Foreign Direct Investment, Trade Openness and Economic Growth: Evidence from Ghana - Open Journal of Business and Management

OJBM > Vol.8 No.1, January 2020

Foreign Direct Investment, Trade Openness and Economic Growth: Evidence from Ghana ()

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DOI: 10.4236/ojbm.2020.81003 2,618 Downloads 7,252 Views Citations

Author(s)

Emmanuel Nketiah^1*, Xiang Cai¹, Mavis Adjei¹, Bekoe Bernard Boamah²

Affiliation(s)

¹School of Business, Nanjing University of Information Science & Technology, Nanjing, China.
²Business School, Hohai University, Nanjing, China.

ABSTRACT

This article investigates the relationship among foreign direct investment, trade openness and economic growth in Ghana taking the period of post-liberalization covering 1975-2017. The Augmented Dickey-Fuller (ADF) test for unit root, regression analysis, descriptive analysis, and Pearson correlation was used to investigate the relationships. ADF test for unit root result shows all variables to be integrated of order one, that is they are stationary after the first difference. The study extracted and used secondary data sources derived from the World Development Indicators (WDI) of the World Bank and Bank of Ghana website over the period 1975-2017. The study proxied foreign direct investment, inflation, and trade openness were used as an independent indicator while GDP growth (annual %) was the dependent indicator. Using the Ordinary Least Squares (OLS) estimator, the study revealed that trade openness is the main factor affecting GDP growth (annual %) in Ghana. Also, the study finds that foreign direct investment and Inflation had (﹣, or +) impact but were not statistically significant on GDP growth (annual %). Therefore, the study concludes by recommending robust measures to enhance trade openness in terms of encouraging exports and inflow of FDI through the creation of an enabling and friendly environment to do business for output growth dynamics in Ghana.

KEYWORDS

Foreign Direct Investment, Trade Openness, Economic Growth and Infla-tion

Share and Cite:

Nketiah, E. , Cai, X. , Adjei, M. and Boamah, B. (2020) Foreign Direct Investment, Trade Openness and Economic Growth: Evidence from Ghana. Open Journal of Business and Management, 8, 39-55. doi: 10.4236/ojbm.2020.81003.

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