Foreign direct investment inflow and sustainable development: Evidence from Nigeria and Ghana

Foreign investment inflow, especially foreign direct investment (FDI) is perceived to have a positive impact on the economic growth and overall development of a recipient country through diverse direct and indirect channels. It complements local investment portfolio, which is essential in the attainment of sustainable growth and development. The African economies rely on FDI inflows from the developed countries for the attainment of the much desired sustainable growth and development in the region. Though the region has recorded some impressive growth in recent times, its ability to sustain it calls for concern. This is based on the fact that one of the growth enhancing factors in the region has unfortunately slumped since 2015. Available statistical evidence reveal that much of the countries in the region have been unable to attract adequate FDI in recent years. The objective of this paper is to determine the role of FDI inflows in enhancing sustainable development in the economy of Nigeria and Ghana. This paper therefore, adopts the multiple regression analysis with Ordinary Least Square (OLS) econometric technique on a time series secondary data from 2000 to 2018 obtained from WDI. Preliminary finding implies that Ghana performs better than Nigeria on social sustainability, which is measured in terms of education and healthcare indicators. However, on environmental and economic sustainability, Nigeria fares better than Ghana. These pre-estimation findings require further empirical inquiry. This implies that a per cent increase in FDI inflow to these countries enhances economic growth and economic sustainability by 0.3 per cent. However, we are quick to indicate that the positive impact is statistically insignificant. This reveals that the difference in economic growth and economic sustainability in both countries is not accounted for by FDI and gross fixed capital formation.