FDI Heterogeneity and Distribution in Ghana: An Econometric Analysis

Stephany Abokzele Adongo, Lizhen Chen, Xuhua Hu


For most developing countries an important reason why political leaders spend millions of dollars to travel the world over to woo investors to their countries is the need to create jobs and boost the economy. This paper sought to explore the extent of heterogeneity of FDI in Ghana. Using economic data from selected institutions in Ghana, we noted a polarization of the FDI distribution with regards to regional distribution. The mean difference between FDI inflow from the Manufacturing industry is -.083 less than from the extractive industry and is statistically significant (Sig value is .998>.05). Similarly, the FDI from the manufacturing industry contributes to FDI in Ghana .533 times less than companies in Service industry and this is also statistically significant (Sig value is .882>0.05). We note that currently FDI inflow from all countries or all sources are positively skewed towards the middle belt and coastal regions relative to the three northern region. Several reasons explain this geographic polarization of FDI. First of all, the early economic reform was focused on the coastal areas such as Tema, Accra and Takoradi where Special Economic Zones, Development Zones, Economic and Technology Development Zones were gradually opened to foreign investors


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