Unbundling economic freedom factors that matter for FDI inflows in Ghana
Keywords:
Trade freedom, financial freedom, rule of law, Foreign Direct Investment, GhanaAbstract
The study investigates how key components of economic freedom drive Foreign Direct Investment (FDI) inflows in Ghana. Using data over the period 1995 to 2018 from World Bank and The Heritage Foundation databases and employing Autoregressive Distributed Lag (ARDL) estimation technique, the study finds that trade freedom, financial freedom, and rule of law positively stimulate FDI inflows in Ghana in the long run. Similarly, in the short-run, the variables are observed to positively influence FDI inflows in Ghana in the current quarter but reduces it thereafter. Policymakers in Ghana should prudently reduce tariffs on both imports and exports and also promote financial system independence in terms of limited interference so as to attract more FDI inflows. Government should also engage in prudent judicial reforms that support respect for rule of law and property rights in order to attract high FDI inflows to Ghana.
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Copyright (c) 2025 Richard Kofi Akoto, Robert Amponsah-Godwyll, Richard Agbanyo, Joseph Dery Nyeadi
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