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Foreign direct investment, remittances, real exchange rate, imports, and economic growth in Ghana: An ARDL approach

Author

Listed:
  • John Kwaku Mensah Mawutor
  • Ernest Sogah
  • Freeman Gborse Christian
  • Desmond Aboagye
  • Alexander Preko
  • Barbara Deladem Mensah
  • Olivia Nanakua Boateng

Abstract

The main objective of this quantitative study is to ascertain the effect of foreign direct investment, real exchange rate, remittances, and import on economic growth in Ghana. Secondary data on gross domestic product, foreign direct investment, real exchange rate, remittances, import, and gross capital formation from 1980 to 2018 were analyzed. The study employed Autoregressive Distributed Lag for the econometrics analysis. The study found that foreign direct investment, real exchange rate, remittances, import, and gross capital formation cointegrates with economic growth. The main findings are that foreign direct investment, real exchange rate, import, and remittances matter from growth perspective. Remittances have a positive and significant effect on economic growth in Ghana both for the short run and the long run. The study also revealed that foreign direct investment, real exchange rate, and imports have a negative and significant effect on the growth process of Ghana’s economy for both the short run and the long run. The study recommends that the Ministry of Finance, Ghana, financial analysts and other policy makers should undertake steps to reduce imports and attract more remittances inflows to attain long-run economic growth. In addition, the economy must concentrate on viable exchange rate policies such as undervaluation of currency to stimulate sustainable economic growth.

Suggested Citation

  • John Kwaku Mensah Mawutor & Ernest Sogah & Freeman Gborse Christian & Desmond Aboagye & Alexander Preko & Barbara Deladem Mensah & Olivia Nanakua Boateng, 2023. "Foreign direct investment, remittances, real exchange rate, imports, and economic growth in Ghana: An ARDL approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(1), pages 2185343-218, December.
    • Handle: RePEc:taf:oaefxx:v:11:y:2023:i:1:p:2185343
    DOI: 10.1080/23322039.2023.2185343
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    Citations

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    Cited by:

    1. Grace Toyin Adigun & Abiola John Asaleye & Olayinka Omolara Adenikinju & Kehinde Damilola Ilesanmi & Sunday Festus Olasupo & Adedoyin Isola Lawal, 2025. "Remittances and FDI: Drivers of Employment in the Economic Community of West African States," JRFM, MDPI, vol. 18(8), pages 1-17, August.
    2. Hasan, Mohammad Maruf & Li, Lanrui, 2025. "Do supply chain and digitalization Foster China's advancement in green development? An evidence from wavelet quantile regression and wavelet quantile correlation analysis," Energy Economics, Elsevier, vol. 142(C).
    3. Huseyin Guvenoglu, Ahmed Yusuf Sarihan, 2025. "Understanding the Nexus Between Imports, Growth, Export and Foreign Debt Dynamics of an Emerging Market: The Case of Turkiye," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 4, pages 1095-1118, Desember.
    4. Edward Annan & Mensah Marfo & Eleazer Fianko Ofei & Theresa Adusei Peasah Aidoo & De-Graft Johnson Dei & Linda Anane-Donkor & Constance Phyllis Puttick & Eric Hope, 2026. "The influence of exchange rate fluctuations on Import-Export performance in ghana: moderated by hedging strategies," SN Business & Economics, Springer, vol. 6(1), pages 1-37, January.
    5. ANTWI AGYEI Bright & BOADI Joana Ankobea & NUNOO Linda Ofeibea & MENSAH Cornelius Nii Odoi & AMPEDU Raphael & MANG'ATI Frank Peter & BOAKYE-BOATENG Gifty, 2024. "The Influence of Social Media on Consumer Behavior in Sub-Saharan Africa: An Empirical Evidence from Ghana," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(8), pages 3102-3121, August.
    6. David Aboagye Danquah & Emmanuel Mensah & Charles Barnor, 2025. "Optimizing foreign direct investment for sustainable trade balance improvement: the case of a developing economy," SN Business & Economics, Springer, vol. 5(3), pages 1-26, March.
    7. Soumya Chatter & Kanchana Chokethaworn & Chukiat Chaiboonsri, 2025. "Analyzing foreign direct investment inflows to India: evidence from VAR-SVAR models," Indian Economic Review, Springer, vol. 60(1), pages 33-48, June.
    8. E. M. Sandoyan & M. A. Voskanyan & A. G. Galstyan & A. A. Shirov, 2025. "Analysis and Assessment of Channels for Impact of the Russian Economy on the Macroeconomic Environment of Armenia," Studies on Russian Economic Development, Springer, vol. 36(5), pages 733-742, October.
    9. Laweh Nicholas & Agyemang Kwasi Sampene & Gloria Opoku Darkoh & Felicia Fosu, 2025. "The impact of foreign direct investment, official development aid, and corruption on economic growth: empirical evidence from Ghana," SN Business & Economics, Springer, vol. 5(9), pages 1-22, September.
    10. Oscar Chiwira & Tinashe Murindagomo, 2024. "Examining the relationship between remittances and financial development in Zimbabwe," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 13(10), pages 181-188, December.

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