Agricultural sector foreign direct investment and economic growth in Ghana

Abstract The study seeks to establish the relationship between foreign direct investment to Ghana’s agriculture sector and economic growth with secondary data mainly sourced from the World Development Indicator. The techniques employed to analyse the data include descriptive statistic, unit root test, Granger causality test and error correction model (ECM). The study accepted a neutrality hypothesis between foreign direct investment to the Ghanaian agricultural sector and its covariates; trade openness, capital and government expenditure. The study also revealed positive and significant relationship between economic growth and foreign direct invest flow to the agricultural sector and volume of trade respectively. However, government expenditure exhibit negative but significant relationship with economic growth. The study contributes to economic development literature from an important but neglected research context with regards to agricultural development via foreign direct investment to support job creation and overall economic development with particular reference to Ghana. Thus, the study recommends that policy should focus on flexible trade policies to attract more foreign direct investment (FDI) inflows to Ghana’s agricultural sector to accelerate growth across board