Baba Adam | Kwame Nkrumah University of Science and Technology, Kumasi Ghana (original) (raw)

Papers by Baba Adam

The past few decades have witnessed the inflows of foreign direct investment (FDI) into developin... more The past few decades have witnessed the inflows of foreign direct investment (FDI) into developing economies including Ghana. Advocates for increased FDI inflows are done on the premise that FDI significantly contribution to fiscal development through by augmenting the supply of funds for investment thus promoting capital formation in host countries. However, opponents of FDI have advanced their argument largely on its impact on the balance of payments and trade deficit of host countries. They argue that if investors import more than they can export, FDI would end up worsening the trade situation of the country and consequently growth. This thus calls for the need for further research on FDI – growth nexus. In addition to assessing the impact of FDI on economic growth in Ghana, this study aims at examining the impact of FDI on the various sectors of the economy as well as the contribution of FDI to trade volume. Relying on annual data spanning 1980 to 2013 and employing Johansen cointegration and vector error correction model (VECM), the study found a positive and significant impact of FDI on economic growth. At the sectoral level, while its effect on the agriculture sector is negative, FDI inflows positively affect the value additions of the industrial sector. Its impact on the service sector is however less significant. Further results show that, in the long-run, while FDI, gross fixed capital formation and trade openness positively affects trade volumes, the effect of exchange rate is negative and significant suggesting that currency depreciation hurts trade volumes. However, in the short-run only trade openness drives trade and inflation does not matter in determining the amount of trade volumes both in the short- and the long-run. In addition to maintaining a continued trade relations aimed at attracting more FDI inflows, there is the need for the government to ensure that constraints in agriculture sector – namely inadequate road network, low commodity prices at the international market and lack of credit to farmers – are eliminated in order to increase productivity so that a self-sustained value addition could take place.

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2015

Foreign Direct Investment (FDI) and its impact on the growth of host economies has been widely re... more Foreign Direct Investment (FDI) and its impact on the growth of host economies has been widely researched but yet to produce a conclusive empirical result. A number of researchers have therefore moved the analysis to sectoral level in terms of the heterogeneity in the way FDI affects the various sectors of the host countries' economies. The industrial sector is one of the sectors that have received considerable attention in the sectoral paradigm. In the case of Ghana however, the studies on the impact of FDI on the industrial sector are limited and the only study available is restricted to the exporting manufacturing firms in Ghana. We therefore studied the impact of FDI on the performance of the entire industrial sector in Ghana. More importantly, our study of the industrial sector in Ghana which includes the mining & quarrying as well as the oil & gas sub-sectors makes our study more meaningful since FDI to Africa has been argued in the literature to be driven by extractive minerals. Our time series data cover the period 1980-2013 and we used the Johansen cointegration test for the estimation of our model. We found FDI, trade openness and gross fixed capital formation to have significant long run positive effects on the performance of the industrial sector in Ghana. We also found that exchange rage exerts significant negative effect on industrial sector performance in the long run. We recommend that policy makers should make foreign ownership of enterprises in Ghana in the industrial sector more appealing to potential and existing investors. The government should work at strengthening the Cedi against the major trading partners as the continuous depreciation of the currency hurts businesses in the planning of payments and receipts denominated in foreign currency. Companies should invest in high quality plants and machines to enhance productivity. Trade relations with other countries should also be improved and fortified as trade openness contributes to the growth of the industrial sector.

International Journal of Academic Research in Business and Social Sciences, 2015

Empirical literature on the impact of FDI on economic growth has been mixed. However some researc... more Empirical literature on the impact of FDI on economic growth has been mixed. However some researchers are of the opinion that the inconclusiveness could be attributed to how FDI affects the various sectors of the Economy and not Growth as a whole. Therefore given that governments of developing economies including Ghana have been putting in place measures in order to attract FDI to stimulate economic growth, this study investigated the impact of FDI on economic growth and the value additions of the service sector in Ghana. By employing the Johansen Cointegration technique, the study revealed FDI to have a positive significant impact on economic growth both in the long-run and short run and rather only a positive significant impact on the service sector in the short run.

