Economic Development And Foreign Direct Investment Spillover: A Causality Analysis For Ghana
Stephany Abokzele Adongo
University for Development Studies, Box 1350, Tamale, Ghana
Joseph Kofi Nkuah
Christian Service University College, Box 3110, Kumasi
Abstract
Explosion of growth in FDI over the 2000’s, especially in the developing countries, has inspired a stream of literature focusing on the impact of FDI on the dynamics of growth measured by GDP in the recipient country. This study examines the relationship between economic growth as measured by GDP per capita and foreign direct investment for Ghana, using the methodology of Granger causality and vector auto regression (VAR). Evidence shows that there is a unidirectional Granger causation from foreign direct investment to economic growth. Results further suggest that Ghana’s capacity to progress on economic development will depend on the country’s performance in attracting foreign capital.