Policy Dynamics and Foreign Direct Investment Inflows in Ghana: What Are the Lessons for West African Countries?

Unlike most West African countries, Ghana has recently attracted significant flows of foreign direct investment (FDI). This article examines why Ghana attracts more FDI than its West African counterparts and how Ghana has improved its FDI attractiveness. To do so, the article uses statistical analysis to investigate the dynamics of FDI policy-related factors in Ghana and compares Ghana's performance with West African countries' average performance. The results show that over time and compared with West Africa's average situation, Ghana has improved its level of openness to international markets, human capital, infrastructure, political stability, and quality of institutions. These results may explain Ghana's recent improved performance in attracting FDI, and they suggest that improving the aforementioned factors may attract more FDI to Ghana and its neighbors.