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The Impact of Inflation, Exchange Rate, Trade and Foreign Direct Investment on Economic Growth Of The Gambia: Evidence From ARDL Approach Minteh, Salim; Amadou Gisseh; Khan, Ebrima
Journal of Macroeconomics and Social Development Vol. 2 No. 3 (2025): March
Publisher : Indonesian Journal Publisher

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.47134/jmsd.v2i3.658

Abstract

The study investigates the relationship between Foreign Direct Investment (FDI), trade flows, inflation rates, and exchange rates in relation to economic growth in The Gambia during the period from 1970 to 2023. The investigation aims to examine both long-term and short-term macroeconomic interrelations between these variables to determine their effects on GDP. The research employs the Auto Regressive Distributed Lag (ARDL) methodology to demonstrate a sustainable long-term relationship between trade, inflation, FDI, and exchange rates with GDP. The statistical analysis reveals a dual effect: inflation and trade lead to GDP increases, while FDI and exchange rates result in GDP decreases. The investigation finds no significant causal relationships between the variables to predict future trends based on past observations. The study faces limitations due to reliance on limited data sources and its focus mainly on The Gambia, making generalization to other contexts challenging. The Gambia presents an economic system that requires official policies to support trade activities and control inflation while addressing the negative effects of FDI on domestic business investments. This research study provides significant economic insights into The Gambia and its important macroeconomic relationships.
Modelling Economic Growth in The Gambia: The role of Remittance and Inflation through ARDL Estimation Minteh, Salim; Amadou Gissay; Touray, Katim
JIAN (Jurnal Ilmiah Administrasi Negara) Vol. 9 No. 2 (2025): September 2025
Publisher : Universitas Bojonegoro

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.56071/jian.v9i3.1494

Abstract

This study explores the relationship between remittances received, inflation and economic growth in The Gambia using annual time series from 2003 to 2024. Employing the Autoregressive Distributed Lag (ARDL) bounds testing model to assess both shot-run and long-run interactions among variables. Remittance inflows have increased dramatically in The Gambia in the last two decades. The result confirms a long-run equilibrium with Error Correction Model (ECM) showing a negative and statistically significant coefficient, indicating a stable long run adjustment mechanism towards equilibrium. However, while remittances and inflation exhibit positive long-run effects on economic growth, these effects are statistically insignificant, suggesting that remittances are primarily directed towards consumption rather than productive investments, and that inflation impact maybe offset by other macroeconomic factors. To enhance the developmental impact of remittance inflows, the study targets financial instruments such as diaspora bonds, matched investment schemes, and remittance-supported business tax incentives. It also recommends inflation targeting policies to reserve purchasing power and macroeconomic stability. The originality of the study lies in its empirical application of the ARDL framework to the Gambia’s remittance and growth nexus, offering policy with a relevant insight for harnessing the financial inflows for sustainable economic development.