DOES LOW FOREIGN DIRECT INVESTMENT PERPETUATE ITSELF IN ANGOLA?
Kagarura Willy Rwamparagi, Nahabwe Patrick Kagambo John
Kabale University, Kabale , Uganda
Abstract
This study examines the persistence of low foreign direct investment (FDI) in Angola by applying autoregressive moving average (ARMA) approach to historical data from 1980 to 2023. Using World Bank data, FDI net inflows (% of GDP) are modelled as the dependent variable, while autoregressive (AR) and moving average (MA) components serve as independent variables. Generalized least squares (GLS) estimation reveals a positive and statistically significant AR(1) coefficient (0.824179), indicating that approximately 82.4% of current FDI levels are influenced by past trends, suggesting a self-perpetuating cycle of low FDI inflows. The estimated ARMA(1,1) model is found to be covariance stationary and invertible, confirming its robustness for forecasting FDI trends. Projections from 2024 to 2043 indicate a gradual but modest improvement, with FDI increasing from -2.5% in 2024 to 2.3% by 2043, though it remains insufficient to drive substantial economic transformation. Based on these findings, we recommend, implementing investment-friendly policies, improving infrastructure, diversifying economic sectors, and fostering regional trade agreements to break the cycle of low FDI inflows and stimulate sustainable investment growth in Angola.
Keywords: ARMA Modelling, Foreign Direct Investment, Angola
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International Journal of Global Economic Light (JGEL)
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Published on : 2025-02-21
| Vol | : | 11 |
| Issue | : | 2 |
| Month | : | February |
| Year | : | 2025 |