An empirical analysis of the effect of foreign direct investment on population health in Ghana

Abstract

Foreign direct investment (FDI) is generally viewed as a major supplement to domestic resources in economies all over the world. Given this, most countries including Ghana continue to devise strategies aimed at attracting more FDI inflows as well as reducing FDI outflows (positive net FDI inflows). This has led to several empirical studies examining the effects of FDI on development indicators. However, while FDI can affect population health, it has received very little attention especially in the case of Ghana. This study, therefore, uses annual time series data from 1975 to 2019 to examine the effect of net FDI inflows on population health (life expectancy and death rate) in Ghana. The ordinary least square (OLS) and the instrumental variable two‐stage least square (IV2SLS) estimators are employed as the empirical estimation techniques. The study finds that, net FDI inflows improve population health even after controlling for endogeneity. Thus, enhancing net FDI inflows can be used as an effective tool towards improving population health in Ghana.

Malaria Prevalence and Macroeconomic Output in Ghana, 1990 to 2019

“…Regarding estimation techniques, given the continuous nature of our dependent variable, the study employs the Ordinary Least Square (OLS) regression as the baseline estimation technique. 28 , 29 However, there is the likelihood of macroeconomic output equally affecting the prevalence of malaria resulting into endogeneity. For instance, higher macroeconomic output implies higher income, which makes people more capable of affording quality healthcare 27 as well as malaria free environments leading to a fall in the prevalence of malaria and vice versa.…”

“…In addition, the insignificance of the P values of J and DW suggests the absence of overidentification and endogeneity respectively. 28 - 33 …”