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|Title: ||The effect of official development assistance and foreign direct investment on economic growth in Ghana (1975-2014)|
|Authors: ||Gyamfi, Benjamin Osei|
|Issue Date: ||2-Nov-2016|
|Abstract: ||This study examined the effect of official development assistance and foreign direct investment
on growth in Ghana and analyzed the fiscal response effect of ODA. Specifically, the study
investigated the long run effect of ODA and FDI on economic growth using Johansen
cointegration approach to establish the presence of long run cointegration relationship among the
variables. The fully modified ordinary least squares (FM-OLS) was used to estimate the long run
effect of ODA and FDI on economic growth. Lastly, the seemingly unrelated regression (SUR)
method was used to estimate the fiscal response effect of ODA in Ghana.
Results of the long run analysis showed that there exists statistically significant negative
relationship between ODA and economic growth while a positive but insignificant relationship
was found between FDI and economic growth.
The results of the fiscal response model indicated that public investment spending increases with
increase in official development assistance. Domestic tax revenue was found to be a significant
driver of total public spending, which gives an indication that Ghana is not over-dependent on
ODA inflows. The government of Ghana is seen as focused on tax efforts and the desire to raise
public sector borrowing requirement without depending so much on donor-support funds.
The study therefore suggests implementation of sound monetary policies that aim at effective
control of domestic funds (tax revenue) as well as stabilization policies such as low and stable
inflation rate and stable domestic currency for smooth economic activities in the country since
ODA inflows does not increase economic growth. Attracting efficient-seeking type of FDI is also
recommended for the growth of the Ghanaian economy|
|Description: ||A thesis submitted to The Department of Economics, in partial fulfilment of the requirements for the award of Master of Philosophy Degree in Economics, 2016|
|Appears in Collections:||College of Arts and Social Sciences|
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