Multiple Regression and Structural Analysis of Foreign Direct Investment (FDI) in Ghana (1994-2010)

Abstract

Foreign Direct Investment (FDI) has been one of the topical issues in international economics, especially, from the past decade. Empirical research on FDI in developing countries, such as Ghana, has been relatively scarce even though there has been a lot of work on the trends in FDI. This study attempts to examine the trend of Foreign Direct Investment (FDI) in Ghana and its relationship with some selected economic indicators such as exchange rate, inflation, interest rates, Gross Domestic Product (GDP) as well as employment and the structural stability of FDIs with respect to the variables. Yearly data on FDI was used for the study spanning from 1994 to 2010. Results from the study indicated that FDI inflows into the country had experienced an increasing trend and undergone structural changes over the period under study. Furthermore, exchange rates and GDP growth played a significant role in attracting FDI into the country.