The impact of foreign direct investment on economic growth in Ghana

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Date
2016
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Abstract
The issue of economic growth has become a great concern for many economies. The growth of economies has been attributed to many factors. To contribute to this subject, the study empirically investigated the impact of foreign direct investment (FDI) on economic growth using evidence from Ghana. Using time series data spanning from 1980 to 2012, Autoregressive Distributed Lagged model (ARDL) is employed for the study. The study found that there is a significant positive impact of Foreign Direct Investment (FDI) and Gross Domestic Savings (GDS) on economic growth in both short and long run. The study further shows that, inflation significantly impacts negatively on economic growth in the short run but has insignificant negative impact in the long run. Government consumption expenditure significantly impacts positively on economic growth in the short run but has insignificant positive impact in the long run. The results subsequently show that there is unidirectional causality between FDI and economic growth. That is FDI granger causes economic growth in Ghana. Owing to the significant positive impact of FDI on economic growth revealed by the study, policies that seek to attract FDI inflow into the country should be embarked upon to further enhance economic growth of Ghana.
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A thesis submitted to The Department of Economics in partial fulfilment of the requirement for the award of the degree of Masters of Science in Economics,
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