The Impact Of Foreign Direct Investment On Gabon's Timber Industry

Gabon is considered one of the countries involved in international trade because of its abundant natural resources in tropical forests that cover 85% of the total land area.The majority of Gabon's forest wealth lies along the Congo Basin,which is currently the second largest forest in the world after the Amazon in Latin America,more precisely in Brazil.Gabon is a member of International Tropical Timber Organization(ITTO)whose commercial activity is marketing of wood products.Gabon is currently recognized as a country of exploit for wood products,the quality of production and timber exports have not been favorable to the country in terms of gains from international trade.This research aimed at answering the following question of interest in a manner which can help to improve Gabon's gains from international trade: what is the impact of FDI in the wood industry in Gabon? To do this,theories of foreign direct investment have been considered to be significant factors that could boost smooth operation of commercial activities in the timber industry.A Panel data model was used to analyze twenty-six years data of four other key timber exporting countries to provide more variability,freedom and reduce multiple collinearity among the explanatory variables,thus improving the efficiency of econometric estimates.The model had the ability to control the individual heterogeneity of the variables in the estimation process.Results showed that,Gabon's timber industry needs foreign investment policy framework and external support to improve its industry production of complementary wood products and export.It is therefore important for Gabon to take into account the motivation policies of FDI.For Gabon to stand out in the timber market,it needs constantly review its domestic pricing and periodically conduct assessment on the status for its products,facilitate entry and implementation of FDI,reducing taxes in the wood manufacturing industry and raise the export tax on raw wood export,reduce the number of trade documents as well as border costs.