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Research Paper | Finance | China | Volume 8 Issue 1, January 2019 | Popularity: 6.8 / 10

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Foreign Direct Investment (FDI) Inflows in Ghana: Sectorial Impact on Economic Growth (GDP)

David Prah

Abstract: Using a multiple regression analysis that includes FDI sector contribution and other macroeconomic variables, this paper explores the impact of FDI on economic growth in Ghana from sector perspective. From the analysis (the pair wise correlation), this studys findings indicate that FDI inflow into the tertiary sector, which involves Export trading, Service, Tourism, Liaison, General trading and Export trading, correlates and for that matter contributes to economic growth more than the secondary and the primary sectors. It is the case that for every unit increases in FDI inflow into the tertiary sector, GDP grows by as large about 85 %. The second highest FDI sector contributor to GDP growth is the secondary sector, which comprises mainly the manufacturing and building & construction. This sector has about 67 % multiplier effect on economic growth. Last but not least, FDI inflows into the primary sector also influence economic growth by about 57 %. Both inflation and interest however has a deleterious impact on economic growth (GDP). As a matter of policy, this study recommends that policymakers and governments should put in much attention and resource in attracting FDI into the tertiary sector as well as reducing inflation and interest rate.

Keywords: FDI, Economic growth, Primary, GDP, Secondary and Tertiary Sector

Edition: Volume 8 Issue 1, January 2019

Pages: 949 - 955

DOI: https://www.doi.org/10.21275/ART20194150

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