Inward Foreign Direct Investment Flows, Growth, and Agriculture in Ghana: A Granger Causal Analysis

Justice G. Djokoto

Abstract


The paper described the movements of agricultural growth and FDI to agriculture, and determined the causality between the two variables. Agricultural growth was represented by real agricultural GDP growth rate and FDI represented by a ratio of inward FDIs to agriculture as a ratio of agriculture value added. Between 1966 and 2008, growth showed significant movements across the zero line. Over the same period, the gyrations of the FDI ratio were above the zero line. Whilst, growth showed small amplitudes above and below the zero line, FDI variable was asymptotic to the zero line, at 0.001. Applying the traditional Granger causality to the stationary variables at levels, neither FDI ratio nor agricultural growth caused each other. The results suggest that the variables in their computable form may not induce each other singularly. Other policy variables may be considered separately or in conjunction to induce increases in either of them.


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International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

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