Empirical literature on the impact of FDI on economic growth has been mixed. However some researchers are of the opinion that the inconclusiveness could be attributed to how FDI affects the various sectors of the Economy and not Growth as a whole. Therefore given that governments of developing economies including Ghana have been putting in place measures in order to attract FDI to stimulate economic growth, this study investigated the impact of FDI on economic growth and service sector value additions in Ghana. By employing the Johansen Cointegration technique, the study revealed FDI to have a positive significant impact on economic growth both in the long-run and short run and rather only a positive significant impact on the service sector in the short run.
Addison, T., and A. Heshmati (2003). The New Global Determinants of FDI Flows to Developing Countries: The Importance of ICT and Democratization. WIDER Discussion Paper No.2003/45. Helsinki: UNU-WIDER.
Alfaro, L., (2003). Foreign Direct Investment and Growth: Does the Sector Matter? Harvard University, Harvard Business School, Working Paper.
Antwi, S., Mills, E.F.E.A., Mills, G.A., and Zhao, X. (2013). Impact of foreign direct investment on economic growth: Empirical evidence from Ghana. International Journal of Academic Research in Accounting, Finance and Management Sciences Vol. 3, No.1, January 2013, pp. 18–25.
Balasubramanyam, V. N., Salisu, M., & Sapsford, D. (1999). Foreign Direct Investment as an Engine of Growth. Journal of International Trade and Economic Development, 8,27-40.
Balasubramanyam, V., Salisu, M., & Spasford D. (1996). Foreign Direct Investment and Growth in EP and IS Countries. Economic Journal, 106, 92-105.
Behname, M. (2012). Foreign direct investment and economic growth: evidence from Southern Asia. Atlantic Review of Economics, 2.
Bende–Nabende, A., Ford, J.L, Santoso, B., & Sen, S. (2003). The interaction between FDI, output and the spillover variables: co-integration and VAR analyses for APEC, 1965-99. Applied Economic Letters, 10(3), 165-172.
Bengoa, M., & Sanchez-Robles, B. (2003). Foreign direct investment, economic freedom and Economic Growth: New Evidence from Latin America. European Journal of Political Economy Vol. 19 (2003) 529–545, Elsevier.
Bhagwati, J. N. (1978). The Theory of Immiserizing Growth: further applications. In International Trade and Money (ed. Michael B. Connolly and Alexander K. Swoboda), Toronto, University of Toronto Press.
Blomstrom, M. (1989). Foreign Investment and Spillovers: A Study of Technology Transfer to Mexico. Routledge, London.
Blomstrom, M., Lipsey, R., and M. Zejan. (1992): What Explains Developing Country Growth? NBER Working Paper, No. 4132.
Borenztein, E., De Gregorio, J. & Lee, J.-W. (1998). How does foreign direct investment affect economic growth. Journal of International Economics, 45, 115-135.
Boyd, J.H., & Smith, B.D. (1992). Intermediation and the Equilibruim Allocation of Investment Capital: Implications for Economic Development. Journal of Monetary Economics, 30: 409-32.
Carkovic, M., & Levine, R. (2002, August 28). Does foreign direct investment accelerate economic growth? University of Minnesota Department of Finance working Paper.
Chen, C., Chang, L., & Zhang, Y. (1995). The role of foreign direct investment in China’s Post-1978 economic development. World Development, 23(4), 691–703.
Chowdhury, A. & Mavrotas, G. (2005). FDI and Growth: A Causal Relationship. UNUWIDER Research Paper No. 2005/25, UNU-WIDER.
Durham, J. B. (2004). Absorptive Capacity and the Effects of Foreign Direct Investment and Equity Foreign Portfolio Investment on Economic Growth. European Economic Review, 48, 285–306.
Engle, R., F., & Granger, C., W., J. (1987). Co-integration and Error Correction: Representation, Estimation, and Testing. Econometrica, 55(2), 251 –27
Frimpong, J. M., & Oteng-Abayie, E. F. (2008). Bivariate Causality Analysis between FDI Inflows and Economic Growth in Ghana. International Research Journal of Finance and Economics 15.
Frimpong, J.M. Eric Fosu, Oteng-Abayie, E.F. (2006). Bivariate Causality Analysis between FDI Inflows and Economic Growth in Ghana. MPRA Paper No. 351 http://mpra.ub.uni-muenchen.de/351/growth: new evidence from Latin America. European Journal of Political Economy, 19,
Ghana Statistical Service (GSS). (2015). Revised 2014 Annual Gross Domestic Product. Accra, Ghana: GSS.
Insah, B. (2013). Foreign Direct Investment Inflows and Economic Growth in Ghana.
International Journal of Economic Practices and Theories, Vol. 3, No. 2, 2013 (April), e-ISSN 2247–7225.
Johansen, S. (1988). Statistical analysis of cointegrating vactors. Journal of Economic Dynamics and Control 12(2-3): 231-254
Johansen, S. (1991). Estimation and Hypothesis Testing for Cointegration Vectors in Gausian Vector Autoregressive Models. Econometrica, 59(6), 1551-1580.
Johansen, S. and Juselius, K. (1990). Maximum likelihood estimation and inference on cointegration with applications to the demand for money. Oxford Bulletin of Economics and Statistics 52(2): 169-210.
Karikari, J. A. (1992). Causality between Direct Foreign Investment and Economic Output in Ghana. Journal of Economic Development 17 (1), 7-17.
Li X., & Liu, X. (2005). Foreign Direct Investment and Economic Growth: An Increasingly Endogenous Relationship. World Development, 33, Issue 3, Pages 393–407.
Lipsey, R. E. (2003). Foreign Direct Investment, Growth, and Competitiveness in Developing Countries. In The Global Competitiveness Report, 2002–2003,ed., Peter K. Cornelius. New York:Oxford University Press.
Makki, S. & Somwaru, A. (2004). Impact of Foreign Direct Investment and Trade on Economic Growth: Evidence from Developing Countries. American Journal of Agricultural Economic, Vol. 86 Issue 3, August, 795-801.
Nair-Reichert, U. & Weinhold, D. (2001). Causality tests for cross-country panels: a new look at FDI and economic growth in developing countries. Oxford Bulletin of Economics and Statistic, Vol. 63, Issue 2, 153-171.
Ozturk, I., & Kalyoncu,H. (2007). Foreign Direct Investment and Growth: An Empiricial Investigation Based on Cross-Country Comparison. Economia Internazionale, 60, 75-82.
pp. 529-45.
Romer, P. (1993). Idea Gaps and Object Gaps in Economic Development. Journal of Monetary Economics, 32, pp. 543-73.
Sakyi, D. (2011). Trade openness, foreign aid and economic growth in post-liberalisation Ghana: An application of ARDL bounds test. Journal of Economics and International Finance, 3 (3): 146- 156.
World Bank. (2001). Global development finance (CD-ROM).
Immurana, M., Yensu, J., Ibrahim, S., & Adam, B. (2015). FDI, Economic Growth and Service Sector Value Additions in Ghana. International Journal of Academic Research in Business and Social Sciences, 5(12). 146-160.
Copyright: © 2015 The Author(s)
Published by Knowledge Words Publications (www.kwpublications.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
