Democracy, Globalization and Private Investment in Ghana

Samuel Kwabena Obeng, Linda Akoto, Felicia Acquah

Research output: Contribution to journalArticle

3 Citations (Scopus)
16 Downloads (Pure)

Abstract

The article examines the effects of democracy and globalization on private investment in Ghana for the period 1980–2012, using the autoregressive distributed lag (ARDL) bounds test for cointegration and the error correction model (ECM). Two models are used. In Model 1, democracy is proxy by an index for institutional quality (Polity 2), while Model 2 uses an index for civil liberties as proxy for democracy. The results for Model 1 show globalization and public investment increase private investment, while exchange rate volatility and trade openness decrease private investment in both the long and short run. In addition, national income and interest rate reduce private investment in the short run. In the case of Model 2, credit to the private sector and public investment increase private investment, while exchange rate volatility and trade openness decrease private investment in both the long and short run. Finally, national income and interest rate reduce private investment in the short run. The findings and policy recommendations of the article provide vital information for policy implementation in Ghana.
Original languageEnglish
Pages (from-to)1-20
JournalGlobal Business Review
Volume19
Issue number1
Early online date3 Oct 2017
DOIs
Publication statusPublished - 1 Feb 2018

Keywords

  • Democracy
  • globalization
  • private investment
  • ARDL
  • ECM

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