Determinants of the deficit in the Egyptian trade balance during the period (1980-2021) “An econometric study”

This research aims to analyze the determinants of the trade balance deficit in Egypt and determine the relative importance of each of them during the study period, which contributes to formulating appropriate policies that can contribute to reducing the trade balance deficit on scientific grounds. And that is by studying the factors affecting the trade balance in the economic literature, and the evolution of the Egyptian trade balance deficit during the study period, using the joint integration method and the (ARDL) model, long-run relationships are estimated, then through the error correction model (ECM) the estimate short-run relationships.
The long-run results show that there is a co-integration relationship between the variables of the model, and that the deficit in the Egyptian trade balance is positively affected by: economic growth, foreign direct investment, international reserves, domestic inflation rate, trade openness, and structural changes represented in the 2008 global financial crisis, and the revolution January 25, 2011, these factors contributed to the increase in the trade balance deficit. While the trade balance deficit is negatively affected by the rise in the effective foreign exchange rate and the corresponding decrease in the value of the national currency, and thus the effectiveness of the policy of reducing the external value of the national currency in improving the trade balance in Egypt in the long run. There is great agreement between the short-run results with the long-term results, although there are some limited differences, in addition to the high explanatory power of the model, and the high value of the correction factor for any short-run imbalances.