# The importance of foreign direct investment in Algeria and its impact on its trade balance using the ARDL model

Mohamed Bouklia

► To cite this version:

Mohamed Bouklia. The importance of foreign direct investment in Algeria and its impact on its trade balance using the ARDL model. International Journal of Economic Performance -, 2022 5 (2), pp.352-374. hal-03905246

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# The importance of foreign direct investment in Algeria and its impact on its trade balance using the ARDL model

<figure><img src="image_2.png" /></figure>

BOUKLIA Mohamed

Boukliamohamed@gmail.com

University of Algiers 3, Algeria

Submitted:03/10/2022

Accepted:17/11/2022

Published:04/12/2022

## Abstract:

This study dealt with the importance of foreign direct investment in Algeria and its impact on its trade balance during the time period of 2003-2018 using the ARDL model. The study concluded that foreign direct investment, gross domestic product and exchange rate have a positive impact on trade balance, and that economic openness has a negative impact on trade balance. Hence, the study recommends diversifying exports by attracting foreign direct investment in the non-oil sectors in order to improve national economy.

**Key words:** Foreign Investment, Trade balance, Model ARDL.

**JEL Classification Codes:** F32, F17.
**Introduction:**

Foreign direct investment is considered done of the most important tools in supporting the growth of world countries economies in general and developing countries in particular. That is why, most countries have adopted new policies and measures by providing facilities, incentives and guarantees, removing obstacles that hinder the flow of these investments and issuing highly encouraging legislations and laws in order to create an attractive investment environment for foreign direct investment.

Foreign trade is the channel that helps transmitting the positive impact of foreign direct to the economies of host countries. Modern studies interested in studying the relationship between foreign direct investment and economic growth is concerned with identifying the impact of foreign direct investment on trade, as foreign trade reflects the development of the movement of trade balance, and thus reveals the nature of this relationship (positive/negative). Foreign direct investment leads to a decrease in the country's imports and/or an increase in the exports of host countries, which is considered an alternative to domestic exports to foreign markets and stimulates further economic growth in host countries. Hence, foreign direct investment is a linking bridge between trade and growth.

**1-Study problematic:** the Algerian economy suffers from severe irregularities in the external economic balance and a distortion of the trade balance through the deficit exacerbation in non-oil exports despite the relatively abundant economic potential and resources that help attracting many foreign investment projects. That is why; Algeria was forced to resort to foreign direct investment as key source in introducing modern technologies into production, raising the efficiency of local products, and increasing their competitiveness among world countries. In light of the foregoing, the following question is to be asked: to what extent can we know the impact of foreign direct investment in Algeria on improving its trade balance? To answer this question, the following subject is to be studied:

- Analysis of the development of foreign direct investments in Algeria, with reference to their ranking.

- Analysis of the development of foreign trade in Algeria.

- Measuring the impact of foreign direct investment in Algeria on trade balance using a model.
**2- The study importance:** nowadays, foreign direct investment is an absolute necessity to finance the requirements of the nation's growth and economic development, as it plays a significant role in improving trade balance. This importance is illustrated in the provision of foreign currency by exports and their contribution in financing imports to meet the requirements of the economic growth process.

**First: The concept of foreign direct investment and its importance**

**1-1-The concept of foreign direct investment:** according to the World Trade Organization that a stable investor in one country owns an asset located in another country, with his intention to manage that asset. Therefore, the administrative dimension is the most important characteristic that distinguishes foreign direct investment from Portfolio investment (Hassan and Abdel Ghaffar, 1998 :8).

According to the International Monetary Fund, it is defined as taking a contribution to a foreign company by creating a branch or buying all or part of a pre-existing local company, with the aim of exercising permanent control over it, unlike when buying shares for a purely financial purpose (De Laubier. D, 1993:4).

As defined by the Algerian legislator, it is investment that expands production capabilities by raising productivity and increasing the number of business. It is every activity linked to the expansion of the institution in various ways through productive capacities created for goods and services, especially the granting of incentives.(Order No. 01-03 dated in August 20, 2001).

**1-2-Forms of foreign direct investment:**

Foreign direct investments in the host countries take different forms, including:

**1-2-1-Joint foreign direct investment:** It is defined as a project in which two or more parties from two different countries are permanently owned or participated in - the foreign investor and the local capital - and the participation here is not limited to the share in the capital, but extends to management, expertise and patents. Or trademarks ...etc.( Abu Qahaf, 1989:27)

**1-2-2-Investments wholly owned by a foreign investor,** it is also called independent investment (Abu Qahaf, 2002:170). This type is preferred by multinational investment institutions, where they have wholly owned production or service branches, as they take over supervision, management, control and decision-making authority. (Said, 1998: P19).

**1-2-3-Assembly Operations projects or operations:** This type is embodied by carrying out merger operations of national companies with international companies
and owning a share of the capital of national companies by foreign investors (Fodhil, 2004:28). It may take the form of joint investments or the form of full ownership of the foreign investor (Attia, 2001:163). In most cases, the foreign party provides expertise, factory interior design, process flow, storage methods and capital equipment in return for an agreed upon return.

**1-2-4-Investment in the free zones:** The customs free zone is considered an extension of the outside, but it is subject to national sovereignty from a political point of view, and in general, it is allowed within the free zone to establish special projects with foreign, national or joint capital, which local and foreign goods are traded. It has some industrial operations, and customs duties are not paid on those goods except when they cross the borders of the free zone into the country (Abdel Muttalib, 2008:85).

**1-2-5-Investments in infrastructure projects:** These are in the form of concession contracts with a duration of between 20 to 50 years, directed at infrastructure projects. This type is beneficial for both parties, the government and the foreign investor, as the government needs these projects to advance development, while the foreign investor sees projects as economically feasible for him and bring economic returns during the concession period (Boulkour, 2009:219).

**1-3-The importance of foreign direct investment:**

The development of countries today is measured by the size of their investment returns, which are one of the most important material factors for raising national income and the standard of living, because of its economic, social and strategic importance that can be allocated as the following points (Al-Quraish, 2001: 24-26) :

* Possession of the latest production technology methods; (Raising the efficiency of national labor...) Possessing advanced administrative methods; (Optimum utilization of economic resources, reducing production costs, following modern scientific methods in the areas of storage);

* The huge amount of capital owned by foreign direct investments, to cover various economic development projects;

* The establishment of many industries that supply the foreign project with needs or maintenance;

* Contributes to increase productivity and helps to create new industries;

* Providing the foreign investor with advertising and marketing experiences and prior communication channels with global markets.
## Second: Algeria's ranking in quantitative indicators of the business climate in Algeria and its share of investment flows

**2-1-The development of quantitative indicators of the business climate in Algeria:** The table below shows that most indicators didn't register any improvement but a significant and continuous decline during the selected years due to the difficulty of obtaining licenses in term of high costs, long deadline and the hindering administrative management of a centralized and bureaucratic nature. In 2020, the index of extraction and building permits and the index of access to electricity, in addition to the index of trade across borders knew a remarkable improvement. Yet, foreign investors still face many obstacles to work in the Algerian market; which reduce the nation attractiveness as an incubator for foreign direct investments.

<table><caption>Table No. (1): Ranking in quantitative indicators of the business climate in Algeria for the selected years</caption><thead><tr><th>Sub-indicators</th><th>2010</th><th>2012</th><th>2014</th><th>2016</th><th>2018</th><th>2020</th></tr></thead><tbody><tr><td>Ranking on Doing Business Topic-Algeria</td><td>136</td><td>148</td><td>153</td><td>163</td><td>166</td><td>157</td></tr><tr><td>Starting a Business</td><td>147</td><td>153</td><td>164</td><td>145</td><td>145</td><td>152</td></tr><tr><td>Dealing with Construction Permits</td><td>110</td><td>118</td><td>147</td><td>122</td><td>146</td><td>121</td></tr><tr><td>Getting Electricity</td><td>122</td><td>164</td><td>148</td><td>130</td><td>120</td><td>102</td></tr><tr><td>Registering Property</td><td>160</td><td>167</td><td>176</td><td>163</td><td>163</td><td>165</td></tr><tr><td>Getting Credit</td><td>135</td><td>150</td><td>130</td><td>174</td><td>117</td><td>181</td></tr><tr><td>Protecting Minority Investors</td><td>73</td><td>79</td><td>98</td><td>174</td><td>170</td><td>179</td></tr><tr><td>Paying Taxes</td><td>168</td><td>164</td><td>173</td><td>169</td><td>157</td><td>158</td></tr><tr><td>Trading across Borders</td><td>122</td><td>127</td><td>133</td><td>176</td><td>181</td><td>172</td></tr><tr><td>Enforcing Contracts</td><td>123</td><td>122</td><td>129</td><td>106</td><td>103</td><td>113</td></tr><tr><td>Resolving Insolvency</td><td>51</td><td>59</td><td>60</td><td>73</td><td>71</td><td>81</td></tr></tbody></table>

Source: World Bank Group, Doing Business 2010, 2012, 2014, 2016, 2018-2020.

http://www.doingbusiness.org/data/exploreeconomies/algeria.

