Impact of Exchange Rate Volatility on Economic Growth and Macroeconomic Stability in High-Income African Countries
DOI:
https://doi.org/10.64321/jcr.v3i2.02Keywords:
Exchange Rate Volatility, Economic Growth, Foreign Direct Investment, Export Volume, Inflation Rate, GDP per CapitaAbstract
This study examines the impact of Exchange Rate Volatility on Economic Growth and Macroeconomic Stability in High-Income African Countries, focusing on Seychelles, Mauritius, Gabon, Botswana, Libya, Equatorial Guinea, South Africa, Egypt, Algeria, Namibia, and Cabo Verde. The research adopts a quantitative approach, utilizing annual panel data from 1991 to 2024 obtained from world bank database. The key variables include GDP per capita (proxy for economic growth), exchange rate, FDI inflows, export volumes, and inflation rates. The study employs various econometric techniques including Panel Least Squares (Fixed Effects), Fully Modified Ordinary Least Squares (FMOLS), and diagnostic tests such as the Augmented Dickey-Fuller (ADF) unit root test, Hausman test, and collinearity diagnostics, all conducted using EViews 13 statistical software. The findings reveal that export volumes and FDI exert significant positive effects on GDP per capita, while exchange rate volatility and inflation show statistically insignificant effects. The study concludes that policies should focus on boosting export capacity and attracting sustainable FDI. It recommends governments maintain macroeconomic stability, improve investment environments, and enhance export diversification strategies to foster long-term economic growth across high-income African nations.
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