Foreign Direct Investment in Ghana: The Role of Infrastructural Development and Natural Resources

Abstract

This paper examines the role of infrastructural development and natural resources on FDI inflows in Ghana. We examine the empirical relations using the Prais-Winsten regression estimation procedure which is meant to overcome autocorrelation and heteroscedasticity in the error terms in the model, often for regressions applied to series. The data was obtained from World Development Indicators (WDI) spanning from 1975 to 2014. Our findings suggest that infrastructural development and natural resources are drivers of FDI inflows in Ghana. The other variables that significantly influence FDI inflows in Ghana include the lending interest rate, market size and GDP growth rate. The policy implications of this study is that, while Ghana seeks to expand its infrastructure and natural resources to enhance FDI inflows and economic growth, this must be done in tandem with creating an enabling environment to ensure macroeconomic stability.

Energy access and foreign direct investment in an emerging market: the Ghanaian perspective

“…The main independent variable is energy access (ENEAC). However, the study controlled for inflation rate, GDP growth rate, market size, trade openness, exchange rate, infrastructure and real interest rate and natural resources; which according to the literature are drivers of FDI (Anarfo et al , 2017; Ang, 2008; Azam, 2010; Abu Bakar et al , 2012; Awan et al , 2011).…”

Revisiting the Nexus of FDI-Led Growth Hypothesis and Economic Development in Rwanda: a Johansen-ARDL Approach to Cointegration

“…Therefore, we encourage the authorities to implement policies that would encourage exports such as elimination of export tariffs, subsidies for domestic exporters, easy licensing procedures, and increase of tariffs on imports of products that are produced locally. Akinboade et al ( 2006 ), Anarfo et al ( 2017 ) and Asamoah et al ( 2016 ) are on the FDI impact across sub-Saharan Africa; Tang et al ( 2019 ) on trade openness and economic development using Mauritius as a case study; Corden ( 1990 ), and Faeth ( 2009 ) are on the theory of international trade and determinants of FDI respectively. ; Hassouneh ( 2019 ) and Ito et al ( 2012 ), Kohler ( 2010 ) are on the spillover benefits or a lack of benefits from the international trade through FDI.…”

“…In the case of Rwanda, a relative political stability after the genocide, reliable economic policies, stable exchange rate, and increase in population are key attractive of FDI inflows. Recently, researchers such as Akinboade et al ( 2006 ), Asamoah et al ( 2016 ), Anarfo et al ( 2017 ), Sunde ( 2017 ), Joshua ( 2019 ), Olorogun et al ( 2020 ) and Olorogun ( 2021 ) explored the connectedness between FDI and economic expansion in South Africa, Nigeria, and Ghana respectively. Their results affirmed FDI as a driving force for economic development particularly Joshua ( 2019 ) found a long-run relationship between FDI and economic expansion.…”

The Role of Property Rights in the Relationship between Capital Flows and Economic Growth in SSA: Do Natural Resources Endowment and Country Income Level Matter?

“…In addition to these mixed views, a foray into the literature on the determinants of foreign capital inflows in SSA countries seems to suggest that the quality of institutions, endowment in natural resources, and the level of development or the income level of the host country are important determinants to attract foreign investments (e.g., Anarfo et al ., ; Asiedu and Lien, ; Malikane and Chitambara, ). But unlike natural resource‐rich countries, those less gifted in natural resources need more quality institutions to attract more foreign capital (Asiedu, ).…”