**2-2- The development of foreign direct investment flows in Algeria:**

At the turn of the new millennium, Algeria started attracting more investments due to a series of reforms that have granted local and foreign investors many valuable privileges, namely, legislative reforms represented in the issuance of Order No. 01-03 dated in August 20, 2001 calling for the establishment of investment promotion agencies along with an association agreement with the European Union in preparation for joining the World Trade Organization. In addition to that, the Algerian government granted a license to Orascom Telecom and privatized the Iron Industries Company in the Hajjar region to the Indian company ISPAT.
In 2006, the Algerian economy knew an increase in flows of 1795 million dollars, i.e. 66.05% thanks the issuance of Order No. 06-08 of July 15, 2006, amending and completing articles of Law 01-03 of August 20, 2001, in addition to selling the third license to the Kuwaiti Al-Watania Telecom Company, which lead to a maximum increase in 2009 compared to previous years to 2746 million dollars, despite a decline in the pace of global investments due to the global financial crisis. However, the year of 2010 knew a decline of $2,264 million, meaning a growth rate of 19.2%, which can be justified by the end of the economic growth support program by 2009. The year of 2011 knew an increase in inflows of $2571 million, due to Algeria's announcement of significant investment plans to attract foreign direct investments, namely, the Electricity and Gas Company "Sonelgaz": $24 billion during the year of 2016, in addition to the announcement of the French Total alliance of an investment of $920 million for developing Timimoun fields by 2013. This growth started to fluctuate by 2012 then rose again in 2015, amounting to 1822 million dollars.

<table><caption>Table No. (2): The development of foreign direct investment flows during the period (2003-2019) in million US dollars</caption><thead><tr><th>Years</th><th>2003</th><th>2004</th><th>2005</th><th>2006</th><th>2007</th><th>2008</th><th>2009</th><th>2010</th><th>2011</th></tr></thead><tbody><tr><th>FDI</th><td>634</td><td>882</td><td>1081</td><td>1795</td><td>1662</td><td>2594</td><td>2746</td><td>2264</td><td>2571</td></tr><tr><th>Years</th><th>2012</th><th>2013</th><th>2014</th><th>2015</th><th>2016</th><th>2017</th><th>2018</th><th>2019</th><th>2020</th></tr><tr><th>FDI</th><td>2005</td><td>1737</td><td>1718</td><td>1822</td><td>1877</td><td>1232</td><td>1466</td><td>1381</td><td>1125</td></tr></tbody></table>

Source: -Unctadstat.unctad.org/wds/table viewer/tableview.aspx. The Arab Investment Guarantee Corporation, Investment Climate in the Arab Countries 2021, P48.

In recent years, in which Algeria witnessed the flow of foreign direct investment, which amounted to 1381 million dollars in 2019 and continued to decline to 1125 million dollars in 2020, and this is due to the company's rule 51/49, which represents an obstacle to attracting these investments to Algeria, and this affects the business climate.

**2-3-Sectoral distribution of foreign direct investment in Algeria:** During the period from 2011 to 2015, Arab and foreign investments incoming to Algeria were concentrated on the sectoral distribution as shown in Table No. (3). We find minerals ranked first, followed by real estate, construction, textiles, pharmaceutical products, cars and original equipment, respectively, and health care and auto components occupied the last ranks in the amounts invested.

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<table><caption>Table No. (3) The amounts invested by sectoral distribution in Algeria during the period (2011-2015) Million dollars</caption><thead><tr><th>sectors</th><th>Industrial machine, equipment and tools</th><th>Software and information technology</th><th>Building material</th><th>Aviation and defense</th><th>Pharmaceutical</th><th>Products original cars</th><th>Auto Components</th><th>Lunch and tobacco</th></tr></thead><tbody><tr><td>Amounts invested in the sector</td><td>108.5</td><td>17.4</td><td>1307</td><td>72.2</td><td>343.6</td><td>291.4</td><td>2.3</td><td>48.6</td></tr><tr><td>sectors</td><td>Chemicals</td><td>Sustainable energy</td><td>Medical devices</td><td>Textiles</td><td>Telecommunication</td><td>Ceramic and glass</td><td>Transportation equipment</td><td>Metal</td></tr><tr><td>Amounts invested in the sector</td><td>6.2</td><td>155.5</td><td>4.6</td><td>947.6</td><td>185.9</td><td>58.6</td><td>121.2</td><td>3377.4</td></tr><tr><td>sectors</td><td>Business services</td><td>Healthcare</td><td>Real estate</td><td>Plastic</td><td>Transportation</td><td>Financial service</td><td></td><td></td></tr><tr><td>Amounts invested in the sector</td><td>54.4</td><td>2.7</td><td>1729.8</td><td>26.9</td><td>61.2</td><td>154.9</td><td></td><td></td></tr></tbody></table>

Source: The Arab Investment Guarantee Corporation, Investment Climate in the Arab Countries 2016, P119.

2-4-Geographical distribution of foreign direct investment in Algeria: Table No. (4) shows that during the period from 2011-2015, Spain, Qatar and Turkey, respectively, ranked among the most important countries investing in Algeria according to the amount invested in projects, while Their share is about 65% of the total, with Luxembourg, the United Kingdom and France occupying the other places, respectively. It should be noted that the volume of investments made in Algeria is due to developed countries.

The number of projects established in Algeria reached, as France ranked first with 15 projects, followed by Spain and the United Kingdom with 7 projects each, Germany

<figure><img src="image_5.png" /></figure>
ranked third with 6 projects, and the rest came according to the number of its projects, and the number of projects established in Algeria during the period 2011 -2015 with 87 projects. And from it, Algeria acquired 3.5% of the distribution of the total inter-Arab investment projects (number of projects) between 2003 and 2018. In recent years, we find that the number of projects reached 24 projects in 2019 compared to 2018 with 18 projects by 17 companies at a capital cost $9,257 million, creating 10,349 jobs. In 2020, Algeria acquired 6 projects at a cost of $77 million and created 251 jobs.

<table><caption>Table No. (4): The most important countries investing in Algeria during the period (2011-2015)</caption><thead><tr><td>Countries</td><td>Number of projects</td><td>Amount (million $)</td><td>Number of jobs</td><td>Number of companies</td></tr></thead><tbody><tr><td>Spain</td><td>7</td><td>2232.1</td><td>2880</td><td>3</td></tr><tr><td>Qatar</td><td>2</td><td>2150</td><td>3089</td><td>2</td></tr><tr><td>Turkey</td><td>2</td><td>1737.3</td><td>3342</td><td>2</td></tr><tr><td>Luxembourg</td><td>1</td><td>837.3</td><td>342</td><td>1</td></tr><tr><td>United kingdom</td><td>7</td><td>408.7</td><td>2659</td><td>6</td></tr><tr><td>France</td><td>15</td><td>376.6</td><td>1631</td><td>13</td></tr><tr><td>South Africa</td><td>1</td><td>350</td><td>638</td><td>1</td></tr><tr><td>Switzerland</td><td>3</td><td>286.2</td><td>561</td><td>3</td></tr><tr><td>Germany</td><td>6</td><td>175.8</td><td>1360</td><td>6</td></tr><tr><td>Myanmar (Roma)</td><td>1</td><td>159.8</td><td>342</td><td>1</td></tr><tr><td>Other</td><td>42</td><td>664.1</td><td>3858</td><td>39</td></tr><tr><td>Total</td><td>87</td><td>9378</td><td>20702</td><td>77</td></tr></tbody></table>

Source: The Arab Investment Guarantee Corporation, Investment Climate in the Arab Countries 2016, P119.

### Third: The development of foreign trade in Algeria

Foreign trade plays an active role in the national economy. Algeria resorts to global and regional markets to obtain its requirements of various commodities and materials. We will address Algerian exports and imports in terms of commodity composition and geographical distribution during the period (2003-2018), in addition to the development of the trade balance for the same period.

#### 3-1- The development of the foreign trade structure

##### 3-1- Development of Algerian exports during the period (2003-2018)

**3-1-1-Commodity structure of exports:** The growth rate of non-oil exports of the total Algerian exports during the study period reached 3.6%. The reason is the lack of experience in the field of export, the lack of quality required for production and the high costs of its production because most of its components are imported materials. As
for the growth rate of oil exports from the total Algerian exports, it ranged during the study period between (93% - 98%), knowing that this sector is subject to fluctuations in oil prices as well as the volume of production, and this imbalance in the commodity structure makes Algerian exports vulnerable to shocks and inability to influencing the global market.

The commodity composition of Algerian exports for the average study period shows the following: Energy, oils ranked first in exports at a rate of 96.5%, and in the second place came semi-manufactured products at a rate of 2.6%, and in the third place came foodstuffs at a rate of 0.5%, and raw materials and Industrial equipment ranked the fourth with a rate of 0.1% and 0.26% respectively, while non-food consumer goods ranked fifth with a rate of 0.04%, and a zero ranking for agricultural equipment.

**3-1-2- Geographical distribution of exports:** The European Union countries ranked first in total exports, with an average rate of 55.9% in the study period. The countries of the Cooperation and Economic Development region occupied the second place at an average rate of 26.1% in this period. Non-Arab Asian countries were in the third place with an average rate of 7.1% in this period. Latin American countries occupied the fourth place, with an average rate of 5.2% in this period. The rest of the Arab countries and Maghreb countries ranked fifth, with an average rate of 2.6%-2.7% in this period, respectively. while the Remaining European Nations countries and African countries ranked sixth at an average rate of 0.1%-0.3 in this period respectively. It is evident from the foregoing that the oil sector occupies the largest proportion of Algeria's total exports to the European Union countries, which reinforces partnership ties with the two parties.

**3-2- Development of Algerian imports during the period (2003-2018)**

**3-2-1- Commodity structure of imports:** The Algerian economy still depends heavily on imports to meet its needs and requirements of various materials and commodities from the outside world. The commodity composition of Algerian imports for the average study period shows the following: Industrial equipment ranked first in imports at a rate of 35.1%, and in the second place came semi-manufactured products at a rate of 23.4%, and in the third place came foodstuffs at a rate of 18.1%, and non-food consumer goods ranked the fourth with a rate of 16.1%, while energy, oils and raw materials ranked fifth with a rate of 3% and 3.5%, respectively, and agricultural equipment ranked sixth with a rate of 0.8%.
**3-2-2- Geographical distribution of imports:** It shows the distribution of Algerian imports according to the economic zones of their most important economic partners. The European Union countries ranked first in total imports, with an average rate of 51.6% in the study period. Non-Arab Asian countries occupied the second place at an average rate of 18.6% in this period. The countries of the Cooperation and Economic Development region were in the third place with an average rate of 15.31% in this period. Latin American countries occupied the fourth place, with an average rate of 6.2% in this period, while the Remaining European Nations countries and the rest of the Arab countries ranked fifth, with an average rate of 3.1% in this period, Maghreb countries ranked sixth at an average rate of 1.23% in this period. African countries and ocean countries occupied the seventh place at an average rate of 0.82%-0.04% in this period, respectively. It is clear from the foregoing that half of Algeria's total imports are acquired by the European Union due to bilateral and multilateral cooperation agreements, which strengthen the partnership ties between the two parties. However, trade exchange percentage between Maghreb and African countries and Algeria was extremely low to zero during the study period.

**3-3- Trade balance:**

Trade balance knew a remarkable improvement in the middle of the millennium, as exports increased from 46 billion dollars in 2005 to 79.29 billion dollars in 2008 before marking a decrease of 45.19 billion dollars in 2009 due to the drop in oil prices in the middle of 2008 following the global economic crisis. These facts indicate that the economies of developing countries are vulnerable to fluctuations in the prices of exported raw materials. Following the gradual improvement in oil prices in 2010, trade balance improved, as exports rose by 57.05 billion dollars and to 73.98 billion dollars in 2012, then gradually decreased by $30.02 billion in 2016, and then increased by $41.16 billion in 2018, but it quickly dropped to $35.82 billion in 2019 and continued to decline to $23.79 billion in 2020, due to the pandemic crisis that befell the world, affecting the world's economies.

On the other hand, we find that imports have witnessed an increase, reaching a value of $20.35 billion in 2005, rising to $46.19 billion in 2018, due to the increase in domestic demand for goods, services and various equipment related to investment, after that, it witnessed a decline of $41.93 billion in 2019 and this decline continued to $34.39 billion in 2020, due to the Corona crisis that swept the world.
<table><caption>Table No. (5) : Development of trade balance during the period (2003-2018)
Billion US dollars</caption><thead><tr><td>Year</td><td>Total Exports</td><td>Total Imports</td><td>Trade Balance</td><td>Coverage Rate</td><td>Total non-oil Exports</td></tr></thead><tbody><tr><td>2003</td><td>24612</td><td>13534</td><td>11078</td><td>181.85</td><td>673</td></tr><tr><td>2004</td><td>31713</td><td>18308</td><td>13405</td><td>173.22</td><td>788</td></tr><tr><td>2005</td><td>46001</td><td>20357</td><td>25644</td><td>225.97</td><td>877</td></tr><tr><td>2006</td><td>54613</td><td>21456</td><td>33157</td><td>254.53</td><td>1184</td></tr><tr><td>2007</td><td>60163</td><td>27631</td><td>32532</td><td>217.74</td><td>1332</td></tr><tr><td>2008</td><td>79298</td><td>39479</td><td>39819</td><td>200.86</td><td>1937</td></tr><tr><td>2009</td><td>45194</td><td>39294</td><td>5900</td><td>115.02</td><td>1066</td></tr><tr><td>2010</td><td>57053</td><td>40473</td><td>16580</td><td>140.97</td><td>1526</td></tr><tr><td>2011</td><td>73489</td><td>47247</td><td>26242</td><td>155.54</td><td>2062</td></tr><tr><td>2012</td><td>73981</td><td>50376</td><td>23605</td><td>146.86</td><td>2187</td></tr><tr><td>2013</td><td>65917</td><td>54852</td><td>11065</td><td>120.17</td><td>2160</td></tr><tr><td>2014</td><td>95662</td><td>58330</td><td>37332</td><td>164</td><td>2810</td></tr><tr><td>2015</td><td>34668</td><td>51702</td><td>-17034</td><td>67.05</td><td>1969</td></tr><tr><td>2016</td><td>30026</td><td>46727</td><td>-17844</td><td>61.8</td><td>1805</td></tr><tr><td>2017</td><td>35191</td><td>46059</td><td>-10868</td><td>76</td><td>1930.3</td></tr><tr><td>2018</td><td>41168</td><td>46197</td><td>-5029</td><td>89</td><td>2830.3</td></tr></tbody></table>

Source: http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx. and
http://www.andi.dz/index.php/ar/statistique/bilan-du-commerce-exterieu.

While the trade balance, it recorded an overflow in 2008 and 2014, amounting to $39.8 billion and $37.3 billion, with a coverage rate of 200.8% and 164%, respectively. The rise in oil prices helped improve the trade balance. However, in recent years, the trade balance recorded a deficit about 5.29 billion dollars due to an increase in the volume of exports to 42.16 billion dollars in 2018 compared to 2017, also witnessed a slight increase in the volume of imports to 46.19 billion dollars, thus the coverage rate rose to 89%, this deficit continued to reach $10.59 billion in 2020 compared to $6.11 billion in 2019.

As for the coverage ratio of non-oil exports to imports during the study period, it ranged between 2.7% and 6.1%, and this indicates the weakness of the export sector due to its incomplete dependence on the export sector.

## Fourth: Measuring the impact of foreign direct investment on the trade balance in Algeria

The study relies on the standard quantitative approach in studying the impact between foreign direct investment and the trade balance in Algeria. The study will depend on a standard model for the impact of foreign direct investment on the trade
balance in Algeria with the help of a study used by (Tamim Bayoumi and Gabrielle Lipworth, 1997). This is based on an autoregressive model using ARDL, and the following equation was used in its study as follows:

$$TB = EXP - IMP = f[GDP_t, EX_t, OPEN, FDI_t] \quad (1)$$

Whereas:

**TB:** represents the trade balance, which is the difference between the percentage of exports and the percentage of imports in a particular country during a certain period.

**EXP:** represents total exports: it is regarded as one of the most important economic indicators used to analyze foreign trade, and a main engine for increasing the returns of this sector, it also helps to increase imports to satisfy the local demand of various products in order to diversify the production structure (Behnam, 2013: 183)

**IMP:** represents total imports: it is one of the most important economic indicators used to analyze foreign trade, as both exports and imports are seen to be valuable components of foreign trade. (Behnam, 2013:183).

**GDP:** represents the gross local product at constant prices, and it is considered as one of the most important economic indicators in clarifying the level of economic activity. It is also one of the most common measurements used to measure economic growth.

**EX:** represents real exchange rate, which is the number of units of foreign goods needed to purchase one unit of domestic goods, meaning that the exchange rate is a real concept that measures the relative prices of two goods.

**OPEN:** represents economic openness. This indicator reflects the relative importance of foreign trade (total exports and merchandise imports) related to the gross local product. It also represents the degree of exposure and connection with the outer world (Al-Sawai, 2010: 283-284).

**FDI:** represents foreign direct investment.

Assuming that relationship (1) can be represented as:

$$TB_t = \gamma (GDP_t)^{\gamma_1} (EX_t)^{\gamma_2} (OPEN_t)^{\gamma_3} (FDI_t)^{\gamma_4} \quad (2)$$

By taking the natural logarithm of both sides of the previous equation, we get the following equation:

$$\log TB_t = \gamma_0 + \gamma_1 \log GDP_t + \gamma_2 \log EX_t + \gamma_3 (OPEN_t) + \gamma_4 \log (FDI_t) \quad (3)$$

Where as

$$\gamma_0 = \log \gamma$$

<figure><img src="image_6.png" /></figure>
**4-1- Unit Root test for stationary:** In order to apply the co-integration test, it is necessary to know whether the time series are stable or unstable. This is based on a unit root check for stability testing, using the Augmented Dickey Fuller Test (ADF).

