The impact of foreign direct investment on economic growth: A comparative study of Ghana and Nigeria

The impact of foreign direct investment on economic growth: A comparative study of Ghana and Nigeria

The economic development performance can be used to measure the economic growth of a given country. In economic analysis, a country can attain economic growth through the growth in national income measurement. However, the role of foreign direct investment (FDI) on economic growth continues to be de...

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Main Author: Sani, Ali Ibrahim
Format: Thesis
Language:eng
eng
Published: 2015
Subjects:
HC Economic History and Conditions
Online Access:https://etd.uum.edu.my/4691/1/s815013.pdf
https://etd.uum.edu.my/4691/2/s815013_abstract.pdf
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id my-uum-etd.4691
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institution Universiti Utara Malaysia
collection UUM ETD
language eng
eng
advisor Abdullah, Hussin
topic HC Economic History and Conditions
spellingShingle HC Economic History and Conditions
Sani, Ali Ibrahim
The impact of foreign direct investment on economic growth: A comparative study of Ghana and Nigeria
description The economic development performance can be used to measure the economic growth of a given country. In economic analysis, a country can attain economic growth through the growth in national income measurement. However, the role of foreign direct investment (FDI) on economic growth continues to be debated and tested in the literature on international economics and development economies. This paper extends the previous empirical studies on the issue by providing some evidence from time series data for the period 1971 to 2013 of Ghana and Nigeria. The primary objective of this study is to analyze the impact of FDI on economic growth of Ghana and Nigeria taking trade openness, Gross Fixed Capital Formation and human capital as control variables. To investigate the long run equilibrium relationship, Johansen and Juselius co-integration approach is analyzed, while the speed of adjustment in the short run is analyzed through the use of VECM method. In addition to check for the direction between FDI, T.OPEN, GFCF, HK and economic growth, granger causality test is performed for both Ghana and Nigeria. In Ghana, all the explanatory variables have long run relationship with economic growth. In Nigeria, FDI, GFCF and HK have long run relationship with economic growth. However, the VECM results in Ghana reveal that only T.OPEN and GFCF are statistically significant and therefore have short run relationship with economic growth. Similarly, the coefficient of ECM is statistically significant at 1% level of significance. Thus, 23.3% of the adjustment is achieved due to the correction of the adjustment speed in a year. In Nigeria, the coefficient of ECM is statistically significant at 1% level of significance. Thus, 10.8% of the adjustment is achieved due to the correction of the adjustment speed in a year. To this effect, Ghana‟s correction of the speed of adjustment in a year moves faster than that of Nigeria.
format Thesis
qualification_name masters
qualification_level Master's degree
author Sani, Ali Ibrahim
author_facet Sani, Ali Ibrahim
author_sort Sani, Ali Ibrahim
title The impact of foreign direct investment on economic growth: A comparative study of Ghana and Nigeria
title_short The impact of foreign direct investment on economic growth: A comparative study of Ghana and Nigeria
title_full The impact of foreign direct investment on economic growth: A comparative study of Ghana and Nigeria
title_fullStr The impact of foreign direct investment on economic growth: A comparative study of Ghana and Nigeria
title_full_unstemmed The impact of foreign direct investment on economic growth: A comparative study of Ghana and Nigeria
title_sort impact of foreign direct investment on economic growth: a comparative study of ghana and nigeria
granting_institution Universiti Utara Malaysia
granting_department Othman Yeop Abdullah Graduate School of Business
publishDate 2015
url https://etd.uum.edu.my/4691/1/s815013.pdf
https://etd.uum.edu.my/4691/2/s815013_abstract.pdf
_version_ 1747827781931106304
spelling my-uum-etd.46912021-04-05T01:15:48Z The impact of foreign direct investment on economic growth: A comparative study of Ghana and Nigeria 2015 Sani, Ali Ibrahim Abdullah, Hussin Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HC Economic History and Conditions The economic development performance can be used to measure the economic growth of a given country. In economic analysis, a country can attain economic growth through the growth in national income measurement. However, the role of foreign direct investment (FDI) on economic growth continues to be debated and tested in the literature on international economics and development economies. This paper extends the previous empirical studies on the issue by providing some evidence from time series data for the period 1971 to 2013 of Ghana and Nigeria. The primary objective of this study is to analyze the impact of FDI on economic growth of Ghana and Nigeria taking trade openness, Gross Fixed Capital Formation and human capital as control variables. To investigate the long run equilibrium relationship, Johansen and Juselius co-integration approach is analyzed, while the speed of adjustment in the short run is analyzed through the use of VECM method. In addition to check for the direction between FDI, T.OPEN, GFCF, HK and economic growth, granger causality test is performed for both Ghana and Nigeria. In Ghana, all the explanatory variables have long run relationship with economic growth. In Nigeria, FDI, GFCF and HK have long run relationship with economic growth. However, the VECM results in Ghana reveal that only T.OPEN and GFCF are statistically significant and therefore have short run relationship with economic growth. Similarly, the coefficient of ECM is statistically significant at 1% level of significance. Thus, 23.3% of the adjustment is achieved due to the correction of the adjustment speed in a year. In Nigeria, the coefficient of ECM is statistically significant at 1% level of significance. Thus, 10.8% of the adjustment is achieved due to the correction of the adjustment speed in a year. To this effect, Ghana‟s correction of the speed of adjustment in a year moves faster than that of Nigeria. 2015 Thesis https://etd.uum.edu.my/4691/ https://etd.uum.edu.my/4691/1/s815013.pdf text eng public https://etd.uum.edu.my/4691/2/s815013_abstract.pdf text eng public masters masters Universiti Utara Malaysia Abbas, Q., Akbar, S., Nasir, A. S., Ullah, H. A. & Naseem, M. A. (2011). Impact of foreign direct investment on gross domestic product. Global Journal of Management and Business Research, 11(8), 35-40. Abdulai, I. (2005). Sectoral analysis of foreign direct investment in Ghana, Working Paper, Bank of Ghana. Adams, S. (2009). 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