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Please use this identifier to cite or link to this item: http://hdl.handle.net/123456789/9872

Title: The effect of official development assistance and foreign direct investment on economic growth in Ghana (1975-2014)
Authors: Gyamfi, Benjamin Osei
Issue Date: 16-Jan-2017
Abstract: This study examined the effect of official development assistance and foreign direct investment on growth in Ghana and analyzed the fiscal response effect of ODA. Specifically, the study investigated the long run effect of ODA and FDI on economic growth using Johansen cointegration approach to establish the presence of long run cointegration relationship among the variables. The fully modified ordinary least squares (FM-OLS) was used to estimate the long run effect of ODA and FDI on economic growth. Lastly, the seemingly unrelated regression (SUR) method was used to estimate the fiscal response effect of ODA in Ghana. Results of the long run analysis showed that there exists statistically significant negative relationship between ODA and economic growth while a positive but insignificant relationship was found between FDI and economic growth. The results of the fiscal response model indicated that public investment spending increases with increase in official development assistance. Domestic tax revenue was found to be a significant driver of total public spending, which gives an indication that Ghana is not over-dependent on ODA inflows. The government of Ghana is seen as focused on tax efforts and the desire to raise public sector borrowing requirement without depending so much on donor-support funds. The study therefore suggests implementation of sound monetary policies that aim at effective control of domestic funds (tax revenue) as well as stabilization policies such as low and stable inflation rate and stable domestic currency for smooth economic activities in the country since ODA inflows does not increase economic growth. Attracting efficient-seeking type of FDI is also recommended for the growth of the Ghanaian economy.
Description: A thesis submitted to the School of Graduate Studies, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the award of the Degree of Master of Philosophy in Economics, 2016
URI: http://hdl.handle.net/123456789/9872
Appears in Collections:College of Arts and Social Sciences

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