RELATIONSHIPS BETWEEN ECONOMIC GROWTH, FOREIGN DIRECT INVESTMENT AND INFLATION: ARDL MODELS APPROACH FOR THE CASE OF GHANA Eurasian Research Journal July 2019 Vol. 1, No. 2 ISSN: 2519-2442 ARTICLES Orhan Coban, Abdul-Razak Bawa Yussif Relationships Between Economic Growth, Foreign Direct Investment And Inflation: ARDL Models Approach for the Case of Ghana Zhuldyz Kanapiyanova History of the Energy Sector Development and Kazakhstan’s Energy Potential Abulkhairkhan Zhunisbek Russia’s Policy in Central Asia During the Putin Era Kanat Makhanov Industrial Concentration in Kazakhstan BOOK REVIEWS Omirbek Hanayi Turkic Republics in the Twenty-Seventh Year of Independence Dinara Taldybayeva Independence and State Building Process in Turkic Republics JULY 2019 VOLUME 1 NO 2 1 Eurasian Research Journal is a refereed journal of international standards aiming to publish scientific articles in a wide range of fields including econom- ics, finance, energy, international relations, security, transportation, politics and sociology in the Eurasian region that covers the territory from the Balkans to Mongolia with particular focus on Turkic – speaking countries. 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Yildirim Beyazit University/Turkey CONTENT ARTICLES Orhan Coban, Abdul-Razak Bawa Yussif 7 Relationships Between Economic Growth, Foreign Direct Investment and Inflation: ARDL Models Approach for the Case of Ghana Zhuldyz Kanapiyanova 25 History of the Energy Sector Development and Kazakhstan’s Energy Potential Abulkhairkhan Zhunisbek 39 Russia’s Policy in Central Asia During the Putin Era Kanat Makhanov 51 Industrial Concentration in Kazakhstan BOOK REVIEWS Omirbek Hanayi Turkic Republics in the Twenty-Seventh Year of Independence 85 Dinara Taldybayeva Independence and State Building Process in Turkic Republics 89 ARTICLES Eurasian RELATIONSHIPS BETWEEN ECONOMIC Research Journal July 2019 GROWTH, FOREIGN DIRECT INVESTMENT AND Vol. 1, No. 2 INFLATION: ARDL MODELS APPROACH FOR THE CASE OF GHANA Orhan COBAN1 Abdul-Razak Bawa YUSSIF2 ABSTRACT The study applies Autoregressive Distributed Lags models and the Toda and Yamamoto (1995) causality test to analyze the relationships as well as the causality properties among various pairs of Ghana’s inflow of Foreign Direct Investment (FDI), Inflation and Economic growth for the period 1980 to 2017. The study finds that Inflation relates inversely with both Economic growth and inflows of Foreign Direct Investment. However, Ghana’s Economic growth and its inflows of FDI are positively related. Finally, the study finds a bidirectional causal effect between inflation and FDI. In addition, a unidirectional causal effect moving from Economic growth to Inflation was established and the causal effect is non-existent between Economic growth and inflow of FDI. Key Words: ARDL, Causality test, Economic growth, FDI, Inflation, Ghana. 1 Prof. Dr., Selcuk University, Yeni Istanbul St. No. 369, Konya, 42130, Turkey, e-mail: [email protected] 2 PhD student, Selcuk University, Yeni Istanbul St. No. 369, Konya, 42130, Turkey, e-mail: [email protected] 7 RELATIONSHIPS BETWEEN ECONOMIC GROWTH, FOREIGN DIRECT INVESTMENT AND INFLATION: ARDL MODELS APPROACH FOR THE CASE OF GHANA Eurasian Research INTRODUCTION Journal July 2019 Vol. 1, No. 2. In both developed and developing countries, the principal goal of pol- icy formulators towards reducing poverty is to attain high sustainable economic growth induced by low inflation (Pesaran et al. 2001). High economic growth has the potential to raise living standards of poor so- cieties. Empirical and theoretical studies present varied views on the re- lationship between economic growth and inflation. Nonetheless, a sig- nificant number of studies still confirm that high inflation has a negative impact on economic growth. The distortion and uncertainty caused by high inflation in an economy subsequently retard sustainable economic growth through that economy’s spending and its investments. Moreover, the international competitiveness of a country is greatly reduced by high price levels; this makes exports more expensive thereby creating balance of payment problems. Foreign Direct Investment (FDI) serves as an essential path through which inflation indirectly affects economic growth for the improvement of soci- ety (Pesaran et al. 2001). A country experiencing low inflation is a sign of economic stability - this implies increases in the returns on FDI and sig- nifies the ability of the central bank carrying out fitting monetary policies as well as the government’s readiness to balance the country’s budget. Hence low inflation level in a country boosts FDI. According to World Bank data, the world’s FDI inflows hit a record high in 2007 of $3.1 trillion but has fallen to about $2 trillion in the next de- cade (2017). In developing economies FDI contribute immensely to eco- nomic growth as it increases total investment, productivity gains through improved managerial skills and technology adoptions and implementa- tions. However, (Herzer et al. 2008) argue that FDI also has the potential to hurt the host country by reducing investment opportunities for local investors. These ambiguous results have triggered more empirical stud- ies on the FDI-economic growth nexus in both developed and develop- ing countries. Just like most developing countries, in Ghana, one of the obstinate prob- lems of the economy is high inflation. This has been persistent for a long time and tends to confirm the belief that high and volatile inflation has the potential of hampering economic growth. In Ghana, the 1983 Eco- nomic Recovery Program (ERP) was used as a measure to control in- flation in order to attract FDI and thereby triggering economic growth. Recently, the central bank (Bank of Ghana) in 2007 adopted inflation tar- geting as another measure to combat high inflation and subsequently to achieve more rapid economic growth. Since the adaptation of price stability as a major measure by the Bank of Ghana, there has been a fall in inflation from 80.76% in 2006 to 13.40% in 2017. Net FDI inflows rising from $63.6 million in 2006 to $3.3 billion in 2017 and real Gross Domes- tic Product growth increasing from 6.4% in 2006 to 8.5% in 2017. These