ANALYSING THE IMPACT OF FOREIGN DIRECT INVESTMENT (FDI) ON NIGERIA'S ECONOMIC GROWTH: A COINTEGRATION APPROACH (original) (raw)
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Foreign Direct Investment and Economic Growth in Nigeria
Journal of Economics and Business , 2018
This study analyzes the relationship between foreign direct investment and economic growth in Nigeria. Secondary data on foreign direct investment, gross domestic product, and monetary policy rate were sourced from Central Bank of Nigeria. The model was analyzed using the Fully modified Least Squares, ADF Unit Root and the Johansen Cointegration test methods. The ADF test result revealed that the variables are not stationary at levels but stationary in first difference. There exists long-run relationship among the variables as shown from the Johansen Cointegration test result thereby forming the basis for employing the FMOLs. The Outcome of the Cointegrating test result shows that all the coefficients of the explanatory variable (FDI and MPR) are positive. However, only FDI was found to be significant. Based on the result of the research, the following recommendations were made among others: a combination of monetary, fiscal as well as other trade policies geared towards attracting foreign investors should be strategically deployed by the government, the government should create an enabling environment to encourage the inflow of foreign capital by the development of infrastructural facilities. There is also the need for a stable political environment to ensure the security of life and property.
IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM NIGERIA, 1985-2016
This study analyses the impact of foreign direct investment on economic growth in Nigeria using data for 32 years, from 1985-2016. The OLS estimation and the Johansen cointegration test were the key techniques of analysis employed. The results indicate that foreign direct investment has no positive impact on the Nigerian economic growth. Trade openness and exchange rate, however, have positive but insignificant influence on economic growth. The cointegration test result revealed that there is evidence of a long-run relationship between foreign direct investment and economic growth. The paper thus recommends that there is need for in-depth investigation of economic and institutional forces that determine the composition of FDI inflows to developing countries and to work towards improving such forces. Moreover, government should also take measures in order to stabilize the exchange rate system that may attract foreign investors in the country, and also liberalize the trade policy to attract foreign investors to the country. JEL: E22, F21, G11
FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN NIGERIA: A TEST OF CAUSALITY
Lapai Journal of Management Science, 2012
Foreign Direct Investment (FDI) facilitates the growth of international production which provides an unprecedented opportunity for developing countries to achieve faster Economic Growth through foreign investments. This paper examines the causal relationship between FDI and Economic Growth in Nigeria for the period 1978-2007. The stationarity of the data series are tested using Augmented Dickey-Fuller (ADF) and Johansen Co-integration test, and Vector Error Correction Model (VECM) used for causality test. The study found that the FDI and Gross Domestic Product (GDP) are cointegrated while the VECM employed shows that causality runs from GDP to FDI. Given the existence of long-run and the causal relationship, the paper recommends that efforts should be made to attract FDI to other sectors that also contribute to GDP other than the extractive (oil) sector.
FDI and Economic Growth in Nigeria: A Co-integration Analysis
Business and Economic Research, 2015
This paper establishes an empirical relationship between foreign direct investment (FDI) and economic growth in Nigeria under the framework of cointegration analysis over the period 1970-2010. The econometric evidence from the Engle Granger cointegration tests suggests that there is no long-run relationship between FDI and economic growth in Nigeria. However, there is a short-run dynamic relationship between FDI and economic growth. And finally the study concluded that, for the achievement of a long-run relationship between FDI and economic growth in Nigeria, there is a need to improve the business environment, with the provision of necessary infrastructure and political stability in the country.
FOREIGN DIRECT INVESTMENT AND ITS IMPACT ON ECONOMIC GROWTH OF NIGERIA (1985-2016
The research is aimed at exploring Foreign Direct Investment and its impact on economic growth of Nigeria. The study covers 31-year period between 1985-2016. Simple ordinary least-square regression model is used to measure the effects and relationships between the independent variable and the dependent variable using E-views 9.0. Foreign Direct Investment (FDI) serve as the independent variable while economic growth as the dependent variable. GDP, exchange rate, inflation rate, unemployment rate, total savings and interest rate were used as proxies for economic growth. Data on FDI, GDP, exchange rate, unemployment rate, savings and interest rate were retrieved from the CBN Annual Statistical Bulletin, World bank Report and National Bureau of Statistics. The stationarity property of a time series data can be examined by conducting unit root test in order to ascertain the stationarity or otherwise of the series variables (Akinola,2016). Augmented Dickey-Fuller (ADF) test due to Dickey and Fuller (1979, 1981), and the Phillip-Perron (PP) due to Phillips (1987) and Phillips and Perron (1988) were used to ensure the stationarity of the time series data i.e dependent and independent variable. The finding showed that there is a strong and positive relationship between FDI and economic growth in Nigeria. The government of Nigeria must put all hands-on desk, formulating policies and necessary reforms to ensure that foreign direct investments are attracted to benefit the populace at large. It also recommended that Institutionalized corruption both in private and public sectors must be fought, if the nation must attract FDI, we must change our ways of doing things.
