Foreign direct investment, technological spillover, and total factor productivity growth in Ghana

Ronald Essel

SN Business & Economics, 2023, vol. 3, issue 8, 1-34

Abstract: Abstract This study examined the linkages between foreign direct investment (FDI) and productivity, and also assessed the technological spillover effect from FDI on productivity in Ghana. Using an aggregate/macro (industry-level) panel dataset for 19 industries, spanning 2010–2020, the research investigated the impact of FDI and its associated technological spillover effect on productivity in Ghana, using total factor productivity (TFP) as a measure of productivity. A robust dynamic panel system of generalized method of moment (GMM) which controls for unobserved heterogeneity, heteroskedasticity, simultaneity, reverse causality, and endogeneity was employed for the empirical estimation. Results revealed that whilst technological spillover, tax, and inflation demonstrated negative relationships with TFP; FDI, physical capital stock, human capital, research and development, trade openness, population growth, interest rate, and exchange rate exhibited a positive relationship with TFP. The study findings have a relevant policy, theoretical and managerial implications for the consideration of knowledge seekers such as policymakers, industrial practitioners, corporate managers of transnational corporations (TNCs), development agents, consultants, financiers, as well as knowledge creators such as scholars/researchers in academia.

Keywords: Foreign direct investment (FDI); Ghana; Technological spillover; Total factor productivity (search for similar items in EconPapers)
JEL-codes: A1 C5 M0 M1 M2 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s43546-023-00514-4

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