A Co-Integration Analysis of the Effect of Foreign Direct Investment on Economic Growth

Authors

  • Chen Lizhen  School of Finance and Economics, Jiangsu University, 301 Xuefu Road, Zhenjiang, Jiangsu, P.R. China
  • Stephany Abokzele Adongo  School of Finance and Economics, Jiangsu University, 301 Xuefu Road, Zhenjiang, Jiangsu, P.R. China
  • Hu Xuhua  School of Finance and Economics, Jiangsu University, 301 Xuefu Road, Zhenjiang, Jiangsu, P.R. China
  • Henry Asante Antwi  School of Management, Jiangsu University, 301 Xuefu Road, Zhenjiang, Jiangsu, P.R. China

Keywords:

Abstract

It has been a major drive for successive governments in Ghana to attract more foreign direct investments as a means of generating growth in the economy. The growth of emerging markets has been attributed, in large part, to incoming foreign direct investments. Companies investing abroad can realise higher growth rates and diversify their income, which creates opportunities for investors. Using our augmented Co-Integration model, we note that foreign direct investment on GDP as the major indicator of economic growth in Ghana is significant. The subsequent analysis also shows that it FDI also has significant effect on other major indicators of economic growth such as Current Account Balance, Unemployment Rate, Technology and Innovation Index, Gini Co-Efficient (Inequality), Gender Inequality Index (GII), Urbanisation, Human Development Index, Per Capita Income, Openness to Trade, Carbon Footprint.FDI is thus constituted as equity capital, reinvested earnings and other capital. By establishing the effect impact of country risk on FDI inflows to Ghana, the study provides insight to policy makers in the country to formulate policies that are aimed at making Ghana a good investment destination for foreign investors.

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International Journal of Scientific Research in Science, Engineering and Technology

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Published

2016-12-30

Issue

Volume 2, Issue 6, November-December-2016

Section

Research Articles

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How to Cite

[1]
Chen Lizhen, Stephany Abokzele Adongo, Hu Xuhua, Henry Asante Antwi, " A Co-Integration Analysis of the Effect of Foreign Direct Investment on Economic Growth, International Journal of Scientific Research in Science, Engineering and Technology(IJSRSET), Print ISSN : 2395-1990, Online ISSN : 2394-4099, Volume 2, Issue 6, pp.405-416, November-December-2016.