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Does human capital constrain the impact of foreign direct investment and remittances on economic growth in Ghana?

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  • Frank Wogbe Agbola

Abstract

This article empirically investigates whether human capital constrains the impact of Foreign Direct Investment (FDI) and remittances on economic growth in Ghana. An economic growth model for Ghana is specified and estimated using Fully Modified Ordinary Least Squares (FMOLS) estimator and employing annual data spanning the period 1965 to 2008. Empirical results indicate that FDI and remittances are key determinants of economic growth in Ghana. Results indicate that human capital enhances the impact of FDI and remittances on economic growth. Although both government expenditure and trade openness are growth-enhancing, government expenditure appears to crowd-out private investment. Empirical results also indicate that domestic inflationary pressures, unstable political environment and volatile global economy exert a negative impact on economic growth in Ghana.

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  • Frank Wogbe Agbola, 2013. "Does human capital constrain the impact of foreign direct investment and remittances on economic growth in Ghana?," Applied Economics, Taylor & Francis Journals, vol. 45(19), pages 2853-2862, July.
    • Handle: RePEc:taf:applec:v:45:y:2013:i:19:p:2853-2862
    DOI: 10.1080/00036846.2012.676735
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    1. Henrik Hansen & John Rand, 2006. "On the Causal Links Between FDI and Growth in Developing Countries," The World Economy, Wiley Blackwell, vol. 29(1), pages 21-41, January.
    2. repec:aer:wpaper:165 is not listed on IDEAS
    3. World Bank, 2011. "Migration and Remittances Factbook 2011 : Second Edition," World Bank Publications - Books, The World Bank Group, number 2522.
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    Cited by:

    1. Ademola Onabote & Ojamaliya Abuh & Oduntun Emmanuel & Oluwasegun Eseyin & Victoria Okafor, 2021. "Foreign Direct Investment, Energy Infrastructure and Manufacturing Output in Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 163-169.
    2. Isaac Dadson & Ryuta Ray Kato, 2015. "Remittances and the Brain Drain in Ghana: A Computable General Equilibrium Approach," Working Papers EMS_2015_04, Research Institute, International University of Japan.
    3. Isaac Dadson & Ryuta Ray Kato, 2016. "Remittances and the Redistributive Policy in Ghana: A Computable General Equilibrium Approach," Review of Economics & Finance, Better Advances Press, Canada, vol. 6, pages 28-44, May.
    4. Amponsah, Mary & Agbola, Frank W. & Mahmood, Amir, 2023. "The relationship between poverty, income inequality and inclusive growth in Sub-Saharan Africa," Economic Modelling, Elsevier, vol. 126(C).
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    6. Fisayo Fagbemi & Tolulope T. Osinubi, 2020. "Leveraging Foreign Direct Investment for Sustainability: An Approach to Sustainable Human Development in Nigeria," Working Papers 20/090, European Xtramile Centre of African Studies (EXCAS).
    7. Milin Ioana Anda & Bușan Gabriela & Ecobici Nicolae & Abdul Rehman, 2023. "Economic Growth Drivers in Romania: Evidence from a NARDL Analysis," Sustainability, MDPI, vol. 15(7), pages 1-19, March.
    8. Friday Osemenshan Anetor & Olusegun Vincent, . "Do human capital and institutional environment constrain the impact of foreign direct investment inflows on economic growth in Africa?," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    9. Jack Pegram & Gioia Falcone & Athanasios Kolios, 2019. "Quantitative and Qualitative Assessment of Job Role Localization in the Oil and Gas Industry: Global Experiences and National Differences," Energies, MDPI, vol. 12(6), pages 1-22, March.
    10. Shreya Pal, 2024. "The International Capital Flows and Domestic Savings–domestic Investment Nexus: A Comparative Evidence Between Heterogeneous Developing Regions," South Asian Journal of Macroeconomics and Public Finance, , vol. 13(2), pages 169-212, December.
    11. Yinka Sabuur Hammed & Omosola Arawomo, 2022. "FDI, Economic Growth and Environmental Quality in the Nigerian Economy: New Evidences from System GMM," Journal of Economics and Behavioral Studies, AMH International, vol. 14(1), pages 50-58.
    12. Bouzayani Rajab & Abida Zouheir, 2024. "Complementarity Relationship Between Foreign Direct Investment, Human Capital Threshold and Economic Growth: State of the 15 Least Developed African Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 7216-7236, June.
    13. Chika Priscilla Imoagwu & Uche Collins Nwogwugwu & Uju Regina Ezenekwe & Chris Ulua Kalu, 2023. "Food Production and Life Expectancy: Evidence from the Economic Community of West African States (ECOWAS)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(9), pages 2099-2112, September.
    14. Shimaa Elkomy & Hilary Ingham & Robert Read, 2015. "Economic, Institutional & Political Determinants of FDI Growth Effects in Emerging & Developing Countries," Working Papers 95922154, Lancaster University Management School, Economics Department.
    15. Shreya Pal & Indranil Bandyopadhyay, 2022. "Impact of financial inclusion on economic growth, financial development, financial efficiency, financial stability, and profitability: an international evidence," SN Business & Economics, Springer, vol. 2(9), pages 1-29, September.
    16. Kheng, Veasna & Pan, Lei, 2021. "The evolution of Cambodian current account: A dynamic general equilibrium analysis," MPRA Paper 108489, University Library of Munich, Germany.
    17. Sun, Chuanwang & Khan, Anwar & Xue, Juntao & Huang, Xiaoyong, 2024. "Are digital economy and financial structure driving renewable energy technology innovations: A major eight countries perspective," Applied Energy, Elsevier, vol. 362(C).
    18. Veasna Kheng & Sizhong Sun & Sajid Anwar, 2017. "Foreign direct investment and human capital in developing countries: a panel data approach," Economic Change and Restructuring, Springer, vol. 50(4), pages 341-365, November.
    19. Muhammad Imran & Abdul Rashid, 2023. "The Empirical Determinants of Foreign Direct Investment Episodes," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 15(3), pages 409-435, September.
    20. Isaac Dadson & Ryuta Ray Kato, 2015. "Remittances and the Redistributive Tax Policy in Ghana: A Computable General Equilibrium Approach," Working Papers EMS_2015_05, Research Institute, International University of Japan.
    21. Boachie, Micheal Kofi, 2015. "Effect of health on economic growth in Ghana:An application of ARDL bounds test to cointegration," MPRA Paper 67201, University Library of Munich, Germany.
    22. Yeboah, Samuel, 2023. "Unlocking the Global Chessboard: FDI Policies and their Impact on Entrepreneurial Ecosystems," MPRA Paper 118473, University Library of Munich, Germany, revised 28 Aug 2023.

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