Title: Antecedents and short-run causal relationship between foreign direct investment and infrastructure development in Ghana

Authors: Sikanery Ibrahim; Kingsley Opoku Appiah; Stephen Zamore

Addresses: Cal Bank, Post Office Box 14596, Accra, Ghana ' School of Business, Kwame Nkrumah University of Science and Technology, University Post Office, Kumasi, Ghana ' School of Business and Law, University of Agder, Gimlemoen 19, 4630 Kristiansand, Norway; School of Business, Kwame Nkrumah University of Science and Technology, University Post Office, Kumasi, Ghana

Abstract: This paper examines the antecedents and short-run causal relationships between Foreign Direct Investment (FDI) and infrastructure development in Ghana. Using time series data spanning 1966-2015, we find that that FDI net inflow positively influences electricity consumption in Ghana; however, electricity consumption does not Granger-cause FDI net inflows. The results further indicate that the electricity consumption shocks contribute 100% of the variance in the one-period-ahead forecast error for electricity consumption growth. An important implication of the findings is that, governments need to liberalise FDI policies for investments by multinational corporations since FDI contributes to infrastructure development.

Keywords: GDP growth; openness; electricity consumption; FDI inflows; Granger-causality; cointegration; vector auto-regression.

DOI: 10.1504/IJFSM.2018.092592

International Journal of Financial Services Management, 2018 Vol.9 No.2, pp.119 - 139

Received: 11 Aug 2017
Accepted: 16 Dec 2017
Published online: 25 Jun 2018 *

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