Munich Personal RePEc Archive

Does Foreign Direct Investment really affect Ghana’s Economic Growth?

Bondzie, Eric Amoo and Fosu, Gabriel Obed and Asare Okyere, Gabriel (2014): Does Foreign Direct Investment really affect Ghana’s Economic Growth? Published in: International Journal of Academic Research in Economics and Management Sciences , Vol. 3, No. 1 (January 2014): pp. 148-158.

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Abstract

In this paper, we investigate the linkage between FDI and economic growth using macro econometric model in the Ghanaian context. Structural shocks in an SVAR model were used to identify the contemporaneous and short run relationships effects of these variables. The AB model restriction approach was used for the Identification and was compared to the Cholesky decomposition. We showed that, there exit a contemporaneous short run positive effects of FDI inflows on GDP growth but as the time horizon expands these effects tend to converge to the equilibrium, however FDI’s deteriorate domestic investment.

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