Determinants of Foreign Direct Investment in Ghana. Thesis Writing (Thesis Sample)

Running Head: DETERMINANTS OF FDI IN GHANA
What are the most significant factors affecting Foreign Direct Investment in Ghana?
by [Student’s name]
[Code + course name]
[Professor’s name]
[University name]
[City, State]
[Date]
Table of Contents
TOC \o "1-3" \h \z \u ABSTRACT PAGEREF _Toc395198653 \h 4
1.INTRODUCTION PAGEREF _Toc395198654 \h 6
1.1.Statement of the problem PAGEREF _Toc395198655 \h 7
1.2.Purpose of the study PAGEREF _Toc395198656 \h 8
1.3.Research Objectives PAGEREF _Toc395198657 \h 9
1.4.Justification of this research PAGEREF _Toc395198658 \h 9
1.5.Research Question PAGEREF _Toc395198659 \h 10
2.LITERATURE REVIEW PAGEREF _Toc395198660 \h 10
2.1.Meaning of FDI PAGEREF _Toc395198661 \h 10
2.2.Theories of Foreign Direct Investment PAGEREF _Toc395198662 \h 11
2.2.1.Internationalisation Theory PAGEREF _Toc395198663 \h 11
2.2.2.Macroeconomic Development Models PAGEREF _Toc395198664 \h 12
2.2.3.Market Power Theories PAGEREF _Toc395198665 \h 12
2.2.4.Competitive International Industries Theory PAGEREF _Toc395198666 \h 13
2.2.5.Eclectic Paradigm PAGEREF _Toc395198667 \h 13
2.3.FDI and Economic growth and Development PAGEREF _Toc395198668 \h 14
2.3.1.Theories of Growth PAGEREF _Toc395198669 \h 15
2.4.Benefits of FDI PAGEREF _Toc395198670 \h 16
2.5.Negative effects of FDI PAGEREF _Toc395198671 \h 20
2.6.Determinants of FDI PAGEREF _Toc395198672 \h 22
2.6.1.Globalisation PAGEREF _Toc395198673 \h 22
2.6.2.Liberalisation/Open Trade Policy PAGEREF _Toc395198674 \h 25
2.6.3.Market Size PAGEREF _Toc395198675 \h 29
2.6.4.Cost factor PAGEREF _Toc395198676 \h 32
2.6.5.Political/cultural or social relationship PAGEREF _Toc395198677 \h 34
2.6.6.Incentives PAGEREF _Toc395198678 \h 35
2.6.7.Transfer of technology PAGEREF _Toc395198679 \h 39
2.6.8.Linkages PAGEREF _Toc395198680 \h 40
2.6.9.Human capital PAGEREF _Toc395198681 \h 41
2.6.10.Performance Requirements PAGEREF _Toc395198682 \h 42
2.6.11.China FDI in Ghana PAGEREF _Toc395198683 \h 46
3.METHODOLOGY PAGEREF _Toc395198684 \h 51
3.1.Research Design PAGEREF _Toc395198685 \h 53
3.2.Population of the study PAGEREF _Toc395198686 \h 53
3.3.Research Instruments PAGEREF _Toc395198687 \h 54
3.3.1.Questionnaires PAGEREF _Toc395198688 \h 54
3.3.2.Interview PAGEREF _Toc395198689 \h 57
3.4.Validity of the Instruments PAGEREF _Toc395198690 \h 58
3.5.Reliability of the Instruments PAGEREF _Toc395198691 \h 60
3.6.Data Collection Procedure PAGEREF _Toc395198692 \h 61
3.7.Data Analysis and presentation PAGEREF _Toc395198693 \h 61
3.8.Ethical Issues PAGEREF _Toc395198694 \h 62
3.9.Limitations PAGEREF _Toc395198695 \h 63
4.FINDINGS AND DISCUSSION PAGEREF _Toc395198696 \h 63
4.1.Characteristics of the company used in the study PAGEREF _Toc395198697 \h 64
4.2.Demographics of the Respondents PAGEREF _Toc395198698 \h 66
4.3.Factors that Affect FDI in Ghana in General PAGEREF _Toc395198699 \h 67
4.4.Factors that Determine FDI in Ghana PAGEREF _Toc395198700 \h 68
4.5.Factors that may discourage an investor from reinvesting in Ghana PAGEREF _Toc395198701 \h 70
4.6.Regression analysis PAGEREF _Toc395198702 \h 74
4.6.1.The relationship between the identified factors and FDI PAGEREF _Toc395198703 \h 75
4.6.2.Regression of the individual factors PAGEREF _Toc395198704 \h 77
4.6.3.Selection of factors for further analysis PAGEREF _Toc395198705 \h 78
5.CONCLUSIONS PAGEREF _Toc395198706 \h 79
5.1.Recommendations PAGEREF _Toc395198707 \h 81
5.2.Future research PAGEREF _Toc395198708 \h 82
6.References PAGEREF _Toc395198709 \h 83
7.Appendix A PAGEREF _Toc395198710 \h 89
8.Glossary PAGEREF _Toc395198711 \h 93
ABSTRACT
Ghana has developed and implemented a number of investment policies since its independence in 1957 (Todaro and Smith, 2003).
It has been promoting democracy and maintaining a stable political environment for a considerable period of time, has made commendable efforts in the management of the economy since the 1980s that has resulted in an average economic growth of 5% every year. The country has also made efforts to attract FDI by formulating polices that market the country as an ideal investment destination with abundance of natural resources. These policies are aimed at creating a more conducive economic climate for both domestic and foreign investors who are interested in investing in the country. By so doing, the country hopes to benefit from these investments, especially foreign investments, in areas such as the transfer of capital, increase in levels of technology, development of organizational structures, enhancement of human capital, and the creation of a better competitive business environment in the country.
Since the 2000s, the level of FDI into Ghana has been on a steady increase; however, the country is still lagging behind its immediate counterparts such as Cote Divoire and Nigeria. This trend is a particular concern given that Ghana has immense potential in attracting the inflow of FDI.
Investors are key players when it comes to fostering a strong economy. Foreign direct investment is particularly a means of boosting the growth and development of host economies. This study explores the factors that influence the inflow of FDI in the economy of Ghana. The study used questionnaires and interviews on individuals from one Chinese company (Anhui Xinran Technology Co. Ltd.) operating in Ghana in the sector of chemical equipments in the country’s economy. A pilot study was carried out to enhance reliability and validity of the instruments. The instruments were administered through personal meetings with respondents. The completed questionnaires were collected after completion. The data was statistically analyzed using SPSS software package. The results were reported using frequency tables. The research question was answered after careful data analysis and interpretation of results after which conclusions were drawn. The findings point to a number of factors that inhibit or contribute to decisions involving investing in Ghana. Those factors that were found to contribute most to the inflow of FDI into Ghana include the Steady growth and development of the economy of the country, political stability, abundance of labour, favourable government policy in terms of laws and regulations and tax as well as the progressively growing market size. On the other hand, several factors were identified as barriers to the inflow of FDI into Ghana: the lack of competition, limited purchasing power, lack of managerial skills, poorly organized employment structures, inadequate or poor health services, lack of skills and training, and poor infrastructure (transport systems, communication and the availability of electricity).