After conducting the stability test for variables using the Extended Dickey-Fuller Test (ADF) for time series, we obtained through the above table. The time series were unstable at level I(0), the exception of economic openness, which is stable at level I(0), the first difference at a significant level (10%), and the rest of the variables were stable at the first difference I(1), such as the trade balance, inflation and foreign direct investment at the level of significance (5%). As for the gross domestic product at a level of significance (1%), whether it is with the presence of a categorical only or with the presence of a categorical and general trend or without them, that is, the time series is free from a unit root and does not contain a false deviation, then it will be integrated of degree I (1).

<table><caption>Table No. (6): Unit Root Test Results of the Variables Using ADF</caption><thead><tr><th rowspan="2">Variable</th><th colspan="3">At Level</th><th colspan="3">At First Difference</th><th rowspan="2">Result</th></tr><tr><th>Without Constant & Trend</th><th>With Constant & Trend</th><th>With Constant</th><th>Without Constant & Trend</th><th>With Constant & Trend</th><th>With Constant</th></tr></thead><tbody><tr><td>Log TB</td><td>-2.45910</td><td>-2.48901</td><td>-3.86502</td><td>-3.87340</td><td>-2.28908</td><td>-2.34678</td><td>Stationary in I(1)</td></tr><tr><td>Log GDP</td><td>-1.87928</td><td>-4.09831</td><td>-1.09213</td><td>-0.87390</td><td>-2.88903</td><td>-1.64749</td><td>Stationary in I(1)</td></tr><tr><td>Log EX</td><td>-2.67844</td><td>-0.45112</td><td>-0.98234</td><td>-2.43522</td><td>-0.54673</td><td>-2.98212</td><td>Stationary in I(1)</td></tr><tr><td>Log OPEN</td><td>-2.76301</td><td>-1.09812</td><td>2.87903</td><td>1.87462</td><td>0.93231</td><td>-0.98352</td><td>Stationary in I(0) & I(1)</td></tr><tr><td>Log FDI</td><td>-1.65387</td><td>-2.02218</td><td>-0.23141</td><td>-0.73684</td><td>-0.76278</td><td>-1.84658</td><td>Stationary in I(1)</td></tr></tbody></table>

Source: Authors' calculation based on E-views 9.

**4-2-Autoregressive Distributed Lag (ARDL) test:** The error correction methodology is applied by estimating the ARDL model by estimating the statistical indicators of the variables under study, and through the results of the table below, the explanatory power index shows (0.863), which shows the ability of the independent variables to explain (86%) of the changes in the dependent variable, the trade balance (TB), and that (14%) belong to other variables that were not included in the model. , as well as the model was significant where the calculated (F) value was equal to (5.7635)

<figure><img src="image_7.png" /></figure>

<figure><img src="image_8.png" /></figure>
and with a significant degree less than 0.01 and this means that the estimated model is highly significant.

<table><caption>Table No. (7): Statistical Indicators for Case Study Using The ARDL model</caption><thead><tr><td>Test Statistic</td><td>Result</td><td>Statistic Test</td><td>Results</td></tr></thead><tbody><tr><td>R²</td><td>0.863</td><td>F</td><td>5.7635</td></tr><tr><td>R²</td><td>0.797</td><td>Prob(F-statistic)</td><td>0.0009</td></tr><tr><td>AIC</td><td>0.764</td><td>H-Q</td><td>0.8733</td></tr><tr><td>SC</td><td>0.987</td><td>D W</td><td>1.19</td></tr></tbody></table>

Source: Authors 'calculation based on E-views 9.

<table><caption>Table No. (8): Estimated Long run Coefficient Using The ARDL model</caption><thead><tr><th colspan="5">Cointegration Form</th></tr><tr><th>Variable</th><th>Coefficient</th><th>Std. Error</th><th>t-Statistic</th><th>Prob.</th></tr></thead><tbody><tr><td>D(LogGDP)</td><td>0.279342</td><td>0.574829</td><td>0.764392</td><td>0.00010</td></tr><tr><td>D(LogEX)</td><td>0.045621</td><td>0.846311</td><td>0.212378</td><td>0.000609</td></tr><tr><td>D(logOPEN)</td><td>0.378903</td><td>0.341123</td><td>0.039833</td><td>0.00000</td></tr><tr><td>D(LogFDI)</td><td>0.837202</td><td>0.093833</td><td>0.281803</td><td>0.00014</td></tr><tr><td>Coint Eq(-1)</td><td>-0.782092</td><td>0.043216</td><td>-5.9484822</td><td>0.00000</td></tr></tbody></table>

CointEq = TB- ( 0.342561*logGDP+ 0.534362*LogEX- 0.937645*logOPEN+ 0.987492*logFDI - 4.892121 )

<table><thead><tr><th colspan="5">Long Run Coefficients</th></tr><tr><th>Variable</th><th>Coefficient</th><th>Std. Error</th><th>t-Statistic</th><th>Prob.</th></tr></thead><tbody><tr><td>LogGDP</td><td>0.342561</td><td>0.975343</td><td>2.430993</td><td>0.03132</td></tr><tr><td>LogEX</td><td>0.534362</td><td>0.674653</td><td>-2.212137</td><td>0.34050</td></tr><tr><td>LogOPEN</td><td>0.937645-</td><td>0.342527</td><td>4.874922</td><td>0.00010</td></tr><tr><td>LogFDI</td><td>0.987492</td><td>0.435672</td><td>0.737382</td><td>0.01321</td></tr><tr><td>C</td><td>-4.892121</td><td>0.735331</td><td>-0.212890</td><td>0.00872</td></tr></tbody></table>

Source: Authors 'calculation based on E-views 9.

Through the results of the estimation, we note that the model is statistically acceptable at 5% (Fisher probability 0.0009). As for the strength of the correlation between the independent variables and the dependent variable, it explains only (86.3%) of the dependent variable, while the rest (13.7%) is explained by non-dependent variables. included in the form. As for the DW test, it shows that there is no autocorrelation between errors.

As we note that the error correction coefficient [Coint Eq(-1)] is statistically significant with its expected negative sign, and this implicitly indicates the existence of an integrative relationship between the variables, the error correction parameter [Coint

<figure><img src="image_9.png" /></figure>
Eq(-1)] amounted to (0.782092) Significant at the (1%) level, meaning that the deviations were corrected at a rate of (-0.782) between two periods of time, as he corrected the error from the short-term to the long-term quickly (78.2%), and that the adjustment is relatively very fast in the sense that there is an integrative relationship between the model variables.

**4-3- The bounds test:** In order to test the extent of a long-term equilibrium relationship between the CA and the independent variables, the statistic F computed through the bounds test was calculated, by assuming two different hypotheses. The first one (the null hypothesis) implies that there is no co-integration between the model variables i.e. There is an absence of a long-term equilibrium relationship, while the second (alternative hypothesis) states that there is a co-integration between the variables of the model, that is, the existence of a long-term equilibrium relationship (Al-Sawai, 2014, p. 8) (Kuma, 2018, p. 31). The calculated F-statistic value of (6.10985) is greater than the upper bound values of (5.29) at a significance level of 5%, which lead us to reject the null hypothesis implying that there is no co-integration between the variables and the existence of a long-term relationship between the variables during the study period.

<table><caption>Table No. (9): Results from the Bounds Test</caption><thead><tr><th>Variables</th><th colspan="2">Test Statistic</th><th>Result</th></tr></thead><tbody><tr><td>F-statistic</td><td colspan="2">6.10985</td><td rowspan="5">Existence of a co-integration relationship at a significance level of 5%</td></tr><tr><th>Signification</th><th>Lower Bound</th><th>Upper Bound</th></tr><tr><td>1%</td><td>4.45</td><td>4.02</td></tr><tr><td>5%</td><td>4.33</td><td>5.29</td></tr><tr><td>10%</td><td>3.09</td><td>4.12</td></tr></tbody></table>

Source: Authors 'calculation based on E-views 9.

**4-4- auto-correlation test and heterogeneity of variance in the ARDL model:** Through the table below, we conclude that the estimated model is free from the problem of autocorrelation according to the (Breusch-Godfrey Serial Correlation LM Test) and according to the (F-statistic) test because the value of (Prob.F) and (Prob.Chi). -Square is not significant at the (5%) level. We accept the null hypothesis and reject the alternative hypothesis, as well as the estimated model being free of the problem of heterogeneity of variance according to the (Heteroskedasticity Test: ARCH) and according to the (F-statistic) test, where the values of (Prob.F) and (Prob.Chi-Square) Not significant at the 5% level.

