Organised Crime, Foreign Direct Investment and Economic Growth in Ghana

Abstract

Aims: Ghana has put measures in place to increase its economic growth. It is established that a reduction in crime rate is a good impetus for growth. The study therefore investigated the relationship between organised crime, FDI and economic growth in Ghana. Study Design: The study uses an Exploratory Design. Place and Duration of the Study: Ghana, between the periods 2000 to 2014. Methodology: This was done by means of the Autoregressive Distributed Lag (ARDL) approach. Results: The study found a cointegrating relationship between economic growth and its determinants. The regression results show that organised crime and FDI are important determinants of economic growth in Ghana since they exerted statistically significant negative and positive effects on economic growth respectively both in the short-run and long-run in Ghana. In addition, interest rate, and inflation also exerted negative and statistically significant effects on economic growth both in the short-run and long-run in Ghana. Further, real effective exchange rate, physical capital and labour force exerted positive and statistically significant effects on economic growth both in the short-run and long-run in Ghana. Conclusion: It is therefore recommended that policymakers should put in pragmatic measures to reduce crime rate, increase FDI inflows, physical capital, and labour force, as well as maintaining low inflationary rate. Finally, Bank of Ghana should maintain a stable exchange rate while financial institutions are to reduce their interest rate on lending.