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The Effect of Foreign Direct Investment on Economic Growth in Ghana

Received: 17 May 2017     Accepted: 12 June 2017     Published: 25 July 2017
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Abstract

This study examines the relationship between Foreign Direct Investment and Economic Growth as well as some selected macroeconomic variables such as inflation, gross fixed capital formation, trade openness and government spending in Ghana for the period 1983 to 2012 by means of time series analysis. This study employs Least Squares to examine the possible effects among the investigated series. The results suggest that, the impact of foreign direct investment on economic growth in Ghana is significantly positive. These findings will be useful for making appropriate policies by policy makers, investors and the government. Hence, there should be economic as well as foreign policy reforms aimed at attracting more investors to boost the Ghanaian economy.

Published in Journal of Business and Economic Development (Volume 2, Issue 4)
DOI 10.11648/j.jbed.20170204.14
Page(s) 227-232
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Foreign Direct Investment, Time Series Analysis, Macroeconomic Variables, Least Squares, Economic Growth

References
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[2] Balasubramanyam, V. N., Salisu, M., & Sapsford, D. (1996). Foreign direct investment and growth in EP and IS countries. The Economic Journal, 92–105.
[3] Carkovic, M. V., & Levine, R. (2002). Does foreign direct investment accelerate economic growth? Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=314924.
[4] Demirsel, M. T., Adem, Ã., Mucuk, M., & others. (2014). The Effect Of Foreign Direct Investment On Economic Growth: The Case Of Turkey. In Proceedings of International Academic Conferences. International Institute of Social and Economic Sciences. Retrieved from https://ideas.repec.org/p/sek/iacpro/0702081.html.
[5] Dickey, D. A., & Fuller, W. A. (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74 (366a), 427–431.
[6] Duce, M. (2003). Definitions of foreign direct investment (FDI): A methodological note. Banco de Espana. Retrieved from https://pdfs.semanticscholar.org/909c/6a2602ca411cda488df5241750cd3dc881aa.pdf.
[7] Eduardo. F (1998) “How Does Foreign Direct Investment Affect Growth?” Journal of International Economics, Vol. 45, pp. 115-35.
[8] Feder, G. (1983). On exports and economic growth. Journal of Development Economics, 12 (1–2), 59–73.
[9] Fosu, A. K. (1990). Exports and economic growth: the African case. World Development, 18 (6), 831–835.
[10] Frimpong, J. M., & Oteng-Abayie, E. F. (2006). Bivariate causality analysis between FDI inflows and economic growth in Ghana. Retrieved from https://mpra.ub.uni-muenchen.de/351/.
[11] GIPC (2007), GIPC Quarterly Report, January 2007, Accra; Ghana Investment Promotion Centre. University of Minnesota Department of finance ‘working paper’ Online www.ssrn.com.
[12] Lall S. (2002) FDI and development: research issues in the emerging context. Edited by Bora B. (2002) Foreign Direct Investment Research Issues. Routledge London, New York.
[13] Lipsey, R. E. (2001). Foreign direct investment and the operations of multinational firms: concepts, history, and data. National bureau of economic research. Retrieved from http://www.nber.org/papers/w8665.
[14] Nketsiah, I. and Ameyibor, J. (2017) ‘‘Determining the relationship between stock returns and inflation – evidence from the Ghana Stock Exchange’’. Research Journal of Economics & Business Studies, 6 (9), 11-17
[15] Njeru, B. N. (2013). The impact of foreign direct investment on economic growth in Kenya. University of Nairobi. Retrieved from http://erepository.uonbi.ac.ke/handle/11295/58592.
[16] Olofsdotter, K. (1998). Foreign direct investment, country capabilities and economic growth. Review of World Economics, 134 (3), 534–547.
[17] Phillips, P. C., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 335–346.
[18] Todaro, M., & Smith, S. (2003). Development economics. Pearson Education.
[19] Townsend I. (2003). ‘‘Does Foreign direct Investment accelerate economic growth in less developed countries?’’ (online).www.stolaf.edu/people/tjf/townsend_thesis.
[20] UNCTAD (2000). World Investment Report 2000. New York: United Nations.
[21] UNCTAD (2002). World Investment Report 2002. Geneva: UNCTAD.
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  • APA Style

    Isaac Nketsiah, Matthew Quaidoo. (2017). The Effect of Foreign Direct Investment on Economic Growth in Ghana. Journal of Business and Economic Development, 2(4), 227-232. https://doi.org/10.11648/j.jbed.20170204.14

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    ACS Style

    Isaac Nketsiah; Matthew Quaidoo. The Effect of Foreign Direct Investment on Economic Growth in Ghana. J. Bus. Econ. Dev. 2017, 2(4), 227-232. doi: 10.11648/j.jbed.20170204.14

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    AMA Style

    Isaac Nketsiah, Matthew Quaidoo. The Effect of Foreign Direct Investment on Economic Growth in Ghana. J Bus Econ Dev. 2017;2(4):227-232. doi: 10.11648/j.jbed.20170204.14

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  • @article{10.11648/j.jbed.20170204.14,
      author = {Isaac Nketsiah and Matthew Quaidoo},
      title = {The Effect of Foreign Direct Investment on Economic Growth in Ghana},
      journal = {Journal of Business and Economic Development},
      volume = {2},
      number = {4},
      pages = {227-232},
      doi = {10.11648/j.jbed.20170204.14},
      url = {https://doi.org/10.11648/j.jbed.20170204.14},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20170204.14},
      abstract = {This study examines the relationship between Foreign Direct Investment and Economic Growth as well as some selected macroeconomic variables such as inflation, gross fixed capital formation, trade openness and government spending in Ghana for the period 1983 to 2012 by means of time series analysis. This study employs Least Squares to examine the possible effects among the investigated series. The results suggest that, the impact of foreign direct investment on economic growth in Ghana is significantly positive. These findings will be useful for making appropriate policies by policy makers, investors and the government. Hence, there should be economic as well as foreign policy reforms aimed at attracting more investors to boost the Ghanaian economy.},
     year = {2017}
    }
    

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    JF  - Journal of Business and Economic Development
    JO  - Journal of Business and Economic Development
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    UR  - https://doi.org/10.11648/j.jbed.20170204.14
    AB  - This study examines the relationship between Foreign Direct Investment and Economic Growth as well as some selected macroeconomic variables such as inflation, gross fixed capital formation, trade openness and government spending in Ghana for the period 1983 to 2012 by means of time series analysis. This study employs Least Squares to examine the possible effects among the investigated series. The results suggest that, the impact of foreign direct investment on economic growth in Ghana is significantly positive. These findings will be useful for making appropriate policies by policy makers, investors and the government. Hence, there should be economic as well as foreign policy reforms aimed at attracting more investors to boost the Ghanaian economy.
    VL  - 2
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Author Information
  • Directorate of Research, Innovation and Consultancy, University of Cape Coast, Cape Coast, Ghana

  • Department of Economics, University of Cape Coast, Cape Coast, Ghana

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