(International Journal of Science and Research (IJSR), 2022) Mwalya, Wambua; Gitahi, Njuru Stephen
This study investigates the impact of macroeconomic factors, specifically Gross Domestic Product GDP and exchange rates, on Foreign Direct Investment FDI in the East African Community EAC. The research aims to determine the effect of these factors on FDI and to establish if there is an endogeneity of exchange rate and GDP with respect to FDI in the EAC. The study uses nonexperimental research design and various statistical methods to analyze published annual data from 2000 to 2021. The results reveal that GDP, infrastructural development, trade openness, and ease of doing business significantly influence FDI in the EAC, while exchange rate negatively affects FDI. The study also finds an endogeneity of exchange rate and GDP with respect to FDI in the EAC. These findings suggest that policymakers in the EAC need to prioritize improving economic growth and stabilizing exchange rates to attract more FDI. Further research is recommended in other regions for comparative analysis.