Factors influencing import demand in Lebanon: A study based on panel data of goods with a comparative advantage
DOI:
https://doi.org/10.18559/rielf.2025.2.3010Keywords:
import demand, panel data, foreign exchange reserves, crisis, import prices, LebanonAbstract
Purpose: This article aims to examine the key determinants of demand for imported goods that Lebanon can produce domestically. By identifying the factors that significantly influence this demand, policymakers will gain insights into the reasons for the substitution of Lebanese production with foreign production. This information will help policymakers design measures to reduce imports of domestically producible goods and support local production.
Design/methodology/approach: This paper exploits the Panel Least Squares model on data for 32 goods for the production of which Lebanon has a comparative advantage covering the period January 2014–December 2023 and tests the null hypothesis that import demand in Lebanon is not determined by import price, the Lebanese economic and financial crisis, and foreign exchange reserves.
Findings: The results reveal that foreign exchange reserves and the Lebanese economic and financial crisis are the main determinants of import demand for goods that Lebanon can produce. Moreover, the sensitivity of the quantity imported to the variations of the explanatory variables differs from one good to another.
Originality/value: This current study contributes to the existing literature by focusing on local goods in the production of which Lebanon has a comparative advantage.
JEL Classification
Price Level • Inflation • Deflation (E31)
General (F10)
Foreign Exchange (F31)
Financial Crises (G01)
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