The Comparative Influence of Foreign Direct Investment (FDI) Inflows on Export Performance Between Landlocked and Coastal African Countries

Why It Matters

Geography determines whether FDI translates into export growth, shaping distinct policy priorities for landlocked and coastal African economies.

Key Takeaways

• FDI drives export growth in coastal African economies
• Landlocked nations see negligible export response to FDI
• Trade openness boosts exports regardless of geography
• Infrastructure aids coastal exports; harms landlocked long‑run
• Political stability improves exports, less impact inland

Pulse Analysis

Africa’s export trajectory has long been tied to its geographic realities, yet few studies have quantified how foreign direct investment interacts with that factor. By spanning nearly three decades, the research fills a gap in the FDI‑export literature, employing rigorous panel cointegration and Granger causality techniques to isolate long‑run relationships. The analysis reveals that coastal nations, with ready port access and deeper integration into global value chains, can convert inbound FDI into tangible export gains, a dynamic absent in landlocked economies that lack similar logistical advantages.

Beyond the core FDI finding, the study underscores the universal power of trade openness: liberalized markets consistently expand export volumes across both geographic groups. Exchange‑rate movements present a nuanced picture—depreciation fuels export competitiveness over the long haul but can suppress output in the short term as firms adjust pricing and contracts. Infrastructure investment emerges as a double‑edged sword; while it amplifies coastal export performance, its long‑run effect turns negative for landlocked states, likely reflecting quality gaps and institutional bottlenecks. Political stability, meanwhile, bolsters export growth in coastal regions and offers modest benefits inland.

Policy implications are clear. Landlocked governments should prioritize trade‑facilitation reforms—such as streamlined customs procedures and regional corridor agreements—to offset the lack of direct sea access, while simultaneously upgrading infrastructure quality and governance. Coastal countries, already advantaged by ports, should focus on enhancing port efficiency, deepening participation in international value chains, and maintaining macro‑economic stability. By tailoring strategies to geographic constraints, African states can better harness FDI to drive sustainable export expansion and broader economic development.