Estimating of Import Demand Function in Egypt

نوع المستند : المقالة الأصلية


Assistant Professor of Economics- International Economic Relations Center – Institute of National Planning.


This study aims to estimate the determinants of import demand in Egypt, utilizing the ordinary least squares (OLS) approach and the vector error correction model (VECM) for the period (1982-2021). The results of the study indicate a positive and significant relationship between the demand for imports and exports, evident in both short and long-term perspectives. Additionally, a negative and significant relationship is identified between import demand and the real effective exchange rate. These findings carry implications for Egypt's balance of payments. The surge in imports, driven by the concurrent increase in exports, serves as a crucial source of foreign exchange, enabling the country to meet fundamental needs for food commodities and production requirements. However, a caveat is noted: if the growth rate of imports surpasses that of real income, it may lead to a deterioration in the trade balance. In conclusion, the paper emphasizes the necessity to foster export-led growth and underscores the importance of carefully considering alternative strategies, particularly given the limited impact of currency depreciation on import dynamics. Furthermore, the study recommends monitoring inflation trends to gain insights into potential shifts in consumer preferences towards imported goods.

الكلمات الرئيسية

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