Do External Debt and Foreign Direct Investment (FDI) Inflow support Economic Growth? Evidence from Ghana

Evans Yeboah; Dastan Bamwesigye; Seval Ozbalci; Francis Atiso

doi:10.18778/2391-6478.1.37.08

Authors

Evans Yeboah Department of Business Economics, Faculty of Business and Economics, Mendel University in Brno, Czech Republic https://orcid.org/0000-0002-0934-3996
Dastan Bamwesigye Department of Forest and Wood Products Economics and Policy, Department of Landscape Management Faculty of Forestry and Wood Technology, Mendel University in Brno, CREA Hydro&Energy Z. S., Czech Republic https://orcid.org/0000-0002-5114-443X
Seval Ozbalci Department of Business Administration, University of the People and Manisa Celal Bayar University, Turkiye https://orcid.org/0000-0002-7823-4654
Francis Atiso Faculty of Economics and Management, Tomas Bata University in Zlin, Czech Republic https://orcid.org/0000-0003-0179-3877

DOI:

https://doi.org/10.18778/2391-6478.1.37.08

Keywords:

External debt, FDI, economic growth, GDP, Ghana

Abstract

The purpose of the article/hypothesis: The prime objective of this study is to discover whether external debt and foreign direct investment promote economic development. The paper investigates whether external debt and foreign direct investment inflows stimulate economic growth, intending to determine the causal relationship between the variables to serve as a substantial factor for policymakers.

Methodology: Numerous econometrics techniques were employed to ensure the findings' effectiveness and accuracy, including the stationarity test, Johansen cointegration test, and multiple regression (ordinary least squares). The hypothesis test that external debt and foreign direct investment inflows do not attain their justification of ensuring economic growth was conducted empirically.

Results of the research: The outcome revealed that external debt and foreign direct investment positively and significantly support Ghana's economic growth. This leads to the conclusion that these variables fulfilled their purpose.

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