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Does Foreign Direct Investment really affect Ghana’s Economic Growth?

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  • Bondzie, Eric Amoo
  • Fosu, Gabriel Obed
  • Asare Okyere, Gabriel

Abstract

In this paper, we investigate the linkage between FDI and economic growth using macro econometric model in the Ghanaian context. Structural shocks in an SVAR model were used to identify the contemporaneous and short run relationships effects of these variables. The AB model restriction approach was used for the Identification and was compared to the Cholesky decomposition. We showed that, there exit a contemporaneous short run positive effects of FDI inflows on GDP growth but as the time horizon expands these effects tend to converge to the equilibrium, however FDI’s deteriorate domestic investment.

Suggested Citation

  • Bondzie, Eric Amoo & Fosu, Gabriel Obed & Asare Okyere, Gabriel, 2014. "Does Foreign Direct Investment really affect Ghana’s Economic Growth?," MPRA Paper 69237, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69237
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    File URL: https://mpra.ub.uni-muenchen.de/69237/1/MPRA_paper_69237.pdf
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    References listed on IDEAS

    as
    1. Sharma, Kishor, 2000. "Export Growth In India: Has FDI Played a Role?," Center Discussion Papers 28372, Yale University, Economic Growth Center.
    2. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    3. Chakrabarti, Avik, 2001. "The Determinants of Foreign Direct Investment: Sensitivity Analyses of Cross-Country Regressions," Kyklos, Wiley Blackwell, vol. 54(1), pages 89-113.
    4. Alfaro, Laura & Chanda, Areendam & Kalemli-Ozcan, Sebnem & Sayek, Selin, 2004. "FDI and economic growth: the role of local financial markets," Journal of International Economics, Elsevier, vol. 64(1), pages 89-112, October.
    5. Samuel Antwi & Ebenezer Fiifi Emire Atta Mills & Gifty Atta Mills & Xicang Zhao, 2013. "Impact of Foreign Direct Investment on Economic Growth: Empirical Evidence from Ghana," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(1), pages 18-25, January.
    6. Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development.
    7. Samuel Antwi & Xicang Zhao, 2013. "Impact of Foreign Direct Investment and Economic Growth in Ghana: A Cointegration Analysis," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 3(1), pages 64-74, January.
    8. Sharma, K., 2000. "Export Growth in India: Has FDI Played a Role?," Papers 816, Yale - Economic Growth Center.
    9. Samuel Antwi & Xicang Zhao, 2013. "Impact of Foreign Direct Investment and Economic Growth in Ghana: A Cointegration Analysis," International Journal of Business and Social Research, LAR Center Press, vol. 3(1), pages 64-74, January.
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    Cited by:

    1. Joseph Emmanuel Tetteh & Anthony Amoah & Deodat Emilson Adenutsi, 2019. "Drivers of Stock Market Returns in Sub-Saharan Africa: Evidence from Selected Countries," Asian Development Policy Review, Asian Economic and Social Society, vol. 7(3), pages 191-208, September.

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    More about this item

    Keywords

    Foreign Direct Investment; Gross Domestic Product; Impulses Responses; Structural VAR.;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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