Abstract
This research aims to present a comprehensive and detailed overview of theoretical frameworks and empirical studies that have sought to analyze and interpret the mechanisms and channels of influence exerted by Foreign Direct Investment (FDI) on Tunisian exports. Additionally, it aims to construct a practical and objective model capable of identifying the nature, magnitude, and direction of this influence. This is achieved using the cointegration method, which relies on the Autoregressive Distributed Lag (ARDL) approach, along with the Vector Error Correction Model (VECM) for estimating short- and long-term parameters of Tunisia's equilibrium dynamics from 1980 to 2021. Based on the theoretical discussion of the overall impact of FDI on the host country's exports, the potential impact is divided into a direct effect through the increase of the host country's exports and an indirect effect that enhances the competitiveness of domestic investment through technology and knowledge acquired from the FDI entering the host country. The estimation results revealed a significant long-term positive relationship between FDI on Tunisian exports. Conversely, there was a negative and also significant relationship between both the real exchange rate and the growth in total fixed capital formation in Tunisian exports. This suggests the possibility of leveraging FDI as one of the variables enhancing exports in Tunisia, necessitating the adoption of an export-supportive exchange rate policy, complemented by capital formation that benefits from the positive indirect effects of the entry of multinational companies.
