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Bivariate causality analysis between FDI inflows and economic growth in Ghana

Frimpong, Joseph Magnus and Oteng-Abayie, Eric Fosu (2006): Bivariate causality analysis between FDI inflows and economic growth in Ghana.

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Abstract

The main objective for this paper is to study the causal link between FDI and GDP growth for Ghana for the pre- and post-SAP periods. We also study the direction of causality between the two variables, based on the more robust Toda-Yamamoto (1995) Granger no-causality test which allows the Granger test in an integrated system. Annual time-series data covering the period 1970-2002 was used. The study finds no causality between FDI and growth for the total sample period and the pre-SAP period. FDI however caused GDP growth during the post-SAP period.

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