Corruption, Foreign Direct Investment and Growth in Ghana: An Empirical Analysis

Abstract

The aim of the study therefore, was to examine the effects of corruption in the economic development of Ghana. The study investigated the effects of corruption on foreign direct investment (FDI) inflow in Ghana by using annual time series data for the period from 2004 to 2014, through the application of (ADF) unit root, Johansen’s co-integration test and Granger causality test. The results of the analysis affirmed the existence of autocorrelation and unit root with Granger causality showing that, FDI inflow is bi-directional with corruption. The study recommended strengthening and strictly enforcing anti-corruption laws and policies to help minimize or prevent the incidence of corruption in Ghana. Moreover, there is the need for more strategic and concerted efforts by both public and private opinion leaders in fighting corruption as a social and economic problem that serves as impediment to growth.

Keywords: Foreign direct investment (FDI), corruption, economic growth, Ghana.