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The dynamic interactions of economic growth, foreign direct investment, and exchange rates in Ghana

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  • Benedict Arthur
  • Bismark Addai

Abstract

This study examines the dynamic interactions among foreign direct investment (FDI), economic growth (GDPG), and real exchange rate (RER) in Ghana using time series data over the period 1996 to 2018, and two econometric models: a trivariate VAR and the ARDL bound test. The results reveal that no long-run relationship exists among the variables. However, a positive causal shock flows from both FDI and RER to GDPG. Also, the response of FDI to the shock in RER is positive. Therefore, it is recommended that the government implements policies that will ensure optimal balance in this nexus since a close and inter-reliant link exists among the variables.

Suggested Citation

  • Benedict Arthur & Bismark Addai, 2022. "The dynamic interactions of economic growth, foreign direct investment, and exchange rates in Ghana," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2148361-214, December.
    • Handle: RePEc:taf:oaefxx:v:10:y:2022:i:1:p:2148361
    DOI: 10.1080/23322039.2022.2148361
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    Cited by:

    1. KHAIRUNNISA ZULKIFLI & Sharulshahida Shakrein Safian & RAZIDA HANEM MOHD RADZIL & NORHASIMAH SHAHARUDDIN, 2024. "The Impact of Stock Market Development on Economic Growth a Case of Malaysia," Information Management and Business Review, AMH International, vol. 16(1), pages 86-104.
    2. Pascal Pouya & Mohamed Karim & Anass Arbia & Mohammed El Yazidi & Khalid Sobhi, 2024. "Exchange Policy and Misalignments in Morocco: A Quantitative Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 14(4), pages 9-17, July.

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