<figure><img src="image_10.png" /></figure>
<table><caption>Table No. (10): Serial Correlation Test and Heteroskedasticity Test</caption><thead><tr><th colspan="4">Breusch-Godfrey Serial Correlation LM Test</th></tr></thead><tbody><tr><th scope="row">F-statistic</th><td>1.175865</td><th scope="col">Prob.F</th><td>112390.</td></tr><tr><th scope="row">Obs*R-squared</th><td>2.574680</td><th scope="col">Prob.Chi-Square</th><td>284630.</td></tr></tbody><thead><tr><th colspan="4">Heteroskedasticity Test : ARCH</th></tr></thead><tbody><tr><th scope="row">F-statistic</th><td>1.37585</td><th scope="col">Prob.F</th><td>0.19012</td></tr><tr><th scope="row">Obs*R-squared</th><td>3.948474</td><th scope="col">Prob.Chi-Square</th><td>0.30929</td></tr><tr><th scope="row">Scaledexplained SS</th><td>3.758602</td><th scope="col">Prob.Chi-Square</th><td>0.67482</td></tr></tbody></table>

Source: Authors' calculation based on E-views 9.

**4-5-Testing the stability of the estimated model using the test (CUSUM, CUSUMSQ Squares):** We test the structural stability of the estimated parameters in UECM format for the ARDL model, by using two tests: the Cumulative Sum of Recursive Residual, CUSUM ) as well as the cumulative sum of Square Recursive Residual test (Pesaran, 1997, P121). The period under study, due to their presence within the critical limits at a significant level of 5%.

<figure><img src="image_11.png" /><figcaption>Fig.1: Sensitivity and Stability Test (CUSUM Test and CUSUM of Squares)</figcaption></figure>

Source: Authors' calculation based on E-views 9.

Regarding the economic analysis of all the variables under study:

- The GDP is governed by a direct correlation, as we notice an increase in this variable in the short term by 1%, leading to an increase in trade balance by 27%. As for the long-term, an increase of 1% leads to an improvement in trade balance by 34%, which explains that any increase in oil prices leads to an increase in oil exports; thus increases the gross domestic product and improves trade balance and payments balance.

- The real exchange rate is governed by a direct correlation, as it did not deviate from the norm. In the short term, we notice an increase in this variable by 1%, leading to an improvement in trade balance by 4%. As for the long-term, an increase of 1% leads to an
improvement in the trade balance by 53%, which explains the positive role of devaluation in improving trade balance, as the main objective behind decreasing the national currency is the liberalization of foreign trade, the elimination of numerous restrictions imposed on imports, encouraging non-fuel exports and the integration of the national economy into the global market, in addition to attracting foreign direct investment. These changes positively affect the economy in improving trade payment balance.

- Economic openness is governed by an inverse correlation, as it deviates from the norm. In the short term, an increase in this variable by 1% is noticed, which leads to an improvement in trade balance by 37%. In the long term, an increase of 1% leads to a remarkable improvement in trade balance by 93%, which explains the emergence of a deficit in the trade balance in recent years due to the huge value of imports compared to exports completely dependent on fuel, which negatively affected the economy.

- Foreign direct investment is governed by a direct correlation, as it did not deviate from the norm. In the short term, an increase in this variable by 1% leads to an increase in the improvement of trade balance by 83%. As for the long-term, an increase of 1% leads to a large improvement in trade balance by 98%, which explains the direct dependence of economy on investment in the hydrocarbon sector, as being the most important sector attracting foreign direct investment in Algeria, leading to a positive impact on national economy.

**Conclusion:**

Accordingly, the following remarks are to be drawn:

- Algeria suffers from a very weak and non-competitive investment climate according to the sub-indices of the ease of doing global business index, due to the lack of readiness for international competition compared to other nations' economies. Hence, many reforms are to be made in this regard.

- The present research study found an imbalance in the commodity composition of Algerian exports, as the average period for non-oil exports ranged by 3.5%, compared to oil exports, which ranged between (93% - 98%), exposing it to shocks.

- The diversification of exports and the increase of the non-oil sectors integration help reducing the risks to fluctuations and crises.

- European Union countries rank first in the geographical distribution of exports and imports thanks to bilateral and multilateral cooperation agreements, which strengthen partnerships between the two parties.

- Attracting investments in value-making sectors to promote national economy and avoid the negative impact of fluctuations in oil prices.
- Algeria enjoys a strategic geographic location and economic resources that help attracting foreign direct investment.

**Referrals and references:**

-Abdal-Salam Abu Qahaf (1991), **The Economics of International Investment**, second edition, modern arab office, Egypt.

-Abdal-Salam Abu Qahaf (1989), **The Different Political Forms of Foreign Investment**, University youth foundation, Alexandria, Egypt.

--Abdal-Salam Abu Qahaf (2006), **International Business Administration**, University house, Alexandria, Egypt.

-Abdel Hamid Abdel Muttalib (2008), **Economic Globalization-its Organizations, Partners, and its Repercussions**, University house, Alexandria.

-Medhat Kazem Al-Quraish (2001), **Industrial Economics**, wael house for printing and publishing, Amman, Jordan.

-Mohamed El-Sayed Said (1998), **Multinational Institutions and their Economic and Political Effects**, general Egyptian book organization, Cairo.

-Hana Abdel Qader (2002), **Foreign Direct Investment and International Trade**, publishing house, Baghdad, Iraq.

-Khaled Al-Sawai (2010), **International Trade : theory and its applications**, Modern world of books, Irbid, Jordan.

-Taher Morsi Attia (2008), **International Business Administration**, dar Al-Nahda Al-Arabiya, 2nd edition, Egypt, 2001.Repercussions, University House, Alexandria.

-Pesaran, M and Pesaran, B (1997), **Working with Microfit 4.0: Interactive Econometrics Analysis**, Oxford University Press.

-Salah Abdel Hassan and Hana Abdel Ghaffar (1998), **Foreign Investments: Justifications and Dangers**, house of wisdom publications, Baghdad.

-Ait Issa Issa (2014), **The Algerian Consumer in the Light of Reforms**, Journal of law and human sciences, Economic Issue 19(2). Ziane Ashour University in Djelfa, August 2014.

-De Laubier. D (1993): Une Décennie d'Expansion des Investissements Directs. Economie Internationale N°52. 1993.

-Driss Rasheed (2013), **Electronic Banking as a strategy for establishing a modern Banking System in Algeria**, Journal of Economics, Management and trade, volume1, N°27, 2013.

-Fares Fodhil (2004), **The Importance of Foreign Direct Investment in the Arab Countries-Study of Algeria Egypt and the Western Kingdom of Saudi Arabia**, PhD thesis in Economic sciences, specialization in economic analysis, university of Algiers.

<figure><img src="image_12.png" /></figure>
-Jonas Kibala Kuma (2018), Modélisation ARDL, Test Co-intégration aux bornes et Approche Toda-Yamamoto éléments de théorie et pratiques sur logiciels, centre de recherche économiques et quantitatives (CREQ), HAL archives-ouvertes.fr, Université de kinshasa, Janvier 2018.

-Khaled Al-Sawai (2014), Determinants of The Jordanian Trade Balance: Self-Regression Model for Distributed Time Gaps, The Tent International Scientific Conference on Prospecting The Future of International Trade in Light of the World Trade Organization, college of economics and administrative sciences, Zarqa University, Jordan.

-Noureddine Boulkour (2009), The Effects of Economic Integration on the External Balances of Member States, the State of Arab Economic Integration, Master's thesis in economic sciences, faculty of economics, management and commercial sciences, University of M'hamed Bouguerra, Boumerdes.

-Order No. 01-03 dated in August 20, 2001, related to investment development.

-Samir Hanna Behnam (2013), The Impact of Foreign Trade Development on Economic Growth of South and East Asian Countries for the Period 1990-2011, al-rafidain development journal, Volume 35 Issue 114, 2013.

