An empirical analysis of the effect of foreign direct investment on population health in Ghana

Abstract

AbstractForeign direct investment (FDI) is generally viewed as a major supplement to domestic resources in economies all over the world. Given this, most countries including Ghana continue to devise strategies aimed at attracting more FDI inflows as well as reducing FDI outflows (positive net FDI inflows). This has led to several empirical studies examining the effects of FDI on development indicators. However, while FDI can affect population health, it has received very little attention especially in the case of Ghana. This study, therefore, uses annual time series data from 1975 to 2019 to examine the effect of net FDI inflows on population health (life expectancy and death rate) in Ghana. The ordinary least square (OLS) and the instrumental variable two‐stage least square (IV2SLS) estimators are employed as the empirical estimation techniques. The study finds that, net FDI inflows improve population health even after controlling for endogeneity. Thus, enhancing net FDI inflows can be used as an effective tool towards improving population health in Ghana.