Effect of Foreign Direct Investment on Economic Growth in Nigeria and Ghana

Authors

  • Justice Sunday Ogbaragu Department of Accountancy, Faculty of Management Sciences, Chukwuemeka Odumegwu Ojukwu University, Igbariam Campus, Nigeria
  • Nkechi Offor Department of Accountancy, Faculty of Management Sciences, Chukwuemeka Odumegwu Ojukwu University, Igbariam Campus, Nigeria
  • Ifeoma Hope Orjinta Department of Accountancy, Faculty of Management Sciences, Chukwuemeka Odumegwu Ojukwu University, Igbariam Campus, Nigeria
  • David Udoezika Department of Accountancy, Faculty of Management Sciences, University on the Niger, Onitsha, Nigeria

DOI:

https://doi.org/10.59653/ijmars.v2i03.1125

Keywords:

Foreign Direct Investment, economic growth, Nigeria, Ghana, Gross Domestic Product, Exchange Rates

Abstract

This quantitative study investigated the effect of Foreign Direct Investment (FDI) on Economic Growth in Nigeria and Ghana using data spanning from 1981 to 2022 sourced from reputable institutions, including the Central Bank of Nigeria, Bank of Ghana, World Bank, International Monetary Fund (IMF), and United Nations Conference on Trade and Development (UNCTAD). Gross Domestic Product (GDP) per capita served as the key indicator of economic growth, calculated by dividing total GDP by population size. FDI, Inflation Rates, and Exchange Rates were examined as independent variables. Ordinary Least Square (OLS) regression analysis was employed, and the model was adapted from previous studies. Descriptive statistics highlighted substantial FDI inflows in both countries, with Nigeria exhibiting a mean FDI of USD 2.47 billion and Ghana's USD 1.13 billion. Analysis revealed the significance of FDI in driving economic growth in both nations, with coefficients of 9.10E-08 for Nigeria and 2.85E-07 for Ghana. Additionally, Exchange Rates demonstrated a positive effect on GDP per capita in both countries, emphasizing the importance of currency stability. Cointegration tests suggested stable long-term relationships between FDI and Economic Growth. The study suggests that both countries should continue implementing policies that attract and retain FDI as clear and stable regulations and incentives for foreign investors can contribute to sustained economic growth.

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Published

2024-08-25

How to Cite

Ogbaragu, J. S., Offor, N., Orjinta, I. H., & Udoezika, D. (2024). Effect of Foreign Direct Investment on Economic Growth in Nigeria and Ghana. International Journal of Multidisciplinary Approach Research and Science, 2(03), 1391–1419. https://doi.org/10.59653/ijmars.v2i03.1125

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Vol. 2 No. 03 (2024): International Journal of Multidisciplinary Approach Research and Science

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