<table><caption>Annex1: Volume of Exports during the period (2003-2018) Million dollars</caption><thead><tr><th>Year</th><th></th><th>Total non-oil Exports</th><th>Total Exports</th><th>Consumer Goods</th><th>Industrial Equipment</th><th>Agricultural Equipment Commodities</th><th>Semi-finished Materials</th><th>Raw Materials</th><th>Energy and Oil</th><th>Foodstuff</th></tr></thead><tbody><tr><td rowspan="2">2003</td><td>Value</td><td>673</td><td>24612</td><td>35</td><td>30</td><td>1</td><td>509</td><td>50</td><td>23939</td><td>48</td></tr><tr><td>%</td><td>2.7</td><td>100</td><td>0.1</td><td>0.1</td><td>0</td><td>2.1</td><td>0.2</td><td>97.3</td><td>0.2</td></tr><tr><td rowspan="2">2004</td><td>Value</td><td>788</td><td>31713</td><td>16</td><td>52</td><td>1</td><td>552</td><td>102</td><td>30925</td><td>65</td></tr><tr><td>%</td><td>2.5</td><td>100</td><td>0.04</td><td>0.2</td><td>0</td><td>1.7</td><td>0.3</td><td>97.5</td><td>0.3</td></tr><tr><td rowspan="2">2005</td><td>Value</td><td>907</td><td>46001</td><td>14</td><td>36</td><td>-</td><td>656</td><td>134</td><td>45094</td><td>67</td></tr><tr><td>%</td><td>2</td><td>100</td><td>0.03</td><td>0.08</td><td>0</td><td>1.5</td><td>0.3</td><td>98</td><td>0.1</td></tr><tr><td rowspan="2">2006</td><td>Value</td><td>1184</td><td>54613</td><td>43</td><td>44</td><td>1</td><td>828</td><td>195</td><td>53429</td><td>73</td></tr><tr><td>%</td><td>2.2</td><td>100</td><td>0.09</td><td>0.08</td><td>0</td><td>1.5</td><td>0.4</td><td>97.8</td><td>0.1</td></tr><tr><td rowspan="2">2007</td><td>Value</td><td>1332</td><td>60163</td><td>34</td><td>46</td><td>0.61</td><td>993</td><td>170</td><td>58831</td><td>88</td></tr><tr><td>%</td><td>2.2</td><td>100</td><td>0.06</td><td>0.08</td><td>0</td><td>1.7</td><td>0.3</td><td>97.8</td><td>0.1</td></tr></tbody></table>
<table><tbody><tr><td rowspan="2">2008</td><td>Value</td><td>1937</td><td>79298</td><td>16.75</td><td>67</td><td>1.25</td><td>1401</td><td>333</td><td>77361</td><td>118</td></tr><tr><td>%</td><td>2.4</td><td>100</td><td>0.02</td><td>0.08</td><td>0</td><td>1.8</td><td>0.4</td><td>97.6</td><td>0.1</td></tr><tr><td rowspan="2">2009</td><td>Value</td><td>1066</td><td>45194</td><td>49</td><td>42</td><td>-</td><td>692</td><td>170</td><td>44128</td><td>113</td></tr><tr><td>%</td><td>2.4</td><td>100</td><td>0.11</td><td>0.09</td><td>-</td><td>1.5</td><td>0.4</td><td>97.6</td><td>0.3</td></tr><tr><td rowspan="2">2010</td><td>Value</td><td>1526</td><td>57053</td><td>30</td><td>30</td><td>1</td><td>1056</td><td>94</td><td>55527</td><td>315</td></tr><tr><td>%</td><td>2.7</td><td>100</td><td>0.05</td><td>0.05</td><td>0</td><td>1.8</td><td>0.2</td><td>97.3</td><td>0.6</td></tr><tr><td rowspan="2">2011</td><td>Value</td><td>2062</td><td>73489</td><td>15</td><td>35</td><td>-</td><td>1496</td><td>161</td><td>71427</td><td>355</td></tr><tr><td>%</td><td>2.8</td><td>100</td><td>0.02</td><td>0.05</td><td>-</td><td>2.03</td><td>0.2</td><td>97.2</td><td>0.5</td></tr><tr><td rowspan="2">2012</td><td>Value</td><td>2187</td><td>73981</td><td>16</td><td>30</td><td>1</td><td>1660</td><td>167</td><td>71794</td><td>313</td></tr><tr><td>%</td><td>3</td><td>100</td><td>0.02</td><td>0.04</td><td>0</td><td>2.24</td><td>0.2</td><td>97</td><td>0.5</td></tr><tr><td rowspan="2">2013</td><td>Value</td><td>2160</td><td>65917</td><td>17</td><td>28</td><td>0</td><td>1604</td><td>109</td><td>63757</td><td>402</td></tr><tr><td>%</td><td>3.3</td><td>100</td><td>0.03</td><td>0.04</td><td>0</td><td>2.5</td><td>0.2</td><td>96.7</td><td>0.6</td></tr><tr><td rowspan="2">2014</td><td>Value</td><td>2810</td><td>95662</td><td>10</td><td>15</td><td>2</td><td>2350</td><td>110</td><td>92852</td><td>323</td></tr><tr><td>%</td><td>2.9</td><td>100</td><td>0.01</td><td>0.02</td><td>0</td><td>2.5</td><td>0.1</td><td>97.1</td><td>0.3</td></tr><tr><td rowspan="2">2015</td><td>Value</td><td>1969</td><td>34668</td><td>11</td><td>19</td><td>1</td><td>1603</td><td>100</td><td>32699</td><td>235</td></tr><tr><td>%</td><td>5.6</td><td>100</td><td>0</td><td>0</td><td>0</td><td>4.6</td><td>0.3</td><td>94.4</td><td>0.7</td></tr><tr><td rowspan="2">2016</td><td>Value</td><td>1780</td><td>30026</td><td>19</td><td>54</td><td>-</td><td>1321</td><td>84</td><td>28221</td><td>327</td></tr><tr><td>%</td><td>6.0</td><td>100</td><td>0.09</td><td>0.2</td><td>-</td><td>4.41</td><td>0.3</td><td>93.9</td><td>1.1</td></tr><tr><td rowspan="2">2017</td><td>Value</td><td>1930</td><td>35191</td><td>20</td><td>78</td><td>0.29</td><td>1410</td><td>73</td><td>33261</td><td>349</td></tr><tr><td>%</td><td>5.5</td><td>100</td><td>0.06</td><td>0.22</td><td>0</td><td>4</td><td>0.2</td><td>94.5</td><td>1</td></tr><tr><td rowspan="2">2018</td><td>Value</td><td>2830.3</td><td>41168.3</td><td>33</td><td>90</td><td>0.30</td><td>2242</td><td>92</td><td>38338</td><td>373</td></tr><tr><td>%</td><td>6.9</td><td>100</td><td>0.08</td><td>0.22</td><td>0</td><td>5.4</td><td>0.2</td><td>93.1</td><td>1</td></tr></tbody></table>

Source: www.andi.dz/index.php/ar/statistique/bilan-du-commerce-exterieure (consulted on 20/07/2022).
- Authors' calculation.

