ASYMMETRIC PASS-THROUGH EFFECTS OF FOREIGN PORTFOLIO INVESTMENT ON ECONOMIC RESILIENCE: A COMPARATIVE ANALYSIS OF SELECTED AFRICAN ECONOMIES

Abstract

This study investigates the asymmetric pass-through effects of foreign portfolio investment FPI on economic resilience in South Africa, Egypt, Nigeria and Kenya using the Nonlinear Autoregressive Distributed Lag (NARDL) frame work over the period 1990-2024. Composite economic resilience normalized on 0-1 scale was constructed via principal component analysis, incorporating macroeconomic stability, financial robustness, productive capacity and institutional quality. Short run results reveal consistent asymmetric: positive FPI shocks significantly enhance (ERI) across all countries with the strongest impacts in Kenya and Nigeria while negative shocks sharply erode resilience most severely in Nigeria and Egypt. Inflation exerts a uniformly negative effect, whereas GDP per capita growth greatly support economic resilience. The error correction term indicate faster adjustment in South Africa per period and slowest in Kenya in the long run positive FPI shocks significantly bolster resilience in Nigeria and Kenya, but remain insignificant in South Africa and Egypt; Negative shocks consistently undermine ERI with statistical significance in all cases. GDP per capita emerges as the dominant long run driver. Policy recommendations include strengthening macroeconomic stability, deepening capital market and promoting growth oriented structural reforms to mitigate FPI volatility and enhance economic resilience to external shocks