The impact of foreign direct investment, official development aid, and corruption on economic growth: empirical evidence from Ghana

Laweh Nicholas (), Agyemang Kwasi Sampene (), Gloria Opoku Darkoh () and Felicia Fosu ()
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Laweh Nicholas: Eastern Illinois University
Agyemang Kwasi Sampene: Jiangsu University
Gloria Opoku Darkoh: Eastern Illinois University
Felicia Fosu: University of Education Winneba

SN Business & Economics, 2025, vol. 5, issue 9, 1-22

Abstract: Abstract Ghana’s economic trajectory over the past two decades has been shaped by the interplay of external financing, governance challenges, and labour market dynamics, yet the joint effects of foreign direct investment (FDI), official development aid (ODA), corruption, and unemployment on long-run growth remain underexplored. To address this gap, annual data from 2002 to 2021 were obtained from the World Development Indicators and analyzed using Fully Modified Ordinary Least Squares (FMOLS) and Dynamic OLS (DOLS) estimators to account for endogeneity and serial correlation. The results reveal that both FDI and ODA exert positive, statistically significant influences on GDP growth, whereas higher unemployment rates and greater corruption levels each impose significant drags on economic performance. These findings highlight the necessity of creating an enabling environment for foreign investment, refining aid program design, and implementing rigorous anti-corruption and job-creation strategies. By demonstrating that development outcomes hinge not merely on the presence of aid or investment but on the quality of governance and program design, this study offers actionable insights for policymakers seeking to foster sustainable growth in Ghana and comparable emerging economies.

Keywords: Foreign aid; Economic growth; Developing countries; Unemployment; Corruption (search for similar items in EconPapers)
JEL-codes: E0 E7 O11 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43546-025-00905-9

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