<table><caption>Annex2: Geographical Distribution of Exports during the period (2003-2018) Million dollars</caption><thead><tr><th>Year</th><th></th><th>Total</th><th>Ocean<br>Countries</th><th>African<br>Countries</th><th>Rest of the<br>Arab<br>Countries</th><th>Meghreb<br>Countries</th><th>Asian<br>Countries<br>without<br>Arab<br>Countries</th><th>North<br>American<br>Countries</th><th>Countries in<br>the<br>Cooperation &<br>Economic<br>Development<br>Region</th><th>Other<br>European<br>Countries</th><th>European<br>Union</th></tr></thead><tbody><tr><td rowspan="2">2003</td><td>Value</td><td>24612</td><td>-</td><td>13</td><td>355</td><td>260</td><td>507</td><td>1220</td><td>7631</td><td>123</td><td>14503</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0</td><td>1.4</td><td>1</td><td>2.1</td><td>5</td><td>31</td><td>0.5</td><td>59</td></tr><tr><td rowspan="2">2004</td><td>Value</td><td>31713</td><td>-</td><td>26</td><td>604</td><td>337</td><td>699</td><td>1480</td><td>10068</td><td>174</td><td>18325</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0</td><td>1.9</td><td>1.1</td><td>2.1</td><td>4.7</td><td>31.7</td><td>0.5</td><td>58</td></tr><tr><td rowspan="2">2005</td><td>Value</td><td>46001</td><td>-</td><td>49</td><td>621</td><td>418</td><td>1218</td><td>3124</td><td>14963</td><td>15</td><td>25593</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.1</td><td>1.3</td><td>0.9</td><td>2.6</td><td>7</td><td>32.5</td><td>0</td><td>55.6</td></tr><tr><td rowspan="2">2006</td><td>Value</td><td>54613</td><td>-</td><td>14</td><td>591</td><td>515</td><td>1792</td><td>2398</td><td>20546</td><td>7</td><td>28750</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0</td><td>1.1</td><td>0.9</td><td>3.1</td><td>4.4</td><td>37.5</td><td>0</td><td>53</td></tr><tr><td rowspan="2">2007</td><td>Value</td><td>60163</td><td>55</td><td>42</td><td>479</td><td>760</td><td>4004</td><td>2596</td><td>25387</td><td>7</td><td>26833</td></tr><tr><td>%</td><td>100</td><td>0</td><td>0</td><td>0.8</td><td>1.3</td><td>6.7</td><td>4.4</td><td>42.2</td><td>0</td><td>44.6</td></tr><tr><td rowspan="2">2008</td><td>Value</td><td>79298</td><td>-</td><td>365</td><td>797</td><td>1626</td><td>3765</td><td>2875</td><td>28614</td><td>10</td><td>41246</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.5</td><td>1</td><td>2.1</td><td>4.7</td><td>3.6</td><td>36.1</td><td>0</td><td>52</td></tr><tr><td rowspan="2">2009</td><td>Value</td><td>45194</td><td>-</td><td>93</td><td>569</td><td>857</td><td>3320</td><td>1841</td><td>15326</td><td>7</td><td>23186</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.2</td><td>1.3</td><td>1.9</td><td>7.3</td><td>4.1</td><td>33.9</td><td>0</td><td>51.3</td></tr><tr><td rowspan="2">2010</td><td>Value</td><td>57053</td><td>-</td><td>79</td><td>694</td><td>1281</td><td>4082</td><td>2620</td><td>20278</td><td>10</td><td>28009</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.1</td><td>1.1</td><td>2.1</td><td>7.2</td><td>5</td><td>35.5</td><td>0</td><td>49</td></tr><tr><td rowspan="2">2011</td><td>Value</td><td>73489</td><td>41</td><td>146</td><td>810</td><td>1586</td><td>5168</td><td>4270</td><td>24059</td><td>102</td><td>37307</td></tr><tr><td>%</td><td>100</td><td>0</td><td>0.2</td><td>1.2</td><td>2.3</td><td>7</td><td>5.8</td><td>32.7</td><td>0.1</td><td>50.7</td></tr><tr><td rowspan="2">2012</td><td>Value</td><td>71866</td><td>-</td><td>59</td><td>1069</td><td>2075</td><td>4704</td><td>3586</td><td>22325</td><td>36</td><td>40127</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0</td><td>1.4</td><td>2.8</td><td>6.4</td><td>4.8</td><td>30.4</td><td>0</td><td>54.2</td></tr><tr><td rowspan="2">2013</td><td>Value</td><td>64974</td><td>-</td><td>81</td><td>1950</td><td>2439</td><td>4697</td><td>3211</td><td>12210</td><td>52</td><td>41277</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.1</td><td>3</td><td>3.7</td><td>7.2</td><td>4.9</td><td>18.5</td><td>0</td><td>62.6</td></tr><tr><td rowspan="2">2014</td><td>Value</td><td>62956</td><td>-</td><td>80</td><td>721</td><td>3248</td><td>4851</td><td>3005</td><td>10482</td><td>49</td><td>40520</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.1</td><td>1</td><td>5.2</td><td>7.7</td><td>5</td><td>16.6</td><td>0</td><td>64.4</td></tr><tr><td rowspan="2">2015</td><td>Value</td><td>34668</td><td>71</td><td>82</td><td>572</td><td>1550</td><td>2409</td><td>1683</td><td>5288</td><td>37</td><td>22976</td></tr><tr><td>%</td><td>100</td><td>0.2</td><td>0.2</td><td>1.6</td><td>4.5</td><td>6.9</td><td>4.9</td><td>15.3</td><td>0.1</td><td>66.3</td></tr><tr><td rowspan="2">2016</td><td>Value</td><td>30026</td><td>-</td><td>94</td><td>663</td><td>1368</td><td>2531</td><td>1678</td><td>6251</td><td>80</td><td>17561</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.2</td><td>2.1</td><td>4.5</td><td>8.3</td><td>5.4</td><td>20.8</td><td>0.3</td><td>58.4</td></tr><tr><td rowspan="2">2017</td><td>Value</td><td>35191</td><td>71</td><td>103</td><td>799</td><td>1273</td><td>3595</td><td>2530</td><td>6465</td><td>40</td><td>20386</td></tr><tr><td>%</td><td>100</td><td>0.2</td><td>0.3</td><td>2.2</td><td>3.6</td><td>10.1</td><td>7.2</td><td>18.4</td><td>0.1</td><td>57.9</td></tr><tr><td rowspan="2">2018</td><td>Value</td><td>41168</td><td>-</td><td>132</td><td>5351</td><td>1669</td><td>6950</td><td>2660</td><td>40</td><td>712</td><td>23654</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.3</td><td>12.9</td><td>4.1</td><td>16.9</td><td>6.5</td><td>0.09</td><td>1.7</td><td>57.51</td></tr></tbody></table>

Source: www.andi.dz/index.php/ar/statistique/bilan-du-commerce-exterieure (consulted on 22/07/2022).

- Authors' calculation.

<figure><img src="image_13.png" /></figure>
<table><caption>Annex3: Volume of Imports during the period (2003-2018) Million dollars</caption><thead><tr><th>Year</th><th></th><th>Total Imports</th><th>Consumer Goods</th><th>Industrial Equipment Commodities</th><th>Agricultural Equipment Commodities</th><th>Semi-finished Materials</th><th>Raw Materials</th><th>Energy and Oil</th><th>Foodstuff</th></tr></thead><tbody><tr><td rowspan="2">2003</td><td>Value</td><td>13534</td><td>2112</td><td>4955</td><td>129</td><td>2857</td><td>689</td><td>114</td><td>2678</td></tr><tr><td>%</td><td>100</td><td>15.6</td><td>36.6</td><td>1</td><td>21.1</td><td>5.1</td><td>0.8</td><td>19.8</td></tr><tr><td rowspan="2">2004</td><td>Value</td><td>18308</td><td>2797</td><td>7139</td><td>173</td><td>3645</td><td>784</td><td>173</td><td>3597</td></tr><tr><td>%</td><td>100</td><td>15.3</td><td>39</td><td>0.9</td><td>20</td><td>4.3</td><td>0.9</td><td>19.6</td></tr><tr><td rowspan="2">2005</td><td>Value</td><td>20357</td><td>3149</td><td>8333</td><td>186</td><td>3981</td><td>732</td><td>293</td><td>3683</td></tr><tr><td>%</td><td>100</td><td>15.5</td><td>41</td><td>0.9</td><td>19.6</td><td>3.6</td><td>1.4</td><td>18</td></tr><tr><td rowspan="2">2006</td><td>Value</td><td>21456</td><td>3011</td><td>8528</td><td>96</td><td>4934</td><td>843</td><td>244</td><td>3800</td></tr><tr><td>%</td><td>100</td><td>14</td><td>39.7</td><td>0.4</td><td>23</td><td>3.9</td><td>1</td><td>18</td></tr><tr><td rowspan="2">2007</td><td>Value</td><td>27631</td><td>3753</td><td>10025</td><td>156</td><td>7104</td><td>1324</td><td>324</td><td>4945</td></tr><tr><td>%</td><td>100</td><td>13.6</td><td>36.3</td><td>0.6</td><td>25.7</td><td>4.8</td><td>1.1</td><td>17.9</td></tr><tr><td rowspan="2">2008</td><td>Value</td><td>39479</td><td>4346</td><td>15144</td><td>173</td><td>10015</td><td>1395</td><td>594</td><td>7812</td></tr><tr><td>%</td><td>100</td><td>11</td><td>38.4</td><td>0.4</td><td>25.4</td><td>3.5</td><td>1.5</td><td>19.8</td></tr><tr><td rowspan="2">2009</td><td>Value</td><td>39294</td><td>6145</td><td>15139</td><td>233</td><td>10165</td><td>1200</td><td>549</td><td>5863</td></tr><tr><td>%</td><td>100</td><td>15.6</td><td>38.5</td><td>0.6</td><td>25.9</td><td>3.1</td><td>1.4</td><td>14.9</td></tr><tr><td rowspan="2">2010</td><td>Value</td><td>40473</td><td>5836</td><td>15776</td><td>341</td><td>10098</td><td>1409</td><td>955</td><td>6058</td></tr><tr><td>%</td><td>100</td><td>14.3</td><td>39.9</td><td>0.8</td><td>24.7</td><td>3.4</td><td>2.2</td><td>14.7</td></tr><tr><td rowspan="2">2011</td><td>Value</td><td>47247</td><td>7328</td><td>16050</td><td>387</td><td>10685</td><td>1783</td><td>1164</td><td>9850</td></tr><tr><td>%</td><td>100</td><td>15.5</td><td>34</td><td>0.8</td><td>22.6</td><td>3.8</td><td>2.5</td><td>20.8</td></tr><tr><td rowspan="2">2012</td><td>Value</td><td>47490</td><td>9955</td><td>13699</td><td>469</td><td>10673</td><td>1824</td><td>1887</td><td>8983</td></tr><tr><td>%</td><td>100</td><td>21</td><td>28.8</td><td>1</td><td>22.5</td><td>3.8</td><td>4</td><td>19</td></tr><tr><td rowspan="2">2013</td><td>Value</td><td>54852</td><td>7473</td><td>19897</td><td>506</td><td>11223</td><td>1832</td><td>4341</td><td>9580</td></tr><tr><td>%</td><td>100</td><td>13.6</td><td>36.3</td><td>0.9</td><td>20.4</td><td>3.3</td><td>8</td><td>17.5</td></tr><tr><td rowspan="2">2014</td><td>Value</td><td>58330</td><td>10287</td><td>18906</td><td>657</td><td>12740</td><td>1884</td><td>2851</td><td>11005</td></tr><tr><td>%</td><td>100</td><td>17.6</td><td>32.4</td><td>1.1</td><td>21.8</td><td>3.2</td><td>4.9</td><td>19</td></tr><tr><td rowspan="2">2015</td><td>Value</td><td>51702</td><td>8676</td><td>17200</td><td>540</td><td>12564</td><td>1200</td><td>2206</td><td>9316</td></tr><tr><td>%</td><td>100</td><td>16.8</td><td>33.3</td><td>1</td><td>24.3</td><td>2.3</td><td>4.3</td><td>18</td></tr><tr><td rowspan="2">2016</td><td>Value</td><td>47089</td><td>8275</td><td>15154</td><td>726</td><td>10321</td><td>1490</td><td>1987</td><td>9136</td></tr><tr><td>%</td><td>100</td><td>17.6</td><td>32.2</td><td>1.5</td><td>21.9</td><td>3.2</td><td>4.2</td><td>19.4</td></tr><tr><td rowspan="2">2017</td><td>Value</td><td>46059</td><td>8114</td><td>14585</td><td>519</td><td>10032</td><td>1459</td><td>2195</td><td>9155</td></tr><tr><td>%</td><td>100</td><td>17.6</td><td>31.7</td><td>1.2</td><td>21.8</td><td>3.2</td><td>4.7</td><td>19.8</td></tr><tr><td rowspan="2">2018</td><td>Value</td><td>46197</td><td>9756</td><td>13433</td><td>563</td><td>10959</td><td>1898</td><td>1015</td><td>8573</td></tr><tr><td>%</td><td>100</td><td>21.1</td><td>29</td><td>1.2</td><td>23.7</td><td>4.2</td><td>2.2</td><td>18.6</td></tr></tbody></table>

