FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN NIGERIA
Abstract
The study is patterned to empirically investigate foreign direct investment (FDI) and the economic growth in Nigeria between 1990 and 2021. It is based on the traditional theory of FDI. For the attainment of its objectives Oil related Foreign Direct Investment (OFDI) and Non-oil related Foreign Direct Investment (NFDI) were used as proxies for study’s explanatory variable FDIwhile gross domestic product (GDP) was used to proxy the study’s dependent variable economic growth in Nigeria. Secondary data from the Central Bank of Nigeria (CBN) statistical bulletin was obtained and employed in the study. In the study stationarity test was indulged in. The ordinary Least Square (OLS) approach was used to carry out the short-run analysis while Johansen co-integration test was employed to carry out the long-run analysis. Also, the Granger causality test was employed in the study so as to ascertain if a causal relationship exists between the study’s variables. Our results reveal the following: Data were stationary at order one (1), positive and insignificant relationship between NFDI and economic growth in Nigeria, negative and insignificant relationship between OFDI and economic growth in Nigeria, positive and significant relationship between FDI and economic growth in Nigeria. The results also reveal the underlisted: In the short-run FDI largely determines economic growth in Nigeria, a long-run relationship between FDI and economic growth in Nigeria, and no causal relationship between FDI and economic growth in Nigeria. Lastly, the study made some recommendations so as to permit economic growth brought about by the inflow and survival of FDI in Nigeria.
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