world is by far less than the monetary value of goods and services that they import from the rest of the world. Ethiopia, being one of the developing countries in the world, has been undergoing through a substantial trade deficit from the inception even in the last decade when the export sector has shown a tremendous progress. A fiscal year has never passed away without the country reported a considerable trade deficit. Based on the data obtained from the World Bank, Ethiopian total imports and exports for the year 2013 were $13.81 billion and $5.95 billion, respectively. After 5 years, i.e. in 2018, while the value of the country’s total exports surged to $7.06 billion, the total imports was estimated to be $19.23 billion. The trade deficit, witnessed a 54% increase, was escalated from $7.86 billion in 2013 to $12.17 billion in 2018. The consistent trade deficit demonstrates how much import reliant the country is and it also tells a lot about how very weak the country’s export performance is in relation to its imports. The World Bank Group (2014) once postulated the Ethiopian export as promising sector despite the fact that it is dominated by agricultural outputs, which are sensitive to volatile international prices. This is why the country has been shifting slowly its emphasis towards agro-processing and light manufacturing. In this process of transforming the export sector, FDI is believed to play an imperative role. This study aims to investigate the relation between FDI inflows and export performance in Ethiopia. 2. Overview of FDI and export in Ethiopia 2.1. General information about export Ethiopian export is especially dominated by primary products which are price volatile and not as much competitive within the international market. This can be why while the country’s economy has witnessed a noteworthy growth, especially within the last 20 years, the contribution of export to the whole GDP has remained low. Limited degree of diversification of exportable goods, low volume of exportable products, which are made up mainly of unprocessed primary products, occasional economic recession which substantially reduce the demand for and prices of primary products, artificial trade barriers by trading partners and other factors may be raised because the underlined causes for the unfledged export capacity of the country. Few numbers of agricultural commodities like coffee, chat, oil seeds, pulses, live animals, and leather and leather products are the main export items the country sells to the rest of the globe. Be that because it may these things were traded without adding any value; so Ethiopia can’t get what can from this sector for the very long time. Nowadays, Ethiopia try to start value added trade through numerous motivating forces for those firms who work on the realm and assisting pre condition for local and foreign firms who going to contribute on value added export. Improvements are observed as a results of the emphasis given to the export sector and diverse government policy reforms to maneuver towards middle income country level in 2025 (Fitawek & Kalaba, 2016). According to a report released by the Ethiopia Investment Commission (2020), in 2018/19, total merchandise export earnings declined by 6.0 percent over last year due to lower export earnings Gebremariam & Ying, Cogent Economics & Finance (2022), 10: 2009089 https://doi.org/10.1080/23322039.2021.2009089 Page 3 of 15 from coffee (8.9 percent), oilseeds (8.4 percent), leather & leather products (11.4 percent), meat & meat products (12.8 percent), fruits & vegetables (0.9 percent), gold (72.1 percent), live-animals (25.0 percent), and electricity (30.8 percent). Hence, the ratio of merchandise export to GDP dropped to 2.8 percent from 3.4 percent a year ago. Specifically, export earnings from coffee went down by 8.9 percent owing to 5.9 percent decline in price and 3.2 percent drop in volume. As a result, the share of coffee in total merchandise export was 28.7 percent which was slightly lower than 29.6 percent last year same period. 2.2. General information about FDI FDI into Ethiopia begun extending with the liberalized arrangement changes that started in 1992 taking after the destruction of the Derg military regime and a long time of social distress. The relatively democratic government, Ethiopian Peoples’ Revolutionary Democratic Front, EPRDF, looked for to apportion with impediments on outside venture and to set up a more conducive commerce environment. After then, Ethiopia has steadily moved from a command economy towards a market affiliated one. New investment policies, proclamations and declarations have been released and modified (Ethiopian Investment Commission, 2020). At present, Ethiopia is one of the top FDI destinations in Africa. It accounts for 18.5 percent of all FDI jobs in the continent. The top 6 FDI origins are China, Turkey, India, Saudi Arabia, Netherlands, and UK. China has significantly increased its investment in the country over the past decade, notably in the construction, textile, power generation and telecommunications sectors. FDI inflows to the Ethiopia have quickened in later a long time. In any case, in 2018, FDI inflows diminished to USD 3.3 billion in 2018 compared to USD 4.2 billion in 2017 (UNCTAD, 2018). Nearly half of the streams from the East African locale were ingested