Foreign Direct Investment and Economic Development in Nigeria
Keywords:
Foreign Direct Investment. Human Development Index. Nigeria. Capital and Recurrent Expenditure
Abstract
This study examined the Foreign Direct Investment (FDI) trends and their influence on the Nigerian Economy over the time frame of 1986 to 2018. Secondary data were sourced from the Central Bank of Nigeria statistical bulletin of various issues and CBN annual reports. This study utilized the Error Correction Model Granger Causality and other diagnostic tests in capturing the long-run and short-run dynamics of the variables used in the model. The result revealed the existence of a positive and significant long-run relationship between Foreign direct investment on the human development index proxy for Economic development. Due to the influence of foreign direct investment, the study recommends that the government should foster its appropriation of capital and recurrent expenditure towards improving the productive dominance of the nation, and eliminate room for insecurity and political turmoil.
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References
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Acheampong, K. (2019). The interaction effect of foreign capital inflows and financial development on economic welfare in sub-Saharan Africa. Financial Innovation, 5(1), 5.
Acosta, P., Calderón, C., Fajnzylber, P. & Lopez, H. (2008). What is the impact of international remittances on poverty and inequality in Latin America? World Development, 36(1), 89-114.
Acosta, P., Calderon, C., Fajnzylber, P., & Lopez, H. (2008). What is the impact of international remittances on poverty and inequality in Latin America?. World Development, 36(1), 89-114.
Adam (2017). The effects of capital on economic growth in Senegal. The Journal of Applied Economic Research, 11(2): 121-42.
Adams Jr, R. H., & Page, J. (2005). Do international migration and remittances reduce poverty in developing countries?. World development, 33(10), 1645-1669.
Adams, S., & Klobodu, E. K. M. (2017). Capital flows and the distribution of income in sub-Saharan Africa. Economic Analysis and Policy, 55, 169-178.
Adams, S., Klobodu, E. K. M., & Lamptey, R. O. (2017). The effects of capital flows on economic growth in Senegal. Margin: The Journal of Applied Economic Research, 11(2), 121-142.
Adegboye, A. C., Ogbebor, O. A., and Egharvba, M. I. (2014). External capital flows and economic growth in Nigeria. JORDIN 12(2). www.transcampus.org/journals.
Adeniyi, O. A., Omisakin, D., Olusegun, A., Egwaikhide, F., & Oyinlola, A. (2012). Foreign direct investment, economic growth and financial sector development in small open developing economies. Economic Analysis & Policy, 42(1).
Adeniyi, O., Ajide, B., & Salisu, A. (2015). Foreign capital flows, financial development and growth in Sub-Saharan Africa. Journal of Economic Development, 40(3).
Aitken, B. J. & Harrison, A.E. (1999). Do domestic firms benefit from direct foreign investment? Evidence from Venezuela. American Economic Review, 89(3), 605-618.
Aizenman, J., Jinjarak, Y. & Park, D. (2013. Capital flows and economic growth in the era of financial integration and crisis, 1990–2010. Open Economies Review, 24(3), 371-396
Ajayi, L. B., & Oke, M. O. (2012). Effect of external debt on economic growth and development of Nigeria. International Journal of Business and Social Science, 3(12), 297-304.
Akinlo, A. E. (2004). Foreign direct investment and growth in Nigeria: An empirical investigation. Journal of Policy modeling, 26(5), 627-639.
Akram, N. (2014). Empirical examination of debt and growth nexus in South Asian countries. Asia-Pacific Development Journal, 20(2), 29-52.
Alfaro, L., Chanda, A., Kalemli-Ozcan, S., & Sayek, S. (2004). FDI and economic growth: the role of local financial markets. Journal of international economics, 64(1), 89-112.
Amuedo-Dorantes, C., & Pozo, S. (2004). Workers' remittances and the real exchange rate: a paradox of gifts. World development, 32(8), 1407-1417.
Anetor, F. O. (2019). Economic growth effect of private capital inflows: a structural VAR approach for Nigeria. Journal of Economics and Development.
Anetor, F. O. (2020). Foreign Capital Inflows, Financial Development and Growth In Nigeria: A Structural VAR Approach. The Journal of Developing Areas, 54(3).
Asika, N. (1991): “Research Methods in Behavioural Sciences” Longman Publishers Lagos.