Source: www.andi.dz/index.php/ar/statistique/bilan-du-commerce-exterieure (consulted on 21/07/2022).
- Authors' calculation.

<table><caption>Annex4: Geographical Distribution of Imports during the period (2003-2018) Million dollars</caption><thead><tr><th>Year</th><th></th><th>Total</th><th>Ocean<br>Countries</th><th>African<br>Countries</th><th>Rest of the<br>Arab<br>Countries</th><th>Meghreb<br>Countries</th><th>Asian<br>Countries<br>without<br>Arab<br>Countries</th><th>Latin<br>American<br>Countries</th><th>Countries in<br>the<br>Cooperation &<br>Economic<br>Development<br>Region</th><th>Other<br>European<br>Countries</th><th>European<br>Union</th></tr></thead><tbody><tr><td rowspan="2">2003</td><td>Value</td><td>13534</td><td>47</td><td>125</td><td>418</td><td>120</td><td>1206</td><td>567</td><td>2242</td><td>855</td><td>7954</td></tr><tr><td>%</td><td>100</td><td>0.3</td><td>0.9</td><td>3.1</td><td>0.9</td><td>8.9</td><td>4.2</td><td>16.6</td><td>6.3</td><td>58.8</td></tr><tr><td rowspan="2">2004</td><td>Value</td><td>18308</td><td>66</td><td>129</td><td>474</td><td>160</td><td>1654</td><td>1071</td><td>3119</td><td>1526</td><td>10109</td></tr><tr><td>%</td><td>100</td><td>0.4</td><td>0.7</td><td>2.6</td><td>0.9</td><td>9</td><td>5.8</td><td>17</td><td>8.4</td><td>55.2</td></tr><tr><td rowspan="2">2005</td><td>Value</td><td>20357</td><td>-</td><td>148</td><td>427</td><td>217</td><td>2504</td><td>1248</td><td>3506</td><td>1088</td><td>11219</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.7</td><td>2.2</td><td>1.1</td><td>12.3</td><td>6.1</td><td>17.2</td><td>5.3</td><td>55.1</td></tr><tr><td rowspan="2">2006</td><td>Value</td><td>21456</td><td>-</td><td>148</td><td>493</td><td>235</td><td>3055</td><td>1281</td><td>3738</td><td>777</td><td>11729</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.7</td><td>2.3</td><td>1.1</td><td>14.2</td><td>6</td><td>17.4</td><td>3.6</td><td>54.7</td></tr><tr><td rowspan="2">2007</td><td>Value</td><td>27631</td><td>-</td><td>231</td><td>621</td><td>284</td><td>4318</td><td>1672</td><td>5363</td><td>715</td><td>14427</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.8</td><td>2.2</td><td>1</td><td>15.6</td><td>6.1</td><td>19.4</td><td>2.6</td><td>52.3</td></tr><tr><td rowspan="2">2008</td><td>Value</td><td>39479</td><td>-</td><td>395</td><td>705</td><td>395</td><td>6916</td><td>2179</td><td>7245</td><td>659</td><td>20985</td></tr><tr><td>%</td><td>100</td><td>-</td><td>1</td><td>1.7</td><td>1</td><td>17.5</td><td>5.5</td><td>18.4</td><td>1.7</td><td>53.2</td></tr><tr><td rowspan="2">2009</td><td>Value</td><td>39294</td><td>2</td><td>350</td><td>1089</td><td>478</td><td>7574</td><td>1866</td><td>6435</td><td>728</td><td>20772</td></tr><tr><td>%</td><td>100</td><td>0</td><td>0.9</td><td>2.8</td><td>1.2</td><td>19.3</td><td>4.7</td><td>16.4</td><td>1.8</td><td>52.9</td></tr><tr><td rowspan="2">2010</td><td>Value</td><td>40473</td><td>-</td><td>396</td><td>1262</td><td>544</td><td>8280</td><td>2380</td><td>6519</td><td>388</td><td>20704</td></tr><tr><td>%</td><td>100</td><td>-</td><td>1</td><td>3.1</td><td>1.3</td><td>20.5</td><td>5.9</td><td>16</td><td>1</td><td>51.2</td></tr><tr><td rowspan="2">2011</td><td>Value</td><td>47247</td><td>-</td><td>578</td><td>1760</td><td>691</td><td>8873</td><td>3931</td><td>6219</td><td>579</td><td>24616</td></tr><tr><td>%</td><td>100</td><td>-</td><td>1.2</td><td>3.7</td><td>1.5</td><td>18.8</td><td>8.3</td><td>13.2</td><td>1.2</td><td>52</td></tr><tr><td rowspan="2">2012</td><td>Value</td><td>46801</td><td>-</td><td>677</td><td>1536</td><td>755</td><td>9410</td><td>3587</td><td>5892</td><td>1086</td><td>23858</td></tr><tr><td>%</td><td>100</td><td>-</td><td>1.4</td><td>3.3</td><td>1.6</td><td>20.1</td><td>7.7</td><td>12.6</td><td>2.3</td><td>51</td></tr><tr><td rowspan="2">2013</td><td>Value</td><td>55028</td><td>-</td><td>594</td><td>2414</td><td>1029</td><td>10623</td><td>3466</td><td>6965</td><td>1213</td><td>28724</td></tr><tr><td>%</td><td>100</td><td>-</td><td>1.1</td><td>4.4</td><td>1.9</td><td>19.2</td><td>6.3</td><td>12.7</td><td>2.2</td><td>52.2</td></tr><tr><td rowspan="2">2014</td><td>Value</td><td>58330</td><td>-</td><td>440</td><td>1958</td><td>711</td><td>12576</td><td>3796</td><td>8443</td><td>886</td><td>29494</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.8</td><td>3.4</td><td>1.1</td><td>21.6</td><td>6.5</td><td>14.5</td><td>1.5</td><td>50.6</td></tr><tr><td rowspan="2">2015</td><td>Value</td><td>51702</td><td>-</td><td>359</td><td>1918</td><td>680</td><td>11850</td><td>2822</td><td>7363</td><td>1225</td><td>25485</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.7</td><td>3.7</td><td>1.3</td><td>23</td><td>5.5</td><td>14.2</td><td>2.4</td><td>49.2</td></tr><tr><td rowspan="2">2016</td><td>Value</td><td>47089</td><td>-</td><td>238</td><td>6193</td><td>754</td><td>11678</td><td>2957</td><td>6595</td><td>1009</td><td>21922</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.5</td><td>4.1</td><td>1.6</td><td>24.8</td><td>6.3</td><td>14</td><td>2.1</td><td>46.5</td></tr><tr><td rowspan="2">2017</td><td>Value</td><td>46059</td><td>-</td><td>186</td><td>1542</td><td>592</td><td>12369</td><td>3209</td><td>5953</td><td>1910</td><td>20298</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.4</td><td>3.3</td><td>1.3</td><td>26.9</td><td>6.9</td><td>12.9</td><td>4.2</td><td>44.1</td></tr><tr><td rowspan="2">2018</td><td>Value</td><td>46197</td><td>-</td><td>166</td><td>1904</td><td>546</td><td>11557</td><td>3546</td><td>5837</td><td>1542</td><td>21099</td></tr><tr><td>%</td><td>100</td><td>-</td><td>0.3</td><td>4.1</td><td>1.1</td><td>25</td><td>7.6</td><td>12.6</td><td>3.3</td><td>46</td></tr></tbody></table>

Source: www.andi.dz/index.php/ar/statistique/bilan-du-commerce-exterieure (consulted on 24/07/2022).

- Authors' calculation.

<figure><img src="image_14.png" /></figure>