Assessing the Role of Foreign Direct Investment (FDI) Influencing Liberia’s Trade Patterns

Assessing the Role of Foreign Direct Investment (FDI) Influencing Liberia’s Trade Patterns

*C. N. Willie, N. N. Dolo, Q. D. Johnson

Sichuan Agricultural University, China

Publication Information

Journal Title: International Journal of Research and Innovation in Social Science (IJRISS)
Author(s): Willie, C. N. ;Dolo, N. N. ;Johnson, Q. D.
Published On: 10/07/2025
Volume: 9
Issue: 7
First Page: 5844
Last Page: 5861
ISSN: 2454-6186

Cite this Article Willie, C. N. ;Dolo, N. N. ;Johnson, Q. D.; Assessing the Role of Foreign Direct Investment (FDI) Influencing Liberia’s Trade Patterns, Volume 9 Issue 7, International Journal of Research and Innovation in Social Science (IJRISS),5844-5861, Published on 10/07/2025, Available athttps://rsisinternational.org/journals/ijriss/articles/assessing-the-role-of-foreign-direct-investment-fdi-influencing-liberias-trade-patterns/

Abstract

This study quantitatively investigates the role of Foreign Direct Investment (FDI) in shaping Africa’s and specifically Liberia’s trade patterns from 2000 to 2023, focusing on sectoral distribution, regional disparities, and institutional mediators. Drawing on a 23-year panel dataset covering 40 African countries, the research integrates fixed-effects regression, the Gravity Model of Trade, and Herfindahl-Hirschman Index (HHI) metrics to measure export diversification outcomes. Empirical results reveal that extractive FDI remains dominant—constituting 65% of Africa’s total inflows and accounting for over 60% of export revenue—yet it exhibits negligible impact on trade diversification (p = 0.58). In contrast, manufacturing FDI shows statistically significant positive effects on diversification (β = 0.30, p < 0.05), with Ethiopia’s textile sector alone contributing to a six-fold increase in exports between 2015 and 2023.

Keywords: Assessing, Role, Foreign Direct Investment, Influencing Liberia’s, Trade, Patterns