Aurangeb and Haq A. (2012), "Impact of Foreign Capital Inflows on Economic Growth in Pakistan",European Journal of Economics, Finance and Administrative Sciences ISSN 1450-2275 Issue 46.www.eurojournals.com/EJEFAS.htm.
Ayanwale B. Adeolu (2007). “FDI and economic growth: Evidence from Nigeria.”. African Economic Research Consortium, Nairobi. AERC Research Paper 165
Ayanwale, A. B. (2007). FDI and economic growth: Evidence from Nigeria.
Balasubramanyam, V.N., Salisu, M. & Sapsford, D. (1996). Foreign direct investment and growth in EP and IS Countries. The Economic Journal, 106(434), 92-105.
Banerjee, A., Dolado, J. J., Galbraith, J. W., & Hendry, D. (1993). Co-integration, error correction, and the econometric analysis of non-stationary data. Oxford university press.
Barro, R J, Mankiw, G and Sala-i-Martin, X (1995), ‘Capital mobility in neoclassical models of growth’, American Economic Review, 85, 1 (March), 103-15.
CBN. (2001): Annual Report and Statement of Accounts for the year ended 31 December, 2001. Abuja. Central Bank of Nigeria (CBN).
Chami, R., Fullenkamp, C., & Jahjah, S. (2005). Are immigrant remittance flows a source of capital for development? IMF Staff papers, 52(1), 55-81.
Chang, R., Kaltani, L., & Loayza, N. V. (2009). Openness can be good for growth: The role of policy complementarities. Journal of development economics, 90(1), 33-49.
Choe, J.I. (2003). Do Foreign direct investment and gross domestic investment promote economic growth? Review of Development Economics, 7(1), 44-57.
De Mello Jr, Luiz R. (1997). Foreign direct investment in developing countries and growth: A selective survey. The Journal of Development Studies, 34(1), 1-34.
De Mello, L.R. (1999). Foreign direct investment-led growth: Evidence from time series and panel data. Oxford Economic Papers, 51(1), 133-151.
Driffield, N. & Jones, C. (2013). Impact of FDI, ODA and migrant remittances on economic growth in developing countries: A systems approach. The European Journal of Development Research, 25(2), 173-196.
Dunning, J.H. & Lundan, S.M. (2008). Multinational enterprises and the global economy. Edward Elgar Publishing
Efobi, U., & Asongu, S. (2016). Terrorism and capital flight from Africa. International Economics, 148, 81-94.
Fambon, S. (2013). Foreign capital inflow and economic growth in Cameroon (No. 2013/124). WIDER Working Paper.
Görg, H. & Greenaway, D. (2004). Much ado about nothing? do domestic firms really benefit from foreign direct investment? The World Bank Research Observer, 19(2), 171-197.
Grossman, G. M., & Helpman, E. (1991). Innovation and growth in the global economy. MIT press.
Kant, C. (1996). Foreign direct investment and capital flight. Princeton studies in international finance. No. 80. ISSN 0081-8070; No. 80. ISBN 0-88165-252-0).
Kolawole , B. O. (2013). Foreign assistance and economic growth in Nigeria: The Two-Gap model framework. American International Journal of Contemporary Research, 3(10).
Krugman, P. (1994). The Myth of Asia's miracle, foreign affairs, 73(6), 62-78.
Lartey, E. K. (2013). Remittances, investment and growth in sub-Saharan Africa. The Journal of International Trade & Economic Development, 22(7), 1038-1058.
Lensink, R., & Morrissey, O. (2006). Foreign direct investment: Flows, volatility, and the impact on growth. Review of International Economics, 14(3), 478-493.
Macias, J.B. & Massa, I. (2010). The global financial crisis and Sub-Saharan Africa: The effects of slowing private capital inflows on growth. African Development Review, 22(3), 366-377.
Obiechina, M.E and Ukeje E.U. (2013), "Economic Growth, Capital Flows, Foreign Exchange Rate,Export and Trade Openness in Nigeria", International Journal of Economics and Management Sciences, .2(9)01-13. managementjournal.org
OECD Development Centre. Working paper No. 160 (Formerly technical paper No. 160) Research programme on: Capital movement and development)
Okoro, C. O., Nzotta, S. N., & Alajekwu, U. B. (2019). Effect of International Capital Inflows on Economic Growth of Nigeria.
