Evidence of the Investment Development Path Hypothesis in Africa

This book applied the investment development path (IDP) model to evaluate the relationship between Ghanäs international investment position and its level of economic development. It also examined how that impact on intra-regional foreign direct investment in Africa. South Africa was used for comparative purpose. The results found empirical evidence in support of the IDP in Ghana. The evidence suggest the country is in the second stage of investment development. Improvement in Ghanäs location-specific advantages combined with those resulting from its natural resources contributed to this pattern of investment development. On the contrary, the regression result for South Africa provided no empirical evidence. I also found that the level and degree of intra-Africa FDI from the Ghanaian perspective is very minimal. The analysis found that while there are many MNEs investing in Ghana, most of them are from advanced countries and only three African countries namely South Africa, Nigeria and Togo have MNEs in Ghana. Generally, outward FDI in Ghana was found to be insignificant and largely concentrated in developed countries though some Ghanaian MNEs invest in Togo and The Gambia.