The Impact of Foreign Direct Investment on the Nigerian Economy

European Journal of Business and Management, Vol.5, No. 2, 2013, ISSN 2222-1905

10 Pages Posted: 8 Nov 2016

See all articles by Ugwuegbe Ugochukwu

Ugwuegbe Ugochukwu

University of Nigeria

Okore Amah

University of Nigeria

John Okey Onoh

Abia State University - Department of Banking and Finance; Independent

Date Written: July 31, 2013

Abstract

This study investigates the empirical relationship between Foreign Direct Investment and economic growth in Nigeria. The work covered a period of 1981-2009 using an annual data from Central Bank of Nigeria statistical bulletin. A growth model via the Ordinary Least Square method was used to ascertain the relationship between FDI and economic growth in Nigeria. The study also added Gross Fixed Capital Formation with a view to capture the effect of domestic investment on the growth of the economy for the period under review. Interest Rate and exchange rate were also added as control variables in the model. Granger causality test was also employed to determine the direction of causality between FDI and economic growth in Nigeria. The result of the OLS techniques indicates that FDI has a positive and insignificant impact on the growth of Nigerian economy for the period under study. GFCF which was used as a proxy for domestic investment has a positive and significant impact on economic growth. Interest rate was found to be positive and insignificant while exchange rate positively and significantly affects the growth of Nigeria economy. Therefore, government should provide an enabling environment that will encourage foreign investors to invest in Nigeria economy by addressing the security challenges in the country, providing investment friendly environment by improved regulatory framework as well as encourage domestic investment.

Suggested Citation

Ugochukwu, Ugwuegbe and Amah, Okore and Onoh, John Okey and Onoh, John Okey, The Impact of Foreign Direct Investment on the Nigerian Economy (July 31, 2013). European Journal of Business and Management, Vol.5, No. 2, 2013, ISSN 2222-1905, Available at SSRN: https://ssrn.com/abstract=2865155

Ugwuegbe Ugochukwu

University of Nigeria ( email )

184 ogui Road Enugu
Department of Science Education, Chemistry option
Nsukka, DE Enugu State 410001
Nigeria

Okore Amah

University of Nigeria ( email )

184 ogui Road Enugu
Department of Science Education, Chemistry option
Nsukka, DE Enugu State 410001
Nigeria

Abia State University - Department of Banking and Finance ( email )

Abia, 441107
Nigeria

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