Olasode, O. S. (2015). Impact of capital flows on economic growth in Nigeria. International Journal of Economics, Commerce and Management. 3(5). 1285-1304.
Olusanya, S. O. (2013). Impact of foreign direct investment inflow on economic growth in a pre and post deregulated Nigeria economy. A granger causality test (1970-2010). European Scientific Journal, 9(25).
Petry, N., Olofin, I., Hurrell, R., Boy, E., Wirth, J., Moursi, M., & Rohner, F. (2016). The proportion of anemia associated with iron deficiency in low, medium, and high human development index countries: a systematic analysis of national surveys. Nutrients, 8(11), 693.
Prasad, E. S., Rajan, R. G., & Subramanian, A. (2007). Foreign capital and economic growth (No. w13619). National Bureau of Economic Research.
Reinhart, C. M., Reinhart, V., & Trebesch, C. (2016). Global cycles: Capital flows, commodities, and sovereign defaults, 1815-2015. American Economic Review, 106(5), 574-80.
Rodrik, D. & Rodríguez, F. (2001). Trade policy and economic growth: A skeptics guide to the cross-national evidence, in B. Bernanke and K. Rogoff (editors), NBER Macroeconomics Annual 2000, 15, 261-325.
Romer (1993). Two strategies for economic development: Using ideas and producing ideas, proceedings of the World Bank annual conference on development economics, 1992, ed. Summers, L.H; Shah, S., 63--91.
Solomon, H.C. and Eka, O.O (2013) Impact of FDI on telecommunication sector on Nigerian Economy. International Journal of Modern Social Sciences, 2(3):195-215.
Stiglitz, J.E. (2000). Capital Market liberalization, economic growth, and instability. World Development, 28(6), 1075-1086.
Tsai, P. (1994). Determinants of foreign direct investment and its impact on economic growth. Journal of Economic Development, 19(1), 137-163.
Tyson, J. (2015). Sub-Saharan Africa international sovereign bonds. Overseas Development Institute.
World Bank (2013). World Bank Global Financial Development Database (GFDD). Washington D.C. World Bank.
World Bank (2006). World Development Indicators. Washington D. C.
Younger, S. D. (1992). Aid and the Dutch disease: Macroeconomic management when everybody loves you. World Development, 20(11), 1587-1597.
Acheampong, K. (2019). The interaction effect of foreign capital inflows and financial development on economic welfare in sub-Saharan Africa. Financial Innovation, 5(1), 5.
Acosta, P., Calderón, C., Fajnzylber, P. & Lopez, H. (2008). What is the impact of international remittances on poverty and inequality in Latin America? World Development, 36(1), 89-114.
Acosta, P., Calderon, C., Fajnzylber, P., & Lopez, H. (2008). What is the impact of international remittances on poverty and inequality in Latin America?. World Development, 36(1), 89-114.
Adam (2017). The effects of capital on economic growth in Senegal. The Journal of Applied Economic Research, 11(2): 121-42.
Adams Jr, R. H., & Page, J. (2005). Do international migration and remittances reduce poverty in developing countries?. World development, 33(10), 1645-1669.
Adams, S., & Klobodu, E. K. M. (2017). Capital flows and the distribution of income in sub-Saharan Africa. Economic Analysis and Policy, 55, 169-178.
Adams, S., Klobodu, E. K. M., & Lamptey, R. O. (2017). The effects of capital flows on economic growth in Senegal. Margin: The Journal of Applied Economic Research, 11(2), 121-142.
Adegboye, A. C., Ogbebor, O. A., and Egharvba, M. I. (2014). External capital flows and economic growth in Nigeria. JORDIN 12(2). www.transcampus.org/journals.
Adeniyi, O. A., Omisakin, D., Olusegun, A., Egwaikhide, F., & Oyinlola, A. (2012). Foreign direct investment, economic growth and financial sector development in small open developing economies. Economic Analysis & Policy, 42(1).
Adeniyi, O., Ajide, B., & Salisu, A. (2015). Foreign capital flows, financial development and growth in Sub-Saharan Africa. Journal of Economic Development, 40(3).
