Sarcouncil Journal of Economics and Business Management

Abstract: This study compares the effect of foreign direct investment on real sector performance in Nigeria and Ghana from 1991 to 2023. The research was based on the Endogenous and Eclectic Paradigm Theory (OLI Model). The research utilized annual time series data obtained from the statistics bulletin of the Central Bank of Nigeria (CBN) and World Bank Development Indicators. The data analysis methods utilized included the Augmented Dickey-Fuller (ADF) statistic, the Autoregressive Distributive Lag (ARDL) technique, and the Error Correction Model. The major finding of the research was that foreign direct investment had a significant and positive effect on agricultural sector output of Nigeria and Ghana in both the short and long run. Likewise, trade openness has a positive and significant impact on agricultural sector output of both nations, in the short and long run too. Contrarily, exchange rate has a significantly negative impact on agricultural sector output in both short and long run only in Ghana. The study concluded that foreign direct investment has a positive and significant influence on the real sector performance (measured by agricultural sector output) of the Nigeria and Ghana economies. The study recommended among others that the authorities of both economies should continue to implement policies that attract and retain foreign direct investment inflow as clear and stable regulation, along with incentives for foreign investor, can contribute to sustain agricultural sector output.