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Foreign direct investment, remittances, real exchange rate, imports, and economic growth in Ghana: An ARDL approach

Author

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  • John Kwaku Mensah Mawutor
  • Ernest Sogah
  • Freeman Gborse Christian
  • Desmond Aboagye
  • Alexander Preko
  • Barbara Deladem Mensah
  • Olivia Nanakua Boateng

Abstract

The main objective of this quantitative study is to ascertain the effect of foreign direct investment, real exchange rate, remittances, and import on economic growth in Ghana. Secondary data on gross domestic product, foreign direct investment, real exchange rate, remittances, import, and gross capital formation from 1980 to 2018 were analyzed. The study employed Autoregressive Distributed Lag for the econometrics analysis. The study found that foreign direct investment, real exchange rate, remittances, import, and gross capital formation cointegrates with economic growth. The main findings are that foreign direct investment, real exchange rate, import, and remittances matter from growth perspective. Remittances have a positive and significant effect on economic growth in Ghana both for the short run and the long run. The study also revealed that foreign direct investment, real exchange rate, and imports have a negative and significant effect on the growth process of Ghana’s economy for both the short run and the long run. The study recommends that the Ministry of Finance, Ghana, financial analysts and other policy makers should undertake steps to reduce imports and attract more remittances inflows to attain long-run economic growth. In addition, the economy must concentrate on viable exchange rate policies such as undervaluation of currency to stimulate sustainable economic growth.

Suggested Citation

  • John Kwaku Mensah Mawutor & Ernest Sogah & Freeman Gborse Christian & Desmond Aboagye & Alexander Preko & Barbara Deladem Mensah & Olivia Nanakua Boateng, 2023. "Foreign direct investment, remittances, real exchange rate, imports, and economic growth in Ghana: An ARDL approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(1), pages 2185343-218, December.
    • Handle: RePEc:taf:oaefxx:v:11:y:2023:i:1:p:2185343
    DOI: 10.1080/23322039.2023.2185343
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    Cited by:

    1. ANTWI AGYEI Bright & BOADI Joana Ankobea & NUNOO Linda Ofeibea & MENSAH Cornelius Nii Odoi & AMPEDU Raphael & MANG'ATI Frank Peter & BOAKYE-BOATENG Gifty, 2024. "The Influence of Social Media on Consumer Behavior in Sub-Saharan Africa: An Empirical Evidence from Ghana," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(8), pages 3102-3121, August.

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