Abstract:
This study is deemed to be significant in investigating the impact of Foreign Direct Investment on export
performance of developing countries, particularly in Ethiopia. The analysis is made based on series of panel
data available from the year 1980 – 2011. In order to differentiate the impact of independent variables, i.e.
inward foreign direct investment capital, domestic investment capital, level of trade openness, and real
effective exchange rate on the dependent variable, i.e. real exports, the researchers used explanatory
research design with time series regression model which were used in the process of examining the effect
of inward foreign direct investment on host country’s export performance. In order to check the fitness or
degree of robustness of the model, different tests such as; test stationary, co-integration, model accuracy
and other econometric problems like test for multicollinearity, heteroskedasticity, and autocorrelation were
conducted. According to the findings of the study, the four independent variables included in this study
have positive and significant effect on export performance.
