An Empirical Assessment of the Impact of Trade Balance, Foreign Direct Investment (FDI), And Public Debt on Economic Growth in Liberia (2008–2023)

Emmanuel Saye and Martins Onyekwelu Onuorah
Additional contact information
Emmanuel Saye: Department of Economics, Kigali Independent University ULK, Kigali, Rwanda
Martins Onyekwelu Onuorah: School of Postgraduate Studies, Kigali Independent University ULK, Kigali, Rwanda

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 9, 3347-3356

Abstract: This study examines the impact of trade balance, foreign direct investment (FDI), and public debt on economic growth in Liberia from 2008 to 2023, a period marked by post-conflict recovery, external shocks, and the COVID-19 pandemic. Employing a Vector Error Correction Model (VECM) using time-series data from the Central Bank of Liberia, the analysis uncovers both short-run and long-run effects. The results show that FDI significantly increases short-run GDP growth, with a 1% increase contributing to a 0.922% rise (p = 0.002), but negatively affects growth in the long run (coefficient = -0.709, p < 0.01). Public debt consistently suppresses GDP, both in the short run (−0.153%, p = 0.016) and long run (−0.435, p < 0.01), reflecting fiscal vulnerabilities. Trade balance, despite persistent deficits, has no significant effect in either the short or long run. These findings highlight the transient benefits of FDI, the detrimental effects of mounting debt, and the complex neutrality of trade imbalance. The study advocates for fiscal discipline, structural reforms, improved FDI governance, and export diversification to secure sustainable growth. Its implications offer empirical insights tailored to Liberia's policy context and broader lessons for small, open, post-conflict economies.

Date: 2025
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://rsisinternational.org/journals/ijriss/Digi ... ssue-9/3347-3356.pdf (application/pdf)
https://rsisinternational.org/journals/ijriss/arti ... n-liberia-2008-2023/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bcp:journl:v:9:y:2025:issue-9:p:3347-3356

Access Statistics for this article

International Journal of Research and Innovation in Social Science is currently edited by Dr. Nidhi Malhan

More articles in International Journal of Research and Innovation in Social Science from International Journal of Research and Innovation in Social Science (IJRISS)
Bibliographic data for series maintained by Dr. Pawan Verma ().