IDEAS home Printed from https://ideas.repec.org/p/ags/huiawp/18829.html
   My bibliography  Save this paper

A General Equilibrium Analysis of the Impact of Inward FDI on Ghana: The Role of Complementary Policies

Author

Listed:
  • Arbenser, Lawrence

Abstract

The need for external capital (FDI) inflow to finance the current account deficit of developing countries cannot be over-emphasized. Foreign direct investment takes predominance over other types of capital inflow into developing countries. How would an increase in FDI and a reduction in import tariff levels in isolation affect household welfare and other macroeconomic indicators? How would the concurrent application of the two enhance the expected impact? This paper explores the above questions by using a Computable General Equilibrium (CGE) model for Ghana, implemented in the General Algebraic Modeling System (GAMS) to carry out specific counterfactual simulations. This paper concludes that the primary benefit of an increase in FDI inflow for a developing economy is the increase in current consumption. It also establishes that policies which ensure increase in FDI inflow and reduce tariff levels are complementary policies that enhance household welfare. It also emphasizes that the two policies will have different impact on macroeconomic indicators, inter alia exchange rage, export, import and trade deficit.

Suggested Citation

  • Arbenser, Lawrence, 2004. "A General Equilibrium Analysis of the Impact of Inward FDI on Ghana: The Role of Complementary Policies," Working Paper Series 18829, Humboldt University Berlin, Department of Agricultural Economics.
  • Handle: RePEc:ags:huiawp:18829
    as

    Download full text from publisher

    File URL: http://ageconsearch.umn.edu/record/18829/files/wp040069.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Aitken, Brian & Hanson, Gordon H. & Harrison, Ann E., 1997. "Spillovers, foreign investment, and export behavior," Journal of International Economics, Elsevier, vol. 43(1-2), pages 103-132, August.
    2. Blomstrom, Magnus & Kokko, Ari, 1998. " Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-277, July.
    3. Fosfuri, Andrea & Motta, Massimo & Ronde, Thomas, 2001. "Foreign direct investment and spillovers through workers' mobility," Journal of International Economics, Elsevier, vol. 53(1), pages 205-222, February.
    4. Jaime de MELO & Sherman ROBINSON, 2015. "Product Differentiation And The Treatment Of Foreign Trade In Computable General Equilibrium Models Of Small Economies," World Scientific Book Chapters,in: Modeling Developing Countries' Policies in General Equilibrium, chapter 2, pages 21-41 World Scientific Publishing Co. Pte. Ltd..
    5. Ricardo Hausmann & Eduardo Fernández-Arias, 2000. "Foreign Direct Investment: Good Cholesterol?," IDB Publications (Working Papers) 1319, Inter-American Development Bank.
    6. Blomstrom, Magnus & Kokko, Ari, 1997. "How foreign investment affects host countries," Policy Research Working Paper Series 1745, The World Bank.
    7. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    8. Blomstrom, Magnus, 1986. "Foreign Investment and Productive Efficiency: The Case of Mexico," Journal of Industrial Economics, Wiley Blackwell, vol. 35(1), pages 97-110, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. von Witzke, Harald & Kirschke, Dieter & Lotze-Campen, Hermann & Noleppa, Steffen, 2005. "The Economics of Alternative Strategies for the Reduction of Food-borne Diseases in Developing Countries: The Case of Diarrhea in Rwanda," Working Paper Series 18830, Humboldt University Berlin, Department of Agricultural Economics.
    2. Grethe, Harald, 2004. "Turkey's Accession to the EU: What Will the Common Agricultural Policy Cost?," Working Paper Series 18821, Humboldt University Berlin, Department of Agricultural Economics.
    3. Badri, Balghis & Knuth, Hardine, 2008. "The Engendered Spaces in the Village at the Edge of the Capital: A Case Study of Al Gharaza/Sudan," Working Paper Series 43095, Humboldt University Berlin, Department of Agricultural Economics.
    4. Nolte, Stephan, 2006. "The application of spatial models in the analysis of bilateral trade flows: An alternative to the Armington approach for the world sugar market," Working Paper Series 10288, Humboldt University Berlin, Department of Agricultural Economics.
    5. AfDB AfDB, 2006. "Working Paper 86 - A Review of Ex - ante Poverty Impact Assessments of Macroeconomic Policies in Cameroon and Ghana," Working Paper Series 2220, African Development Bank.
    6. AfDB AfDB, 2006. "Working Paper 86 - A Review of Ex - ante Poverty Impact Assessments of Macroeconomic Policies in Cameroon and Ghana," Working Paper Series 2300, African Development Bank.
    7. Patrick GEORGES & Marcel MERETTE & Yazid DISSOU, "undated". "Liberalizing Foreign Direct Investment Restrictions in Canada: A Multi-Country Computable General Equilibrium Analysis," EcoMod2008 23800043, EcoMod.

    More about this item

    Keywords

    International Relations/Trade;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:huiawp:18829. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/iahubde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.