Box-Jenkins ARIMA approach to predicting net FDI inflows in Zimbabwe

Thabani Nyoni

MPRA Paper from University Library of Munich, Germany

Abstract: This study attempts to model and forecast net FDI inflows in Zimbabwe over the next 2 decades. Spanning from 1980 – 2017, annual time series data for net FDI inflows in Zimbabwe was used. The ADF test indicates that FDI data is I (1). The study identifies the minimum AIC value and subsequently presents ARIMA (1, 1, 1) model as the optimal model to forecast FDI in Zimbabwe. The ADF test also indicates that the residuals of the ARIMA (1, 1, 1) model are I (0), thus confirming its adequacy. A diagnosis of the inverse roots of AR/MA polynomials confirms that our estimated model is stable. The predicted net FDI inflows over the next 2 decades show a relatively poor and unimpressive growth trend. Amongst the main policy prescriptions, the study recommends that policy makers in Zimbabwe ought to come up with investor – friendly policies in order to attract the much needed FDI.

Keywords: AR; ARIMA; ARMA; Foreign Direct Investment (FDI); forecasting; MA; Zimbabwe (search for similar items in EconPapers)
JEL-codes: E0 E3 E37 E6 G1 (search for similar items in EconPapers)
Date: 2018-07-03
New Economics Papers: this item is included in nep-int and nep-mac
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Citations: View citations in EconPapers (62)

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