2016
This study examined the causality between foreign direct investment (FDI) and export performance in Nigeria from 1970-2013. The study employed secondary annual time series data which was obtained from various publications of the Central Bank of Nigeria (CBN) for the period 1970 – 2012. The presence of unit root was tested using the Phillips-Perron (PP 1998) and Kwiatkowski, Phillips, Schmidt, and Shin (KPSS, 1992) tests. Johansen-Juselius and vector error correction (VEC) procedure was performed to trace cointegration relationship between the variables. The study found the presence of a cointegration relationship among the variables. Also the VEC model traced a long-run equilibrium relationship in the variables under study without having any significant short-term causal flows among the series, except for the FDI. However, the study did not trace any significant relationship between GDP, EXR, TOP and exports. The study recommends the authority concern to come up with policies that w...
Foreign Direct Investment Led Growth Hypothesis and Economic Development in Nigeria
Randwick International of Social Science Journal
This study was an inquiry into the nexus of the foreign-direct investment (FDI) led growth hypothesis, and how it translates into the development of the Nigerian economy as of 1970 – 2018. The study utilized secondary data from the ‘World Development Indicators’ which were analysed using the Bounds test for cointegration and the ‘autoregressive distributed lag (ARDL) approach to divulge both the short-term cum the long-term influence of foreign direct investment net inflow on ‘economic development’ of Nigeria. The Bounds test was conducted after the unit root test revealed that the variables were stationary at mixed order of level and first difference. The outcome of the ARDL Bounds test supported confirmation of long-term association among the variables. The ARDL short-run error correction showed that 14.62% of the instability in the model was corrected yearly. In the short-term, it was discovered that FDI wielded a deleterious and substantial weight on ‘economic development of Nig...
Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate
Journal of Investment Management, 2021
Having reviewed previous empirical studies on the relationship between foreign direct investment and economic growth, limited attention was given on the role of exchange rate on the relationship between foreign direct investment and economic growth. Therefore this study investigates the role of exchange rate on the relationship between foreign direct investment and economic growth over the period 1986 to 2018 using annual time series data sourced from the Central Bank of Nigeria Statistical Bulletin. Augmented Dicker-fuller Unit Root Test and ARDL model were used for the analyses. The ARDL Bounds test to cointegration revealed that economic growth, foreign direct investment, export, import and exchange rate do not have long run relationship over the period under study. The results showed that foreign direct investment has positive relationship with economic growth at maximum, average and minimum level of exchange rate but the relationship is only significant at maximum level over th...
An Impact Assessment of Foreign Direct Investment and Export Volume on Economic Growth in Nigeria
In the economic literature, the impact of foreign direct investment on economic growth remains a debatable phenomenon among policy makers. Undeniably, foreign direct investment havebeen regarded as an engine of economic growth in an increasingly globalised world economy, but it contributions to growth may strongly depend on the circumstances surrounding the recipient country including its development status. In a developing nation like the Nigerian economy, foreign direct investment is expected to play a vital role in propelling aggregate national output towards sustainable growth. In lieu of that, this study examines the impact of foreign direct investment and total export on economic growth in Nigeria using annual time series data covering a sample period of 1981 to 2018. The study employs the ordinary least square technique, cointegration analysis and the Granger causality technique to measure the impact and the long-run relationship among the variables. Findings established that foreign direct investment and export have a positive and significant effect on economic growth in Nigeria. While cointegration shows the presence of long-run relationship among the variables, the Granger causality shows no causal relations between foreign direct investment and real GDP but only unidirectional causality running from foreign direct investment to export. There is ample need for policy makers to develop a specific growth-oriented policies that would create reform measures in the domestic market, greater trade openness and creation of a stable macroeconomic environment that would provide more opportunities for sustainable growth.
FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN NIGERIA:AN EMPIRICAL EVIDENCE
This study examines the impact of Foreign Direct Investment inflows on the growth of Nigerian economy. from 1977 – 2011. The ADF result shows that all the variable in the study are stationary. Again the cointegration test shows that there is a long run relationship between the variables in the study. The data for the study was tested for unit root using Augmented Dickey –Fuller (ADF) test. Econometric evidence further shows that FDI has positive relationship with economic growth in Nigeria. It is recommended that Nigeria evolve investor friendly policies that can attract foreign direct investments and enhanced the country's productivity and growth.