Agricultural sector foreign directinvestment and economic growth in Ghana

Abstract

The study seeks to establish the relationship between foreign direct investment toGhana’s agriculture sector and economic growth with secondary data mainlysourced from the World Development Indicator. The techniques employed toanalyse the data include descriptive statistic, unit root test, Granger causality test anderror correction model (ECM). The study accepted a neutrality hypothesis betweenforeign direct investment to the Ghanaian agricultural sector and its covariates; tradeopenness, capital and government expenditure. The study also revealed positive andsignificant relationship between economic growth and foreign direct invest flow tothe agricultural sector and volume of trade respectively. However, governmentexpenditure exhibit negative but significant relationship with economic growth. Thestudy contributes to economic development literature from an important butneglected research context with regards to agricultural development via foreigndirect investment to support job creation and overall economic development withparticular reference to Ghana. Thus, the study recommends that policy should focuson flexible trade policies to attract more foreign direct investment (FDI) inflows toGhana’s agricultural sector to accelerate growth across board.