External Debt and Foreign Private Investment in Nigeria: A Test for Causality

African Economic and Business Review Vol. 4 No. 1, Spring 2006, 1109-5609

16 Pages Posted: 20 Jun 2015

See all articles by Rufus Ajisafe

Rufus Ajisafe

Obafemi Awolowo University - Department of Economics

M. Nassar

Independent

O. Fatokun

Independent

Ismail Soile

University of Lagos; University of Dundee - Centre for Energy, Petroleum and Mineral Law & Policy (CEPMLP)

Olajide K. Gidado

Olabisi Onabanjo University

Date Written: April 20, 2006

Abstract

The paper investigates the causal relationship between External Debt and Foreign Private Investment in Nigeria between 1970 and 2003. The source of data for the study is the publication of the Central Bank of Nigeria Statistical Bulletin (volume 14, 2004) issued annually by the Research Department. The variables used in the study were tested for stationarity using the Augmented Dickey Fuller and Philip Perron test. The result shows that the variables are stationary at first differencing. Cointegration test was also performed and the result shows that the variables are not related in the long run using the likelihood ratio as a measure of significance. The result of the cointegration determines the use of vector autoregressive model to test for causality, which resulted in a bi-directional relationship between external debt and foreign private investment in Nigeria.

Keywords: Foreign private investment, Economic growth; causality, cointegration, Nigeria

JEL Classification: C22, G12, H24

Suggested Citation

Ajisafe, Rufus and Nassar, M. and Fatokun, O. and Soile, Ismail and Gidado, Olajide K., External Debt and Foreign Private Investment in Nigeria: A Test for Causality (April 20, 2006). African Economic and Business Review Vol. 4 No. 1, Spring 2006, 1109-5609. Available at SSRN: https://ssrn.com/abstract=2621003

Rufus Ajisafe

Obafemi Awolowo University - Department of Economics ( email )

Ile-Ife
Nigeria

M. Nassar

Independent

No Address Available

O. Fatokun

Independent

No Address Available

Ismail Soile (Contact Author)

University of Lagos ( email )

Akoka
PMB 4491
Akoka, Lagos State 00234
Nigeria
+2348076184184 (Phone)

University of Dundee - Centre for Energy, Petroleum and Mineral Law & Policy (CEPMLP) ( email )

Nethergate
Dundee, Scotland DD1 4HN
United Kingdom

Olajide K. Gidado

Olabisi Onabanjo University ( email )

P.M.B.2002
Permanent Site
Ago-Iwoye, Ogun 234
Nigeria

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