Government Policies, Foreign Direct Investment (FDI) and Socioeconomic Development: The Case of Ghan

The last two decades (1994--2014), Ghana has witnessed growth in the inflow of foreign direct investment (FDI). This has been accompanied by an increase in competition from other developing countries within the Sub-Sahara Africa region to attract FDI, resulting in the implementation of Ghana government policies offering higher investment incentives and removal of restrictions on operations of foreign firms in the country.;The dissertation investigated government policies that drive FDI inflows in Ghana as well as the extent to which government policies toward FDI have impacted the level of linkage and spillover between foreign affiliates and domestic firms. government policy variables in attracting FDI by testing their impacts on FDI inflows. Multiple regression analysis was used to identify the major government policy variables that have an impact on foreign direct investment. The findings indicate that government policies relating to trade openness, market size, labor quality, exchange rate uncertainty, and FDI are significant factors determining FDI inflows in Ghana. The findings of the study also suggest that over the past two decades (1994--2014), there have been several significant improvements in Ghana's legal and institutional framework in relation to policies on FDI. Key changes in FDI related policies indicate that Ghana has increased the rights of foreign investors, created a legal and investment environment which is more favorable to them as it narrows the policy gap between the conditions for overseas and local investors. The revisions of policies relating to FDI such as tax-incentive policies, exchange rate policies, labor policies, and open-trade policies have played a crucial role in attracting inward FDI by creating a more favorable legal and business environment for foreign investors. Ghana's international commitments on welcoming FDI have opened economic domains by reducing discrimination against overseas investors and by establishing mechanisms for foreign investment promotion and protection.