Aitken, B. J. & Harrison, A.E. (1999). Do domestic firms benefit from direct foreign investment? Evidence from Venezuela. American Economic Review, 89(3), 605-618.
Aizenman, J., Jinjarak, Y. & Park, D. (2013. Capital flows and economic growth in the era of financial integration and crisis, 1990–2010. Open Economies Review, 24(3), 371-396
Ajayi, L. B., & Oke, M. O. (2012). Effect of external debt on economic growth and development of Nigeria. International Journal of Business and Social Science, 3(12), 297-304.
Akinlo, A. E. (2004). Foreign direct investment and growth in Nigeria: An empirical investigation. Journal of Policy modeling, 26(5), 627-639.
Akram, N. (2014). Empirical examination of debt and growth nexus in South Asian countries. Asia-Pacific Development Journal, 20(2), 29-52.
Alfaro, L., Chanda, A., Kalemli-Ozcan, S., & Sayek, S. (2004). FDI and economic growth: the role of local financial markets. Journal of international economics, 64(1), 89-112.
Amuedo-Dorantes, C., & Pozo, S. (2004). Workers' remittances and the real exchange rate: a paradox of gifts. World development, 32(8), 1407-1417.
Anetor, F. O. (2019). Economic growth effect of private capital inflows: a structural VAR approach for Nigeria. Journal of Economics and Development.
Anetor, F. O. (2020). Foreign Capital Inflows, Financial Development and Growth In Nigeria: A Structural VAR Approach. The Journal of Developing Areas, 54(3).
Asika, N. (1991): “Research Methods in Behavioural Sciences” Longman Publishers Lagos.
Aurangeb and Haq A. (2012), "Impact of Foreign Capital Inflows on Economic Growth in Pakistan",European Journal of Economics, Finance and Administrative Sciences ISSN 1450-2275 Issue 46.www.eurojournals.com/EJEFAS.htm.
Ayanwale B. Adeolu (2007). “FDI and economic growth: Evidence from Nigeria.”. African Economic Research Consortium, Nairobi. AERC Research Paper 165
Ayanwale, A. B. (2007). FDI and economic growth: Evidence from Nigeria.
Balasubramanyam, V.N., Salisu, M. & Sapsford, D. (1996). Foreign direct investment and growth in EP and IS Countries. The Economic Journal, 106(434), 92-105.
Banerjee, A., Dolado, J. J., Galbraith, J. W., & Hendry, D. (1993). Co-integration, error correction, and the econometric analysis of non-stationary data. Oxford university press.
Barro, R J, Mankiw, G and Sala-i-Martin, X (1995), ‘Capital mobility in neoclassical models of growth’, American Economic Review, 85, 1 (March), 103-15.
CBN. (2001): Annual Report and Statement of Accounts for the year ended 31 December, 2001. Abuja. Central Bank of Nigeria (CBN).
Chami, R., Fullenkamp, C., & Jahjah, S. (2005). Are immigrant remittance flows a source of capital for development? IMF Staff papers, 52(1), 55-81.
Chang, R., Kaltani, L., & Loayza, N. V. (2009). Openness can be good for growth: The role of policy complementarities. Journal of development economics, 90(1), 33-49.
Choe, J.I. (2003). Do Foreign direct investment and gross domestic investment promote economic growth? Review of Development Economics, 7(1), 44-57.
De Mello Jr, Luiz R. (1997). Foreign direct investment in developing countries and growth: A selective survey. The Journal of Development Studies, 34(1), 1-34.
De Mello, L.R. (1999). Foreign direct investment-led growth: Evidence from time series and panel data. Oxford Economic Papers, 51(1), 133-151.
Driffield, N. & Jones, C. (2013). Impact of FDI, ODA and migrant remittances on economic growth in developing countries: A systems approach. The European Journal of Development Research, 25(2), 173-196.
Dunning, J.H. & Lundan, S.M. (2008). Multinational enterprises and the global economy. Edward Elgar Publishing
Efobi, U., & Asongu, S. (2016). Terrorism and capital flight from Africa. International Economics, 148, 81-94.
Fambon, S. (2013). Foreign capital inflow and economic growth in Cameroon (No. 2013/124). WIDER Working Paper.
Görg, H. & Greenaway, D. (2004). Much ado about nothing? do domestic firms really benefit from foreign direct investment? The World Bank Research Observer, 19(2), 171-197.
