Does Causal Relationships Exist between External Trade and Foreign Direct Investment Flow to Agriculture in Ghana?

Djokoto, Justice G.

doi:10.5539/ijbm.v7n2p179

Cited by 16 publications

(17 citation statements)

References 42 publications

(38 reference statements)

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“…Therefore, trade openness and GDP per capita exerts a significant positive effect on FDI inflow into Ghana's economy. This result is in line with the findings of Morisset (2000Morisset ( , 2003, Dah & Khadijah (2010) and Djokoto (2012). The natural logarithm expression of the model implies that the coefficients are elasticities.…”

Section: Long Run Empirical Modelsupporting

confidence: 81%

“…Similarly, a 1 % decrease in inflation will induce a 2.11 % increase in FDI inflow. This concurs with the findings of Morisset (2000Morisset ( , 2003, Dah & Khadijah (2010) and Djokoto (2012). The key variable, GIPC is not statistically distinguishable from zero.…”

Section: Short Run Empirical Modelsupporting

confidence: 80%

“…In investigating the short-run and long-run relationship between external merchandise agricultural trade and FDI inflows into agricultural sector of Ghana, using Toda-Yamamoto augmented Granger Causality test, Djokoto (2012) arrived at the following conclusions: 1. In the short-run, the coefficient for FDI inflows and imports were statistically significant.…”

Section: Empirical Reviewmentioning

confidence: 99%

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The Effect of Investment Promotion on Foreign Direct Investment Inflow into Ghana

Djokoto¹

2012

IBR

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The paper investigated the effect of investment promotion (IP) on foreign direct investment flow (FDI) into Ghana. Cointegration among the variables was established using auto regressive distributed lag (ARDL) models in the presence of a mix of I (0) and I (1) variables. The control variables, inflation and trade openness were statistically significant in the short run. Whilst inflation exerted a negative effect on FDI inflow; trade openness positively induced FDI inflow. GDP per capita and exchange rate did not statistically significantly influence FDI inflow in the short run. In respect of the key variable GIPC, in the short run, there was a positive but statistically insignificant effect on FDI inflow. The estimated long-run ARDL model showed that macroeconomic variables such as inflation, GDP and trade openness determined FDI inflow into Ghana. Notwithstanding the positive relationship between establishment of IP agency (GIPC) and FDI inflow, this relationship was statistically insignificant. Greater efforts at macroeconomic management specifically, promotion of external trade, increasing GDP and reducing inflation holds more promise to attracting FDI into Ghana. GIPC should be maintained to provide a supportive role when the foreign investors arrive in Ghana.

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Section: Long Run Empirical Modelsupporting

confidence: 81%

Section: Short Run Empirical Modelsupporting

confidence: 80%

Section: Empirical Reviewmentioning

confidence: 99%

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The Effect of Investment Promotion on Foreign Direct Investment Inflow into Ghana

Djokoto¹

2012

IBR

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“…The effect was a slight decrease in FDI because of increases in output. In agriculture specific study, Djokoto (2012a) found that in the short-run, the coefficient for FDI inflows and imports were statistically significant. The negative sign pointed to a substitution or replacing relationship between the two variables.…”

Section: Empirical Reviewmentioning

confidence: 96%

“…In the specific case of Ghana, Karikari (1992), Gyapong and Karikari (1999), Osabuohien (2007), Frimpong and Oteng-Abayie (2008), Adenutsi (2008), Sakyi (2011) and Djokoto (2012a) provide pieces of empirical evidence. Karikari (1992) in a Ghana specific study (but not on agriculture) concluded that, for the period, 1961 to 1988, FDI did not Granger-cause economic output.…”

Section: Empirical Reviewmentioning

confidence: 99%

Openness and Agricultural Performance in Ghana

Djokoto¹

2013

Jnl Sci Tech

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The paper examined the relationship between openness and agricultural performance using data covering the period 1995 to 2009. Representing openness as foreign direct investment (FDI) and trade openness, the results showed that there is no long run relationship between FDI and trade openness on one hand and agricultural performance on the other. In the short run, vtrade openness and FDI exerted a statistically significant negative effect on agricultural performance. Though inelastic, the sign of the coefficients showed that increased openness of Ghana's agriculture through trade and FDI do not promote performance of the sector. These results provide evidence for an examination of the type of FDI attracted into the sector. Also, the detrimental effect of trade openness suggests a re-examination of the free trade policy to provide some cushion to sections of the sector to enhance output thereby increasing performance.

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Exporting decision of agricultural firms: The role of foreign direct investment

Kastratović

2023

Agribusiness

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In this study, we examine how foreign direct investment affects agricultural firms' exporting decisions. We investigate this by using a Tobit model of export intensity, estimated on the sample of 104 Serbian agricultural firms observed in the period 2014–2017. In particular, we considered both direct and indirect export effects of foreign direct investment. The results indicate that foreign ownership positively affects firms' export intensity. Furthermore, we find that the effect is conditional on the origin of foreign capital, the strongest effects being associated with capital coming from bordering countries. Finally, the results show that the indirect effects of foreign direct investment on export are mainly negative. The results imply that agricultural firms which are a part of the system of multinational enterprises have lower costs of exporting, due to their reliance on international distribution networks and the information on foreign markets provided by the parent companies. In contrast, the costs of production for the local firms could be increased due to the intensive competition by the foreign affiliates. This means that foreign direct investment has the potential to improve the export performances of host‐country agricultural firms. However, to realize their full potential, a sufficient absorptive capacity of the local firms is required. [EconLit Citations: F21, F23, Q17].

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Does Causal Relationships Exist between External Trade and Foreign Direct Investment Flow to Agriculture in Ghana?

Cited by 16 publications

References 42 publications

The Effect of Investment Promotion on Foreign Direct Investment Inflow into Ghana

The Effect of Investment Promotion on Foreign Direct Investment Inflow into Ghana

Openness and Agricultural Performance in Ghana

Exporting decision of agricultural firms: The role of foreign direct investment

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