by Ethiopia. Totally, FDI stocks were evaluated at USD 22.2 billion, constitutes 27.7percent of GDP in 2018. Agreeing to the most recent information from UNCTAD, in spite of a 24% drop in speculations to USD 3.1 billion in 2018, Ethiopia kept up its beat rank in East Africa, with investments in petroleum refining, mineral extraction, real estate, manufacturing, and renewable energy resources. FDI has brought both opportunities and challenges to Ethiopia. Among the distinctive positive contributions, one is profiting capital which is essential to carryout medium and large-scale agricultural and mechanical investments and in this manner broadening country’s trade things. Horticulture is one striking case; Ethiopia has gotten to be the one of the beat six flower exporters of the world and this contains extraordinary share within the country’s GDP. Recognizing the significance of FDI in the development of its economy, Ethiopia has, since the early 1990s, taken critical steps towards liberalization of the economy and of private investment. Countries’ strong approaches toward FDI base themselves on the presumption that FDI increments the country’s output, productivity, produces positive spillover effects, and innovation exchange. Another advantage of FDI is that creation of work opportunity for the locals (Tafese, 2018). As of late, FDI in Ethiopia is concentrating within the manufacturing sector, which is remarkable for a developing country that mostly depends on agricultural economic activity. In most lowincome countries, FDI is overwhelming within the service and agriculture sectors. As of now, Ethiopian manufacturing sector receives around 60 percent of the total FDI inflow to the country. 3. Review of related literature Thus far, enormous studies about the nature of FDI and its impact have been conducted. So long as the impact of FDI is concerned, the literature can systematically be classified under two major categories. The first group, based on panel data analysis, emphasized on the effect of FDI on economic growth and or development in a certain group of countries or the possible effects FDI could have on other economic variables other than economic growth in general in those countries. This kind of study is important for comparison and helpful to understand the distribution of FDI and its contribution among countries. However, using such studies for policy purposes might be Gebremariam & Ying, Cogent Economics & Finance (2022), 10: 2009089 https://doi.org/10.1080/23322039.2021.2009089 Page 4 of 15 misleading as they do not take the inherent macroeconomic and structural differences among the countries under study into account. The second category, however, is concerned about the studies carried out at country level. Accordingly, the research studies that give weight to the influence of FDI on individual country’s economic growth as a whole or on the other aspects of the economy in particular belongs to the second category also termed as country case study. The empirical literature review in this study gives a great deal of attention to the previous studies within the topic. Hereafter, the authors tried to discuss the preceding works that have been devoted to explore the possible impacts of FDI on export performance specifically. Nwanna (1986) conducted a cross country study to investigate the contribution of FDI to exports by considering 23 less developed countries by then. The empirical result suggested that FDI into those countries had a direct positive effect on exports even though the magnitude of the effect of FDI on exports differs from one country to other. Zhang (2005) examined how the FDI affects the export performance of the host country. The empirical estimation result suggested that FDI has positive impact on China’s export performance. Hailu (2010) studied the impact of FDI on African countries Trade performance and found a positive and significant FDI elasticity of export, which indicates the existence of direct correlation between FDI and the export sector of the continent despite the fact that the overall effect of FDI on balance of trade has found to be negative as imports outweighs exports in the continent. Kinoshita (2011) has asserted that FDI in the tradable sectors leads to an improvement of the external balance in Eastern Europe. The study also confirmed high FDI inflows in the tradable sectors are highly related with large market size, good infrastructure, greater trade integration, and educated labor force. Goswami and Saikia (2012) found a bidirectional causality between FDI and export in India. That is, the inflow of FDI causes manufactured export growth and then export-led growth further encourages the flows of FDI. Furthermore, Selimi et al. (2016) analyzed the impact of the foreign direct investments on exports performance in Western Balkan countries for the period of 1996– 2013 by employing the panel regression techniques and Least Square Dummy Variable (LSDV) regression method. The empirical result showed a positive relationship between FDI and export performance. Mijiyawa (2017), by employing generalized method of moments (GMM), studied the possible effect of foreign direct investment inflows on exports in 53 African countries. The empirical estimation result of the study indicated that FDI inflows are positively and significantly linked with exports of goods and services. The author also implied that a large part of the FDI effect in the continent is driven by its spillover effects on exports. Recently, Popovici (2018), who studied the effect of the FDI on EU export performance in both manufacturing and service sectors, has found FDI is one factor contributing for the increased export at the time thought the magnitude of the impact of FDI on exports is higher in the new EU MS than in the old ones. Samantha (2018) examined the effect of FDI on trade in Sri Lanka by applying the ARDL cointegration for time series data covering the period from 1980 to 2016. The short-run and the long-run estimation results revealed a significant positive relationship between the two variables. Mukhtarov et al. (2019) also found similar results for Jordan. Gamariel and Hove (2019) analyzed the impact of FDI on export competitiveness in SSA and confirmed that FDI stimulates export competitiveness. To identify whether export-oriented and FDI-friendly policies have a significant impact on a balance of Payments in a Developing Economy, Razmi (2005) conducted a study using a general equilibrium framework. The result of the paper revealed a negative short-run effects of FDI-friendly policies on the balance of payments. This is in contrast to common opinion and may attributed to the nature of both the investments and the policy measures. Goswami (2013) has also examined the determinants of trade development for South Asian countries over the period 1980–2010. The estimation result indicated an inverse correlation between FDI and trade performance. Gebremariam & Ying, Cogent Economics & Finance (2022), 10: 2009089 https://doi.org/10.1080/23322039.2021.2009089 Page 5 of 15 Some empirical evidences suggested that there is no significant relationship between the two variables of interest. Sharma (2000), aiming to figure out whether FDI played an imperative role in Indian export growth, found a statistically insignificant relationship between FDI and growth in export. Temiz and Gökmen (2009) found no significant effect that runs from FDI to export for the Turkish economy. Rather, their study confirmed a long-run and short-run unidirectional causality running from export to FDI. Still, some other studies in the topic highlighted the existence of causality between the dependent and independent variables without mentioning the nature of the relationship. Danish et al. (2013) investigated relationship between FDI and current account in Pakistan using the Johansen– Juselius cointegration technique and the Granger causality test. The result of their study suggested that a long-run relationship had existed between FDI and CA with in the study period. The Granger causality test findings indicate that the causality between FDI and CA is unidirectional. Acaravci and Ozturk (2012) empirically studied the existence of long-run relationship between FDI, export and economic growth for the ten transition European countries (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovak Republic and Slovenia) by using quarterly data from 1994 to 2008. The study employed the ARDL bounds testing approach and found a causal relationship between FDI, export and economic growth in four out of ten countries considered. Mitic and Ivić (2016) found a significant level of correlation between FDI and export for European transition economies, with the stronger correlation in the case of high-tech exports. The difference in the results of the empirical evidences simply shows how debatable the topic is. Although the conventional theories which founded upon simplified assumptions tell us that the FDI contributes to growth in a nations export thereby economic growth, not all studies turned out to support those hypothetical implications. This calls for conducting additional studies using recent data with sound methodology and partially motivates the authors to investigate the relationship between FDI and export performance at country level. 4. Data and estimation technique 4.1. Data As explained earlier, the intention of this study is to explore the association between FDI and export performance in Ethiopia. In this study, a time series data spanning the period from 1992 up to 2018 was analyzed. The data for exports, foreign direct investment inflows, real gross domestic product (GDP), and real effective exchange rate index (REERI) were obtained from the national bank of Ethiopia. Furthermore, the data, for all the variables except for the real effective exchange rate index, were transformed into natural logarithm to reduce possible occurrence of heteroscedasticity problem. It must also be noted that according to National Bank of Ethiopia’s compilation, a decrease in the REERI implies a real depreciation and an increase in the REERI is a real appreciation. 