Economic Growth and Governance Challenges in Ghana: Insights from Tax Revenue, Foreign Direct Investment, Institutional Quality, and Corruption

Abstract:

The combination of external, governance and fiscal factors influence the economic growth of developing economies. The study examined economic growth in Ghana over the period 2000 to 2023 by analysing the relationship between various factors, such as tax revenue, institutional quality, corruption, and foreign direct investment (FDI). The integrated perspective on growth dynamic was provided by a quantitative time-series approach adopted by the study. The study's findings suggest that the negative long-run relationship between economic growth and both tax revenue and FDI is revealed. The findings suggest that increased financial resources do not automatically lead to improved economic performance. The country's economic growth was shaped by governance conditions linked to corruption and institutional quality. The weak institutions and persistent corruption limited the effectiveness of foreign investment and fiscal policy. The unified analysis of governance and economic factors influencing economic growth contributed to the development of the literature on the topic. The deeper insights of the study were provided by the integration of FDI, institutional quality, corruption, and taxation within a single framework, which provides determinants for sustainable economic growth.