Global Capital Inflows, Growth, and Trade Indicators in Ghana and Nigeria: Evidence from Asymmetric Cointegration Framework

Abstract

This study examined the impact of the dynamical nature of Foreign Direct Investment (FDI) inflow and Official Development Assistance (ODA) inflow on growth and trade indicators in Ghana and Nigeria. Secondary data sourced from World Development Indicators for the period covering 1970-2017 were utilized. The Nonlinear ARDL Bound F-test showed a long-run relationship between global capital inflows and growth and trade. Specifically, (i) positive (rise) FDI inflow generate a positive impact on RGDP in Ghana and negative impact on RGDP in Nigeria; negative (fall) FDI inflow leads to a positive impact on RGDP in Ghana and negative impact on RGDP in Nigeria (ii) positive ODA inflow causes a positive impact on RGDP in Ghana and Nigeria; negative ODA inflow has a negative impact on RGDP in Ghana and Nigeria (iii) positive and negative FDI (ODA) inflow has a negative impact on trade (% of GDP) in Ghana and Nigeria (iv) positive and negative FDI inflow leads to a negative impact on multilateral trade in Ghana; and positive and negative FDI inflow leads to a positive impact on multilateral trade in Nigeria; (v) positive and negative ODA inflow leads to a negative impact on multilateral trade in Ghana and Nigeria (vi) positive and negative FDI inflow leads to a negative impact on trade openness in Ghana and positive impact in Nigeria, (vii) positive and negative ODA inflow has negative and positive impact on trade openness in Ghana and negative impacts in Nigeria.