Foreign Direct Investment (FDI) and Trade Volume between the US and East Africa

FDI AND TRADE VOLUME
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The year between 2000 and 2020 saw a rise in Foreign Direct Investment (FDI) from the United States to East Africa to $8.9Billion. Some East African countries that benefited from the investment include Kenya, Tanzania, Uganda and Rwanda. Although the figure in 2020 was lower than the previous year, the amount is substantial, and the expected returns are significant (Joshua et al., 2021). The highest FDI from America to East Africa was in 2014. However, still, it is the lowest among other regions in the world in terms of the amount of foreign direct investment.
Diversification of investment opportunities is one of the ways we can use to improve FDI and trade volume numbers. The beginning of the 21st century saw most foreign investments from the USA to East Africa for raw materials extraction. Some of the materials extracted were coal and petroleum. These items were mainly prioritized due to the readily available global market. These were also products that were already manufactured for a long time, so the market was stable. The investment of these raw materials in East Africa amounted to more than half of all the FDI in the region. To improve the FDI and trade volume numbers, investors should diversify the investment opportunities and also focus on services rather than just goods (Ibrahim et al., 2019). Other goods that could be invested in are renewable energy and valuable chemicals.
Investment in local government projects whose objectives are to improve the region's economic stability is another way of improving FDA and trade volume numbers. Some investments, such as building public roads, help easy access to the resources investors from the USA gain through the interests received. Investing in these economic projects would enable the easy movement of goods to the market (Marandu et al., 2018). Besides public roads, we can also invest in creating strong communication networks like the internet. Users will be able to find resources online that could help them to improve their organization. Although some of the investments may not yield direct profit to the USA, the projects invested in would indirectly help improve the businesses that the USA invests in.
One of the main factors affecting trade is local conflicts. Most countries in the East African region are faced with intercommunity wars, and this leads to political instability around the country. Lack of political stability affects trade because the products cannot reach the market, hence low revenue (Qiang et al., 2021). The local conflicts in local government also contribute to the factors affecting the trade. People in the local government may want the investment to be made in their region to improve the welfare of their people. If the USA does not install the projects in their region, the local leaders oppose them. Other leaders would need kickbacks and other incentives, ideally corruption. All the co...