ABSTRACT
Many developing countries are striving to attract foreign direct investment into their country of which Ghana is no exception. They believe foreign direct investment inflows can boost domestic consumption expenditure and eventually aid in the alleviation of poverty in their respective countries. This key objective of this study is to investigates the impact of foreign direct invest (FDI) inflow on household consumption expenditure in Ghana, the research used secondary data from the world development indicators, ranging from 1975 through to 2016.
Foreign direct invest, trade openness, human capital, were some of the independent variable used against household consumption been the dependent variable.
The model was estimated using the Ordinary Least Square Estimation Technique. The study result reveals that, foreign direct investment has an adverse influence on household consumption in the country, reason been most foreign direct investment are directed towards the extractive industries and the mining of natural resources, proceeds from such venture are usually repatriated back to the foreign country, with very little done to enhance domestic consumption, the study also reveals that electricity consumption which served as proxy for expenditure and human capital development has a positive influence on household consumption expenditure. The result of the study recommends that the state should redirect juicy policies and incentives given to foreign direct investors to development of human capital and better infrastructure to domestic investor since this is likely to have a significant positive effect on household consumption expenditure relative to foreign direct investment.
CHAPTER ONE INTRODUCTION
1.0 Background of the Study
Frequently, destitution is seen as far as pay. Individuals can be considered to live in destitution when they don’t have salary and different assets needed to satisfy the states of existence, for example, counts calories, material, offices products and ventures; this necessity would have made them to assume jobs and partake in the connections and conventions of their general public (AfDB, 2015). Notwithstanding, it is accepted that salary gives a biased sketch does and is not inclusive of the more extensive way of life or human improvement. Poverty is defined by the World Bank as “encompassing not only material deprivation (measured by an appropriate concept of income or consumption) but also low achievements in education and health” (Azam, Haseeb, & Samsudin, 2016)
Typically most types of FDI’s are intended to expand house hold salaries. Outside direct venture inflows is typically transmitted either legitimately or by implication through multilateral establishments or private deliberate associations so as to improve the social and financial advancement of the creating nations. Along these lines, the broadly useful of inflows from worldwide association and outside contributors is to invigorate monetary improvement, support residential assets preparation and spending and in the long run diminish the instance of neediness particularly in low salary financial aspects. At first outside guide appears to improve normal pay in the guide getting nation and after that assumes job in neediness alleviation(Alvi & Senbeta, 2012; Sachs & McArthur, 2005) showed that the focused on foreign inflows to a great extent to kill neediness in creating nations. In a comparative report, (Wetherill & Gray, 2015) out that the major goals of outside guide are to relieve neediness; these targets incorporate empowering monetary development, boosting institutional change, and diminishing destitution in the creating scene. (Steele, 2013) gives
motivations to giving guide by contending that remote guide offered on a fundamental level, straightforwardly or in a roundabout way will encourage the improvement of the lives of those individuals who truly need it. Direct foreign inflows (FDI) has been seen as a critical resource for monetary progression. Various people battle that the movements of foreign inflows may perhaps fill the opening amongst needed endeavors and privately arranged saving(DeMartino, 2002; Stebek, 2012) It moreover may extend charge livelihoods and improve the board, development, similarly as work capacities in recipient nations (DeMartino, 2002; Stebek, 2012) Numerous scholars broadly accept that the advantages accumulated from direct foreign inflows may incorporate the securing of novel innovation, neediness decrease, work creation, human capital advancement, commitment to worldwide exchange reconciliation, upgrading household venture, and expanding charge income produced by direct foreign inflows (Bank, 2000; Duffield, 2014) Some of these advantages are required to add to higher financial and work development which is a successful apparatus for accomplishing enhancement in the decrease of neediness particularly in provincial regions.