ABSTRACT The past few decades have witn... more ABSTRACT
The past few decades have witnessed the inflows of foreign direct investment (FDI) into developing economies including Ghana. Advocates for increased FDI inflows are done on the premise that FDI significantly contribution to fiscal development through by augmenting the supply of funds for investment thus promoting capital formation in host countries. However, opponents of FDI have advanced their argument largely on its impact on the balance of payments and trade deficit of host countries. They argue that if investors import more than they can export, FDI would end up worsening the trade situation of the country and consequently growth. This thus calls for the need for further research on FDI – growth nexus. In addition to assessing the impact of FDI on economic growth in Ghana, this study aims at examining the impact of FDI on the various sectors of the economy as well as the contribution of FDI to trade volume. Relying on annual data spanning 1980 to 2013 and employing Johansen cointegration and vector error correction model (VECM), the study found a positive and significant impact of FDI on economic growth. At the sectoral level, while its effect on the agriculture sector is negative, FDI inflows positively affect the value additions of the industrial sector. Its impact on the service sector is however less significant. Further results show that, in the long-run, while FDI, gross fixed capital formation and trade openness positively affects trade volumes, the effect of exchange rate is negative and significant suggesting that currency depreciation hurts trade volumes. However, in the short-run only trade openness drives trade and inflation does not matter in determining the amount of trade volumes both in the short- and the long-run. In addition to maintaining a continued trade relations aimed at attracting more FDI inflows, there is the need for the government to ensure that constraints in agriculture sector – namely inadequate road network, low commodity prices at the international market and lack of credit to farmers – are eliminated in order to increase productivity so that a self-sustained value addition could take place.

Empirical literature on the impact of FDI on economic growth has been mixed. However some researc... more Empirical literature on the impact of FDI on economic growth has been mixed. However some
researchers are of the opinion that the inconclusiveness could be attributed to how FDI affects
the various sectors of the Economy and not Growth as a whole. Therefore given that
governments of developing economies including Ghana have been putting in place measures in
order to attract FDI to stimulate economic growth, this study investigated the impact of FDI on
economic growth and service sector value additions in Ghana. By employing the Johansen
Cointegration technique, the study revealed FDI to have a positive significant impact on economic
growth both in the long-run and short run and rather only a positive significant impact on the
service sector in the short run.

Drafts by Baba Adam

ABSTRACT The past few decades have witn... more ABSTRACT
The past few decades have witnessed the inflows of foreign direct investment (FDI) into developing economies including Ghana. Advocates for increased FDI inflows are done on the premise that FDI significantly contribution to fiscal development through by augmenting the supply of funds for investment thus promoting capital formation in host countries. However, opponents of FDI have advanced their argument largely on its impact on the balance of payments and trade deficit of host countries. They argue that if investors import more than they can export, FDI would end up worsening the trade situation of the country and consequently growth. This thus calls for the need for further research on FDI – growth nexus. In addition to assessing the impact of FDI on economic growth in Ghana, this study aims at examining the impact of FDI on the various sectors of the economy as well as the contribution of FDI to trade volume. Relying on annual data spanning 1980 to 2013 and employing Johansen cointegration and vector error correction model (VECM), the study found a positive and significant impact of FDI on economic growth. At the sectoral level, while its effect on the agriculture sector is negative, FDI inflows positively affect the value additions of the industrial sector. Its impact on the service sector is however less significant. Further results show that, in the long-run, while FDI, gross fixed capital formation and trade openness positively affects trade volumes, the effect of exchange rate is negative and significant suggesting that currency depreciation hurts trade volumes. However, in the short-run only trade openness drives trade and inflation does not matter in determining the amount of trade volumes both in the short- and the long-run. In addition to maintaining a continued trade relations aimed at attracting more FDI inflows, there is the need for the government to ensure that constraints in agriculture sector – namely inadequate road network, low commodity prices at the international market and lack of credit to farmers – are eliminated in order to increase productivity so that a self-sustained value addition could take place.

