Effects of Exchange Rate Regimes on FDI Inflows in Ghana

Nyarko, Philip Asiamah; Nketiah‐Amponsah, Edward; Barnor, Charles

doi:10.5539/ijef.v3n3p277

Cited by 19 publications

(19 citation statements)

References 35 publications

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“…The exchange rate variable is negative but statistically indistinguishable from zero. The non-discernible effect of exchange rate on FDI inflow into Ghana concurs with the conclusions of Nyarko et al (2011).…”

Section: Long Run Empirical Modelsupporting

confidence: 70%

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The Effect of Investment Promotion on Foreign Direct Investment Inflow into Ghana

Djokoto¹

2012

IBR

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The paper investigated the effect of investment promotion (IP) on foreign direct investment flow (FDI) into Ghana. Cointegration among the variables was established using auto regressive distributed lag (ARDL) models in the presence of a mix of I (0) and I (1) variables. The control variables, inflation and trade openness were statistically significant in the short run. Whilst inflation exerted a negative effect on FDI inflow; trade openness positively induced FDI inflow. GDP per capita and exchange rate did not statistically significantly influence FDI inflow in the short run. In respect of the key variable GIPC, in the short run, there was a positive but statistically insignificant effect on FDI inflow. The estimated long-run ARDL model showed that macroeconomic variables such as inflation, GDP and trade openness determined FDI inflow into Ghana. Notwithstanding the positive relationship between establishment of IP agency (GIPC) and FDI inflow, this relationship was statistically insignificant. Greater efforts at macroeconomic management specifically, promotion of external trade, increasing GDP and reducing inflation holds more promise to attracting FDI into Ghana. GIPC should be maintained to provide a supportive role when the foreign investors arrive in Ghana.

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Section: Long Run Empirical Modelsupporting

confidence: 70%

“…Exchange rate had no discernible effect on Ghana's FDI (Nyarko, et al, 2011). This was possible by modelling the causal relationship between FDI inflows and exchange rate regimes over a 39 year period .…”

Section: Empirical Reviewmentioning

confidence: 99%

The Effect of Investment Promotion on Foreign Direct Investment Inflow into Ghana

Djokoto¹

2012

IBR

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“…Supportive evidence of the production flexibility argument is found, instead, for developed economies by Goldberg and Kolstad (1995); Chowdhury and Wheeler (2008) and Osinubi et al (2009). Insignificant impact is found for laggard and advanced economies, respectively, by Nyarko et al (2011) and Gorg and Wakelin (2002). Finally, mixed results, depending on the volatility proxy employed are found by Lemi and Asefa (2001) …”

Section: Oecd (2008) Defines a Foreign Direct Investment Enterprise Amentioning

confidence: 71%

FDI Inflows, Price and Exchange Rate Volatility: New Empirical Evidence from Latin America

Bianco

To²

2016

Preprint

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This paper investigates the impact of price and real exchange rate volatility on Foreign Direct Investment (FDI) inflows in a panel of 10 Latin American and Caribbean countries, observed between 1990 and 2012. Both price and exchange rate volatility series are estimated through the Generalized Autoregressive Conditional Heteroscedasticity model (GARCH). Our results, obtained employing the Fixed Effects estimator, confirm the theory of hysteresis and option value, in so far it is found a statistically significant negative effect of exchange rate volatility on FDI. Price volatility, instead, turns out to be positive but insignificant. Moreover, we show that human capital and trade openness are key for attracting foreign capital. From the policy perspective, our analysis suggests the importance of stabilization policies as well as the one of government credibility in promoting trade openness and human capital formation.

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“…Some of the advantages that foreign firms enjoy over local rivals in such scenarios include cheaper costs of borrowing and enhanced competition (Nyarko et al, 2011). Countries in SSA have, over the last couple of decades, pursued policies targeted at exchange rate devaluation in order to attract FDI (Noorbakhsh and Paloni, 1999).…”

Section: H3d Foreign Investors With Strong Domestic Currencies Are Mmentioning

confidence: 99%

Locational Determinants of US Outward FDI into Sub-Saharan Africa

Okafor

2015

jda

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This paper uses panel data techniques to investigate the locational determinants of US outward foreign direct investment (FDI) into 23 countries of Sub-Saharan Africa (SSA) for 1996-2010. The findings revealed that US outward FDI into SSA is influenced by the availability of crude oil and natural gas, infrastructure development, market size and completion rates in primary education. Conversely, labor force (of those aged 15+) and inflation deter US FDI, while political instability, corruption, and the exchange rate have an insignificant negative relationship with US FDI. These findings suggest that US investors investing in SSA are significantly influenced by resource and market seeking factors but not by efficiency seeking factors. The study therefore suggests that credible policies for attracting US investors into SSA countries should be relentlessly pursued through education, training and skills acquisition, inflation targets, trade openness (especially in the natural resource sector), corruption control and political stability.JEL Classifications: F10, F68, O51, O55

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Effects of Exchange Rate Regimes on FDI Inflows in Ghana

Cited by 19 publications

References 35 publications

The Effect of Investment Promotion on Foreign Direct Investment Inflow into Ghana

The Effect of Investment Promotion on Foreign Direct Investment Inflow into Ghana

FDI Inflows, Price and Exchange Rate Volatility: New Empirical Evidence from Latin America

Locational Determinants of US Outward FDI into Sub-Saharan Africa

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