FDI INFLOW AND ECONOMIC OPPORTUNITY NEXUS IN NIGERIA: A MULTI-SECTORAL ANALYSIS
Abstract
The study examines the relationship between FDI inflows and economic opportunities nexus in Nigeria over the period 1986 to 2022. Specifically, the study considers how the growth of output in agricultural (AGR), construction/real estate (CRES), mining and quarrying (MIQU), transportation and storage (TSSE), information and communication (ICS), and manufacturing (MSE) sectors affect foreign direct investment growth (FDIG). The study makes use of the ex-post facto research design. The data utilized in the study were sourced from the statistical bulletin of Central Bank of Nigeria. At the 5% level, the study used the descriptive statistics, unit root, Johansen co-integration, Parsimonious ECM, and Granger Causality test. The unit test result shows that the variables are all stationary at first difference requiring the Johansen co-integration that verifies the presence of long-run form. The Parsimonious ECM test shows that AGR and ICS are positive but insignificant to FDIG, CRES is negative and insignificant to FDIG, MSE and MIQU are positive and significant to FDIG, and TSSE is negative and significant to FDIG. The Granger Causality test shows the absence of causality among the variables. In conclusion, the economic opportunities in the various sectors of the Nigerian economy significantly affect FDI inflows. The study recommended that the federal government of Nigeria should continue to encourage more growth in the manufacturing and mining and quarrying sectors in form of concessions, tax holidays as well as free production and export zones so as to increase the FDI inflows.
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