The past few decades have witnessed the inflows of foreign direct investment (FDI) into developin... more The past few decades have witnessed the inflows of foreign direct investment (FDI) into developing economies including Ghana. Advocates for increased FDI inflows are done on the premise that FDI significantly contribution to fiscal development through by augmenting the supply of funds for investment thus promoting capital formation in host countries. However, opponents of FDI have advanced their argument largely on its impact on the balance of payments and trade deficit of host countries. They argue that if investors import more than they can export, FDI would end up worsening the trade situation of the country and consequently growth. This thus calls for the need for further research on FDI – growth nexus. In addition to assessing the impact of FDI on economic growth in Ghana, this study aims at examining the impact of FDI on the various sectors of the economy as well as the contribution of FDI to trade volume. Relying on annual data spanning 1980 to 2013 and employing Johansen cointegration and vector error correction model (VECM), the study found a positive and significant impact of FDI on economic growth. At the sectoral level, while its effect on the agriculture sector is negative, FDI inflows positively affect the value additions of the industrial sector. Its impact on the service sector is however less significant. Further results show that, in the long-run, while FDI, gross fixed capital formation and trade openness positively affects trade volumes, the effect of exchange rate is negative and significant suggesting that currency depreciation hurts trade volumes. However, in the short-run only trade openness drives trade and inflation does not matter in determining the amount of trade volumes both in the short- and the long-run. In addition to maintaining a continued trade relations aimed at attracting more FDI inflows, there is the need for the government to ensure that constraints in agriculture sector – namely inadequate road network, low commodity prices at the international market and lack of credit to farmers – are eliminated in order to increase productivity so that a self-sustained value addition could take place.

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2015

Foreign Direct Investment (FDI) and its impact on the growth of host economies has been widely re... more Foreign Direct Investment (FDI) and its impact on the growth of host economies has been widely researched but yet to produce a conclusive empirical result. A number of researchers have therefore moved the analysis to sectoral level in terms of the heterogeneity in the way FDI affects the various sectors of the host countries' economies. The industrial sector is one of the sectors that have received considerable attention in the sectoral paradigm. In the case of Ghana however, the studies on the impact of FDI on the industrial sector are limited and the only study available is restricted to the exporting manufacturing firms in Ghana. We therefore studied the impact of FDI on the performance of the entire industrial sector in Ghana. More importantly, our study of the industrial sector in Ghana which includes the mining & quarrying as well as the oil & gas sub-sectors makes our study more meaningful since FDI to Africa has been argued in the literature to be driven by extractive minerals. Our time series data cover the period 1980-2013 and we used the Johansen cointegration test for the estimation of our model. We found FDI, trade openness and gross fixed capital formation to have significant long run positive effects on the performance of the industrial sector in Ghana. We also found that exchange rage exerts significant negative effect on industrial sector performance in the long run. We recommend that policy makers should make foreign ownership of enterprises in Ghana in the industrial sector more appealing to potential and existing investors. The government should work at strengthening the Cedi against the major trading partners as the continuous depreciation of the currency hurts businesses in the planning of payments and receipts denominated in foreign currency. Companies should invest in high quality plants and machines to enhance productivity. Trade relations with other countries should also be improved and fortified as trade openness contributes to the growth of the industrial sector.

International Journal of Academic Research in Business and Social Sciences, 2015

Empirical literature on the impact of FDI on economic growth has been mixed. However some researc... more Empirical literature on the impact of FDI on economic growth has been mixed. However some researchers are of the opinion that the inconclusiveness could be attributed to how FDI affects the various sectors of the Economy and not Growth as a whole. Therefore given that governments of developing economies including Ghana have been putting in place measures in order to attract FDI to stimulate economic growth, this study investigated the impact of FDI on economic growth and the value additions of the service sector in Ghana. By employing the Johansen Cointegration technique, the study revealed FDI to have a positive significant impact on economic growth both in the long-run and short run and rather only a positive significant impact on the service sector in the short run.

