Foreign direct investment, quality governance and economic growth in ghana

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The role of quality governance in the globalization process has been recognized as a catalyst for the attraction of foreign capital to boost productivity and international trade for holistic economic development. In general, a country draws more foreign investment the better its institutional framework is. However, there is a limited understanding of how quality governance affects different types of foreign investment and how they do so. The study's main objective is to investigate the impact of FDI on Ghana's economic development. The study uses the ARDL model on a time series of data extending from 2000 to 2020 to accomplish this goal. To find out the existence of a long-run relationship among the variables, I run the Pesaran cointegration test and the finding confirms presence of long run relationship. According to the study, FDI has little long-term and short-term beneficial effects on economic growth. Additionally, the research notes that FDI-induced economic growth in Ghana is typically improved by the quality of governance. In the long run, the results indicate that all the governance quality-induced FDI indicators have significant impacts on GDP except FDI*PS. Whereas FDI*VA, FID*GE, and FDI*RQ significantly enhances economic growth, FDI*CC significantly reduces GDP. Therefore, I recommend Ghana should take a keen interest in the development of the quality of governance or institutions to facilitate the efficient utilization of the inflow of funds from foreign direct investment to increase the nation's economic growth.
This thesis is submitted to the kwame nkrumah university of science and technology, kumasi in partial fulfillment of the requirement for the award of mba finance