Challenges that Obstruct Ghana’s Ability to Attract Foreign Direct Investment (FDI)
DOI:
https://doi.org/10.58932/MULE0005Keywords:
Ghana, Challenges, Foreign Direct Investment, FDIAbstract
Research has been conducted on the accounts of Foreign Direct Investment. Most of these researchers used generic variables and this did not lead them in analyzing the county-specific problems. The generic findings of most researchers about FDI are not a good benchmark for interpreting Foreign Direct Investment in a particular country since continents differ so as the countries. This study examines the following elements whether they are challenges facing Ghana in attracting Foreign Direct Investment and these elements are education, taxation policies, political and frequent change of government, infrastructural facilities, inflation, and public debt. However, this study seeks to specifically examine the challenges that impede Ghana’s ability in attracting foreign direct investment and also examine the major areas foreign direct investment is aimed at to curb the challenges or hindrances to improve the economy of Ghana.
Foreign direct investment in Africa has been on the rise progressively over the past years and specifically for Ghana hitting a figure of $47.73 million, ranking 3rd in Africa and 1st in central and western Africa. Evidence depicts that foreign direct investment together with production of labor and natural resources brings about advancement or improvement in these targeted areas; technology, acquisition and transfer of knowledge, employment, capital for investment and financial resilience. It is manifested all over the world that foreign investments aids in development of economies and is seen as a strong inducement for socio-economic improvements and if not focused on will no doubts bring about serious challenges faced by the economy of Ghana.
On the side of the examined elements, the study found that each element plays vital role in obstructing Ghana’s ability in attracting FDI. Out of the six elements the study found that education, and political and frequent change of government are catalyst in attracting Foreign Direct Investment in Ghana while taxation policies, infrastructural facilities, inflation, and public debt are actually the challenges that impedes Ghana’s ability in attracting Foreign Direct Investment in Ghana.
Keywords：FDI, Ghana, Employment, education, taxation policies, political and frequent change of government, infrastructural facilities, inflation, and public debt.
References
Lund M. T. Foreign direct investment: catalyst of economic growth? PhD Thesis, the University of Utah, United States. (2010).
Alfaro, L., Chanda, A., Kalemli-Ozcan, S. and Sayek, S. How does foreign direct investment promote economic growth? Exploring the effects of financial markets on linkages [J]. Journal of Development Economics, Vol. 91 No. 2, pp. 242-256. (2010)
Blomström, Magnus, Ari Kokko, and Jean-Louis Mucchielli. "The economics of foreign direct investment incentives." Foreign direct investment in the real and financial sector of industrial countries. Springer, Berlin, Heidelberg, 2003. 37-60.
Bruno, Randolph Luca, and Nauro F. Campos. "Reexamining the conditional effect of foreign direct investment." Discussion Papers 7458, Institute for the Study of Labour (IZA),Germany. (2013).
Romer, Paul M. "Increasing returns and long-run growth." Journal of political economy 94.5 (1986): 1002-1037.
Zhang, K. “Does foreign direct investment promote growth? Evidence from East Asia and Latin America” Contemporary Economic Policy, Vol. 19 No. 2, pp.175-185, (2001).
Görg, H. E. and Strobl, E. “Footloose multinationals? The Manchester School, Vol.71, pp. 1-19, (2003).
Haskel, Jonathan E., Sonia C. Pereira, and Matthew J. Slaughter. "Does inward foreign direct investment boost the productivity of domestic firms?." The review of economics and statistics 89.3 (2007): 482-496.
Eaton, J. and Kortum, S. “Trade in ideas: productivity and patenting in the OECD” Journal of International Economics, Vol. 40 No. 3/4, pp. 251–278, (1996).
Frimpong, Samuel Kwadwo. "Research on relationship between China and Ghana: Trade and foreign direct investment (FDI)." Journal of Economics and Sustainable Development 3.7 (2012): 51-61.
Tee, Evans, Frank Larbi, and Rebbeca Johnson. "The Effect of Foreign Direct Investment (FDI) on the Ghanaian Economic Growth." Journal of Business and Economic Development 2.5 (2017): 240-246.
OECD Benchmark definition of foreign direct investment. In OECD, OECD Benchmark Definition of Foreign Direct Investment (4th ed., pp. 62-64). Paris: OECD, 2008.
Djokoto, Justice G., and Gloria C. Dzeha. "Determinants and Effects of Foreign Direct Investment in Ghana–Review of Literature”." Developing Country Studies 2.11/12 (2012): 25-35.
Yeboah, Evans, and Lucy Anning. "Investment in Ghana: An overview of FDI components and the impact on employment creation in the Ghanaian economy." Economics, Management and Sustainability 5.1 (2020): 6-16.
Fonds monétaire international, et al. Balance of payments manual. International Monetary Fund, 1993.
Insah, Baba. "Foreign direct investment inflows and economic growth in Ghana." International Journal of Economic Practices and Theories 3.2 (2013): 115-121.
