Antecedents and short-run causal relationship between foreign direct investment and infrastructure development in Ghana

Sikanery Ibrahim, Kingsley Opoku Appiah and Stephen Zamore

International Journal of Financial Services Management, 2018, vol. 9, issue 2, 119-139

Abstract: This paper examines the antecedents and short-run causal relationships between Foreign Direct Investment (FDI) and infrastructure development in Ghana. Using time series data spanning 1966-2015, we find that that FDI net inflow positively influences electricity consumption in Ghana; however, electricity consumption does not Granger-cause FDI net inflows. The results further indicate that the electricity consumption shocks contribute 100% of the variance in the one-period-ahead forecast error for electricity consumption growth. An important implication of the findings is that, governments need to liberalise FDI policies for investments by multinational corporations since FDI contributes to infrastructure development.

Keywords: GDP growth; openness; electricity consumption; FDI inflows; Granger-causality; cointegration; vector auto-regression. (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijfsmg:v:9:y:2018:i:2:p:119-139

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