The Role of Foreign Direct Investment on Ghana’s Economic Growth: A Durbin Watson Analysis.

Abstract:

Foreign Direct Investment is an investment made by a firm or individual in one country into business interests located in another country. Foreign Direct Investment is considered an important factor in developing an economy, as it raises the technological spillover and competition, and reinforces the production capabilities of the host country. FDI is normally taken or considered to be a major key to economic growth in most economies: developed and developing economies. The study examines how FDI impacted economic growth in Ghana from the period 1998 to 2017 with World Bank data time series data. The study revealed that there is a positive impact of FDI on economic growth in Ghana. The study further tests if the result is autocorrelated by applying the Durbin Watson test after the General method of moment regression has been done. The Durbin Watson test result confirms that indeed, there is a positive correlation between FDI and economic growth.