4.2. Estimation technique As explained earlier, the intention of this study is to explore the association between FDI and export performance in Ethiopia. In this study, a time series data spanning the period from 1992 up to 2018 was analyzed. The data were obtained from the national bank of Ethiopia. Further, the data for all the variables except for real effective exchange rate index were transformed into natural logarithm to reduce possible occurrence of heteroscedasticity problem. The autoregressive distributed lag (ARDL) model estimation technique was adopted for this study in which the dependent variable is expressed by the lag and current values of independent variables and its own lag value. The ARDL methodology follows general to specific approach, that’s why it could be possible to tackle many econometric problems like, misspecification and autocorrelation, and come up with a most appropriate interpretable model (Ghouse et al., 2018). According to Pesaran et al. (1996), the ARDL cointegration approach provides explicit tests for Gebremariam & Ying, Cogent Economics & Finance (2022), 10: 2009089 https://doi.org/10.1080/23322039.2021.2009089 Page 6 of 15 the presence of a single cointegrating vector, instead of assuming uniqueness. Further, by using ordinary least square estimations of ARDL model, we can make appropriate inference on short-run and long-run parameters. So, the ARDL model order is properly augmented to grant for contemporary correlation among the stochastic elements of the data generating processes involved in estimation. Export performance tells about a firm’s/nation’s accomplishment in terms of selling once locally produced products to the rest of the world. There exist plethora of ways to measure export performance. Usually, measures of export performance can be categorized in two broad groups: financial/ economic and non-financial/non-economic measures. Within the financial/economic classification, McGuinness and Little (1981) and Axinn (1988) suggested Export sales volume as a measure of export performance of a firm or nation. Accordingly, this study considers export volume as a measure of export performance. From the theoretical and empirical perspective, there are several variables that have a significant impact on export performance of a country. In order to investigate the impact of FDI on Ethiopian export performance, this study considered real GDP and real effective exchange rate as independent variables in addition to the foreign direct investment inflows after taking a look at previous research works such as Nwanna (1986), and Alguacil et al. (2002). As a result, the study estimated the following functional relationship. EX ¼FDI;RGDP;REER (1) where EX = export of goods and services, FDI = foreign direct investment inflows, RGDP = real gross domestic product, and REERI = Real Effective Exchange Rate Index. The econometric model for investigating the impact of FDI on Export performance can be represented as: EX ¼αþβ1FDI þβ2RGDP þβ3REER þμt(2) where α represents for the constant term, β 1 , β 2 , and β 3 Regression coefficients of the parameters, i.e. FDI, RGDP, and REER, respectively, and μt denotes stochastic error term. As we have already specified, the study employed the ARDL model for analysis. Thus, the ARDL form of the econometric model looks like ΔEXt¼αþ∑ n1 i¼1 α1ΔEXt1þ∑ n2 i¼0 α2ΔFDIt1þ∑ n3 i¼0 α3ΔRGDPt1þ∑ n4 i¼0 α4ΔREERt1þβ1EXt1 þβ2FDIt1þβ3RGDPt1þβ4REERt1(3) 5. Results and discussion 5.1. Unit root test Practically, many economic and financial time-series shows trending character or non-stationarity, which finally resulted in a spurious or non-sense regression results. In our study, a unit root test is conducted by employing the standard augmented version of the Dickey–Fuller (Dickey & Fuller, 1979) also termed as Augmented Dickey Fuller (ADF) test to lessen the impact of such a systematic problems by assuring whether the variables under consideration are stationary or not. Note: D shows the variable is differenced once. Note: MacKinnon (1996) one-sided critical values for rejection of a unit root are used here. * shows significance at 1%. Gebremariam & Ying, Cogent Economics & Finance (2022), 10: 2009089 https://doi.org/10.1080/23322039.2021.2009089 Page 7 of 15 peoples’ awareness towards foreign direct investment, constructing more industrial parks, improving the infrastructural facilities, keeping the political and social orders stable, and providing investors with many more encouragement packages. Funding The authors received no direct funding for this research. Author details Teamrat Kahssay Gebremariam 1 E-mail: [email protected] Sun Ying 1 1 School of Economics and Management, University of Science and Technology Beijing, Beijing, China. Disclosure statement No potential conflict of interest was reported by the author(s). Citation information Cite this article as: The foreign direct investment-Export performance nexus: An ARDL based empirical evidence from Ethiopia, Teamrat Kahssay Gebremariam & Sun Ying, Cogent Economics & Finance (2022), 10: 2009089. References Ethiopian Investment Commission. (2020). 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Foreign direct investment and economic growth: evidence from Ten East Asian Economies. Economia Internazionale/International Economics, 52(4), 517–535. © 2021 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license. You are free to: Share — copy and redistribute the material in any medium or format. Adapt — remix, transform, and build upon the material for any purpose, even commercially. The licensor cannot revoke these freedoms as long as you follow the license terms. Under the following terms: Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use. No additional restrictions You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits. 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