The main aim of the study was to examine the major determinants of foreign direct investment in Ghana.
The study found that both the long-run and short-run results found statistically significant negative effects of inflation rate, exchange rate and interest rate on FDI in Ghana while gross domestic product, electricity production and telephone usage (TU) had a positive effect on FDI. This article is published under the Creative Commons Attribution (CC BY 4.0) licence.
The study found a cointegrating relationship between FDI and its determinants. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors.
The study recommended that government must create the enabling socio-economic and political environment with appealing features for FDI.
Thesis On Foreign Direct Investment In Ghana
Also, government must showcase the investment potentials of the country to the world through the various technological mediums and Ghana Investment Promotion Center (GIPC) and the Free Zones Board (FZB) are laudable initiatives by government towards attracting FDI.The study employs time series annual data on FDI, GDP per capita, Economic Openness, Exchange Rate, Political rights, Government Consumption Expenditure, Macro Economic Stability, and Natural Resource Endowment and Interest Rate from Ghana over the study period 1980 to 2014.Also openness of the nation’s economy and market, and natural resources, its infrastructure, the size and level of governments expenditure and consumption and also the interest rate regime in the nation were the factors that determines Ghanas FDI.According to Gabriele (2000), African countries increasingly adopt alternative strategies for mobilizing development finance.One notable strategy attempts to attract new inflows of FDI.The factors that determine foreign direct investment (FDI) are important to policy-makers, investors, the banking industry and the public at large.FDI in Ghana has received increased attention in recent times because its relevance in the Ghanaian economy is too critical to gloss over.Second, most African countries realize that debt service is a burden in their attempt to mobilize capital for domestic development projects.Third, excessive debt service burdens severely constrain the capacity of African Governments to provide quality social services (such as health, education and infrastructures) for the citizenry.For example, from 1980–1989 to 1990–1998, FDI to Sub-Saharan Africa (SSA) grew by 59 percent.This compares disproportionately with high increase of 5,200 percent for Europe and Central Asia, 942 percent for East Asia and Pacific, 740 percent for South Asia, 455 percent for Latin America and Caribbean and 672 percent for all developing countries.