Although studies have been conducted to explore the determinants of FDI, some of the core macroeconomic variables such as inflation, interest rate, telephone subscriptions, electricity production, etc., which are unstable and have longstanding effects on FDI have not been much explored to a give a clear picture of the relationships. (2019), "Analysis of the determinants of foreign direct investment in Ghana", Journal of Asian Business and Economic Studies, Vol. FDI is essentially an international investment where the investor gains significant influence in the management of an entity outside the investor’s home country (Solomon, 2011).
Therefore, a study that will explore these and other macroeconomic variables to give clear picture of their relationships and suggest some of the possible ways of dealing with these variables in order to attract more FDI for the country to achieve its goal is what this paper seeks to do. FDI under all circumstances has become an important force in the internationalization of investment activities in the global economy.
Finally, their obligations to credit nations compromise the ability of these governments to act independently in the international political economy.
A number of domestic factors are important in attracting FDI to an economy.
For example, from 1980–1989 to 1990–1998, FDI to Sub-Saharan Africa (SSA) grew by 59 percent.
This compares disproportionately with high increase of 5,200 percent for Europe and Central Asia, 942 percent for East Asia and Pacific, 740 percent for South Asia, 455 percent for Latin America and Caribbean and 672 percent for all developing countries.In summary Foreign Direct Investment (FDI) in Ghana is much concentrated in the mining and oil and gas sector at the expense of the fundamental drivers of Ghana’s economy, therefore FDI becomes less impactful on Ghana’s economic growth.Ghana’s attraction of foreign direct investment hinge on major factors mentioned earlier above.The study recommended that government must create the enabling socio-economic and political environment with appealing features for FDI.Also, government must showcase the investment potentials of the country to the world through the various technological mediums and Ghana Investment Promotion Center (GIPC) and the Free Zones Board (FZB) are laudable initiatives by government towards attracting FDI.The study employs time series annual data on FDI, GDP per capita, Economic Openness, Exchange Rate, Political rights, Government Consumption Expenditure, Macro Economic Stability, and Natural Resource Endowment and Interest Rate from Ghana over the study period 1980 to 2014.Also openness of the nation’s economy and market, and natural resources, its infrastructure, the size and level of governments expenditure and consumption and also the interest rate regime in the nation were the factors that determines Ghanas FDI.It must be pointed out, however, that the motives behind these international capital flows are still substantially different than those related to the inflows of FDI to developing countries, in spite of the changes that have taken place over the last decades.For example, the search for agricultural or mineral resources is much less important today than it was at the beginning of the twentieth century.The purpose of this paper is to examine the determinants of FDI in Ghana between the period of 19.The study found a cointegrating relationship between FDI and its determinants.