Determinants of Foreign Direct Investments: The Case of Ghana

Author(s)

Godfred Anim , Prof. Jiang Xinying ,

Download Full PDF Pages: 157-166 | Views: 545 | Downloads: 166 | DOI: 10.5281/zenodo.5036313

Volume 9 - November 2020 (11)

Abstract

the study assessed the determinants of foreign direct investment inflows into Ghana. It used data sourced from World Development Indicators from 1996 to 2018 in time series. The study employed OLS and FMOLS for its statistical analysis. In essence, it concluded that research and development negatively and significantly influence foreign direct investment inflows while human development and institutional quality positively and significantly influence foreign direct investment inflows. On the other hand, economic growth, inflation rate, corporate tax, and unemployment rate have no significant influence on foreign direct investment inflows. The study recommends that policymakers should strengthen and safeguard institutional regulations that would support the private sector to attract more investment to support the growth agenda. Also, human development investment ought to prioritize developing the country's human capital to augment the growth-agenda.

Keywords

Foreign direct investment; Ghana; Ordinary least square; Fully modified ordinary least square; Determinants

References

                     i.            Asiamah, M., Ofori, D., & Afful, J. (2018).  Analysis of the determinants of foreign direct investment in Ghana. Journal of Asian Business and Economic Studies, 26(1), 56-75. DOI 10.1108/JABES-08-2018-0057

      ii.            Business & Financial Times (2020). Editorial: Q2 FDI records increase despite pandemic. Available at:https://thebftonline.com/07/10/2020/editorial-q2-fdi-records-increase-despite-pandemic/. Retrieved on 09/10/2020.

    iii.            Bobenič Hintošová, A., Bruothová, M., Kubíková, Z., & Ručinský R. (2018). Determinants of foreign direct investment inflows: A case of the Visegrad countries. Journal of International Studies, 11(2), 222-235. doi:10.14254/2071-8330.2018/11-2/15

     iv.            Dunning, J. (1981). International Production and the Multinational Enterprise. London: Allen & Unwin.

       v.            Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115(1), 53-74. Available at: https://doi.org/10.1016/s0304-4076(03)00092-7.

     vi.            Janicki, A., & Wunnava, P.V. (2004). Determinants of foreign direct investment: empirical evidence from EU accession candidates. Applied Economics, 36(5), 505-509. doi: https://doi.org/10.1080/00036840410001682214

   vii.            Kaur, M., & Sharma, R. (2013). Determinants of foreign direct investment in India: an empirical analysis.  Decision, 40(1/2), 57-67.

 viii.            Kok, R., & Ersoy, B. (2009), Analyses of FDI determinants in developing countries. International Journal of Social Economics, Vol. 36, pp. 105-123.

     ix.            Levin, A., Lin, C.-F., & Chu, C.-S. J. (2002). Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics, 108(1), 1-24. Available at: https://doi.org/10.1016/s0304-4076(01)00098-7.

       x.            Maddala, G. S., & Wu, S. (1999). A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and statistics, 61(S1), 631-652. Available at: https://doi.org/10.1111/1468-0084.0610s1631.

     xi.            Pedroni, P. (2000). Fully-modified OLS for heterogeneous cointegration panel. Advances in Econometrics, 15, 93–130.

   xii.            Pedroni, P. (2001). Purchasing power parity tests in cointegrated panels. Review of Economics and Statistics, 83, 727–731.

 xiii.            Reenu, J. & Sharma, A.K. (2015). Trends and determinants of foreign direct investment in India: a study of the post-liberalization period. South Asian Journal of Management, 22(3), 96-98.

 xiv.            Saini, N., & Singhania, M. (2017). Determinants of FDI in developed and developing countries: a quantitative analysis using GMM. Journal of Economic Studies, 45(2), 348-382.

   xv.            Trading Economics (2020). Ghana's Capital flow. Available at: https://tradingeconomics.com/ghana/capital-flows.  Retrieved on 09/10/2020.

 xvi.            Vitenu-Sackey, P. A., Barfi, R., & Oppong, S. (2019). Stock Market Capitalization, Foreign Direct Investment and Stock Market Performance: A Comparative Study of Ghana and Nigeria. International Journal of Management Sciences and Business Research, 8(9), 79-90.

xvii.            Vitenu-Sackey, P. A., & Alhassan, N. (2019). How does democracy affect poverty alleviation? Empirical evidence from Africa. International Journal of Management Sciences and Business Research, 8(12), 21-31.

xviii.            World Development Indicators, World Bank (Dataset)

 xix.            Worldwide Governance Indicators, World Bank (Dataset)

   xx.            Xinying, J., Oppong, S., & Vitenu-Sackey, P. A. (2019). The impact of personal remittances, FDI and Exports on economic growth: Evidence from West Africa. European Journal of Business and Management, 11(3), 24-32.

 xxi.            Yushang, K., Baku, K. R., & Vitenu-Sackey, P. A. (2019). Financial development, foreign direct investment and banking sector performance: Evidence from African countries with stock market. International Journal of Management Sciences and Business Research, 8(9), 37-44.

Cite this Article: