TITLE:
Foreign Direct Investment, Trade Openness and Economic Growth: Evidence from Ghana
AUTHORS:
Emmanuel Nketiah, Xiang Cai, Mavis Adjei, Bekoe Bernard Boamah
KEYWORDS:
Foreign Direct Investment, Trade Openness, Economic Growth and Infla-tion
JOURNAL NAME:
Open Journal of Business and Management,
Vol.8 No.1,
November
28,
2019
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.