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.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Ghana; FDI; seemingly unrelated regression; Granger causality; cointegration
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O49 - Other; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; F - International Economics > F3 - International Finance > F39 - Other

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