ABSTRACT The past few decades have witn... more ABSTRACT
The past few decades have witnessed the inflows of foreign direct investment (FDI) into developing economies including Ghana. Advocates for increased FDI inflows are done on the premise that FDI significantly contribution to fiscal development through by augmenting the supply of funds for investment thus promoting capital formation in host countries. However, opponents of FDI have advanced their argument largely on its impact on the balance of payments and trade deficit of host countries. They argue that if investors import more than they can export, FDI would end up worsening the trade situation of the country and consequently growth. This thus calls for the need for further research on FDI – growth nexus. In addition to assessing the impact of FDI on economic growth in Ghana, this study aims at examining the impact of FDI on the various sectors of the economy as well as the contribution of FDI to trade volume. Relying on annual data spanning 1980 to 2013 and employing Johansen cointegration and vector error correction model (VECM), the study found a positive and significant impact of FDI on economic growth. At the sectoral level, while its effect on the agriculture sector is negative, FDI inflows positively affect the value additions of the industrial sector. Its impact on the service sector is however less significant. Further results show that, in the long-run, while FDI, gross fixed capital formation and trade openness positively affects trade volumes, the effect of exchange rate is negative and significant suggesting that currency depreciation hurts trade volumes. However, in the short-run only trade openness drives trade and inflation does not matter in determining the amount of trade volumes both in the short- and the long-run. In addition to maintaining a continued trade relations aimed at attracting more FDI inflows, there is the need for the government to ensure that constraints in agriculture sector – namely inadequate road network, low commodity prices at the international market and lack of credit to farmers – are eliminated in order to increase productivity so that a self-sustained value addition could take place.

Empirical literature on the impact of FDI on economic growth has been mixed. However some researc... more Empirical literature on the impact of FDI on economic growth has been mixed. However some
researchers are of the opinion that the inconclusiveness could be attributed to how FDI affects
the various sectors of the Economy and not Growth as a whole. Therefore given that
governments of developing economies including Ghana have been putting in place measures in
order to attract FDI to stimulate economic growth, this study investigated the impact of FDI on
economic growth and service sector value additions in Ghana. By employing the Johansen
Cointegration technique, the study revealed FDI to have a positive significant impact on economic
growth both in the long-run and short run and rather only a positive significant impact on the
service sector in the short run.

ABSTRACT The past few decades have witn... more ABSTRACT
The past few decades have witnessed the inflows of foreign direct investment (FDI) into developing economies including Ghana. Advocates for increased FDI inflows are done on the premise that FDI significantly contribution to fiscal development through by augmenting the supply of funds for investment thus promoting capital formation in host countries. However, opponents of FDI have advanced their argument largely on its impact on the balance of payments and trade deficit of host countries. They argue that if investors import more than they can export, FDI would end up worsening the trade situation of the country and consequently growth. This thus calls for the need for further research on FDI – growth nexus. In addition to assessing the impact of FDI on economic growth in Ghana, this study aims at examining the impact of FDI on the various sectors of the economy as well as the contribution of FDI to trade volume. Relying on annual data spanning 1980 to 2013 and employing Johansen cointegration and vector error correction model (VECM), the study found a positive and significant impact of FDI on economic growth. At the sectoral level, while its effect on the agriculture sector is negative, FDI inflows positively affect the value additions of the industrial sector. Its impact on the service sector is however less significant. Further results show that, in the long-run, while FDI, gross fixed capital formation and trade openness positively affects trade volumes, the effect of exchange rate is negative and significant suggesting that currency depreciation hurts trade volumes. However, in the short-run only trade openness drives trade and inflation does not matter in determining the amount of trade volumes both in the short- and the long-run. In addition to maintaining a continued trade relations aimed at attracting more FDI inflows, there is the need for the government to ensure that constraints in agriculture sector – namely inadequate road network, low commodity prices at the international market and lack of credit to farmers – are eliminated in order to increase productivity so that a self-sustained value addition could take place.