Dr. John, A. What has been the impact of foreign direct investment in Ghana?. IEA Policy Analysis. The Institute of Economic Affairs, 1(9), 2005.
Acheampong, Prince, and Victor Osei. "Foreign direct investment (fdi) inflows into Ghana: should the focus be on infrastructure or natural resources? Short-run and long-run analyses." International Journal of Financial Research 5.1 (2014): 42.
Romer, Paul M. "Increasing returns and long-run growth." Journal of political economy 94.5 (1986): 1002-1037.
Kraus, J. (1991). The struggle over structural adjustment in Ghana. Africa Today, 38(4), 19-37.
Ghana. PNDC Budget Statement and Economic Policy for 1991, January 9. 1991. p 4
Asiamah, M., Ofori, D., & Afful, J. (2019). Analysis of the determinants of foreign direct investment in Ghana. Journal of Asian Business and Economic Studies.
Vijayakumar, N., Sridharan, P. and Roa, K.C. (2010), “Determinants of FDI in BRICS countries: a panel analysis”, Journal of Business Science and Applied Management, Vol. 5 No. 3, pp. 34-36.
Amoako, D. (2013). Challenges of Foreign Direct Investment in Ghana, Examining Empirical Evidences in Vodafone Ghana. Challenges of Foreign Direct Investment in Ghana, Examining Empirical Evidences in Vodafone Ghana (May 8, 2013).
Bendi-Nabendi, A. (2002). Globalization, FDI, Regional Integration & Sustainable Development: Theory, Evidence and Theory, Ashgate Publishing Ltd.
Anarfo, E. B., Agoba, A. M., & Abebreseh, R. (2017). Foreign direct investment in Ghana: The role of infrastructural development and natural resources. African Development Review, 29(4), 575-588.
Yakubu, I. N., & Mikhail, A. A. (2019). Determinants of foreign direct investment in Ghana: a sectoral analysis.
Busse, M., & Hefeker, C. (2007). Political risk, institutions and foreign direct investment. European journal of political economy, 23(2), 397-415.
Onafowora, O., & Owoye, O. (2019). Public debt, foreign direct investment and economic growth dynamics. International Journal of Emerging Markets.
Alamá-Sabater, L., Heid, B., Jiménez-Fernández, E., & Márquez-Ramos, L. (2016). What drives interdependence of FDI among host countries? The role of geographic proximity and similarity in public debt. Economic Modelling, 58, 466-474.
Hailu, Z. A. (2010). Demand side factors affecting the inflow of foreign direct investment to African countries: does capital market matter?. International Journal of Business and Management, 5(5), 104.
Chakrabarti, A. (2001) The Determinants of Foreign Direct Investment: Sensitivity Analyses of Cross-Country Regressions, KYKLOS, 54, 89-114.
Alfaro, L., and A. Rodriguez-Clare (2004), "Multinationals and Linkages: An Empirical Investigation", Economia, Spring.
Aghion, P., and Howitt, P. (1992). A Model of Growth through Creative Destruction. Econometrica, 60(2), 323-251.
Aghion, P., and Howitt, P. (2009). The Economics of Growth. London: MIT Press.
Dias, R., Mattos, C. R., and Balestieri, J. A. P. (2006). The Limits of Human Development and the Use of Energy and Natural Resources. Energy Policy, 34(9), 1026-1031.
Dollar, D., and Kraay, A. (2004). Trade, Growth, and Poverty. The Economic Journal, 114(493), 22-49.
Deininger, K., and Squire, L. (1996). A New Data Set Measuring Income Inequality. The World Bank Economic Review, 10(3), 565-591.
Frankel, M. (1962). The Production Function in Allocation of Growth: A Synthesis. American Economic Review, 52(5), 995-1022.
Gorg, H., and Greenaway, D. (2004). Much Ado Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment. The World Bank Research Observer, 19(2), 171-197.
Hoff, K., and Stiglitz, J. E. (2001). Modern Economic Theory and Development. In G. Meier, and J. E. Stiglitz (Ed.), Frontiers of Development Economics: The Future in Perspective. New York: Oxford University Press.
OECD (2002). Foreign Direct Investment for Development; Maximizing Benefits, Minimizing Costs. Paris.
Reiter, S. L., and Steensma, H.K. (2010). Human Development and Foreign Direct Investment in Developing Countries: The Influence of FDI Policy and Corruption. World Development, 38(12), 1678-1691.
Romer, P. M. (1990). Endogenous Technological Change. Journal of Political Economy, 98(5), 71-102.
Stiglitz, J. E. (2006). Making Globalization Work. New York: W.W. Norton and Company.
Solow, R. M. (1956). A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 70(1), 65-94.
https://www.macrotrends.net/countries/GHA/ghana/literacy-rate'>Ghana Literacy Rate 2000-2021. www.macrotrends.net. Retrieved 2021-05-02.
Agrawal, A., and A. Oettl (2008), "International Labor Mobility and Knowledge Flow Externalities", Journal of International Business Studies, 39: 1242-60.