Grossman, G. M., & Helpman, E. (1991). Innovation and growth in the global economy. MIT press.
Kant, C. (1996). Foreign direct investment and capital flight. Princeton studies in international finance. No. 80. ISSN 0081-8070; No. 80. ISBN 0-88165-252-0).
Kolawole , B. O. (2013). Foreign assistance and economic growth in Nigeria: The Two-Gap model framework. American International Journal of Contemporary Research, 3(10).
Krugman, P. (1994). The Myth of Asia's miracle, foreign affairs, 73(6), 62-78.
Lartey, E. K. (2013). Remittances, investment and growth in sub-Saharan Africa. The Journal of International Trade & Economic Development, 22(7), 1038-1058.
Lensink, R., & Morrissey, O. (2006). Foreign direct investment: Flows, volatility, and the impact on growth. Review of International Economics, 14(3), 478-493.
Macias, J.B. & Massa, I. (2010). The global financial crisis and Sub-Saharan Africa: The effects of slowing private capital inflows on growth. African Development Review, 22(3), 366-377.
Obiechina, M.E and Ukeje E.U. (2013), "Economic Growth, Capital Flows, Foreign Exchange Rate,Export and Trade Openness in Nigeria", International Journal of Economics and Management Sciences, .2(9)01-13. managementjournal.org
OECD Development Centre. Working paper No. 160 (Formerly technical paper No. 160) Research programme on: Capital movement and development)
Okoro, C. O., Nzotta, S. N., & Alajekwu, U. B. (2019). Effect of International Capital Inflows on Economic Growth of Nigeria.
Olasode, O. S. (2015). Impact of capital flows on economic growth in Nigeria. International Journal of Economics, Commerce and Management. 3(5). 1285-1304.
Olusanya, S. O. (2013). Impact of foreign direct investment inflow on economic growth in a pre and post deregulated Nigeria economy. A granger causality test (1970-2010). European Scientific Journal, 9(25).
Petry, N., Olofin, I., Hurrell, R., Boy, E., Wirth, J., Moursi, M., & Rohner, F. (2016). The proportion of anemia associated with iron deficiency in low, medium, and high human development index countries: a systematic analysis of national surveys. Nutrients, 8(11), 693.
Prasad, E. S., Rajan, R. G., & Subramanian, A. (2007). Foreign capital and economic growth (No. w13619). National Bureau of Economic Research.
Reinhart, C. M., Reinhart, V., & Trebesch, C. (2016). Global cycles: Capital flows, commodities, and sovereign defaults, 1815-2015. American Economic Review, 106(5), 574-80.
Rodrik, D. & Rodríguez, F. (2001). Trade policy and economic growth: A skeptics guide to the cross-national evidence, in B. Bernanke and K. Rogoff (editors), NBER Macroeconomics Annual 2000, 15, 261-325.
Romer (1993). Two strategies for economic development: Using ideas and producing ideas, proceedings of the World Bank annual conference on development economics, 1992, ed. Summers, L.H; Shah, S., 63--91.
Solomon, H.C. and Eka, O.O (2013) Impact of FDI on telecommunication sector on Nigerian Economy. International Journal of Modern Social Sciences, 2(3):195-215.
Stiglitz, J.E. (2000). Capital Market liberalization, economic growth, and instability. World Development, 28(6), 1075-1086.
Tsai, P. (1994). Determinants of foreign direct investment and its impact on economic growth. Journal of Economic Development, 19(1), 137-163.
Tyson, J. (2015). Sub-Saharan Africa international sovereign bonds. Overseas Development Institute.
World Bank (2013). World Bank Global Financial Development Database (GFDD). Washington D.C. World Bank.
World Bank (2006). World Development Indicators. Washington D. C.
Younger, S. D. (1992). Aid and the Dutch disease: Macroeconomic management when everybody loves you. World Development, 20(11), 1587-1597.
Published
2023-12-16
How to Cite
Ifeosame, S. (2023). Foreign Direct Investment and Economic Development in Nigeria. GPH-International Journal of Social Science and Humanities Research, 6(11), 199-215. https://doi.org/10.5281/zenodo.10396014
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Copyright (c) 2023 Samuel Nwaoha Ifeosame
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