Main Article Content
This research paper investigated the determinants of foreign direct investment inflow into the Nigerian economy. This is because Nigeria at present is still characterized by low economic growth, which has created other macro-economic problems like inflation, low export, unemployment, unfavorable exchange rate, balance of payment disequilibrium, etc. The study adopted the Autoregressive Distributed Lag (ARDL/Bounds testing) econometric tool to examine the determinants of foreign direct investment (FDI) in the Nigerian economy. Data for the analysis are annual data covering the period 1981-2019, obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin several issues. The study used inflation rate (INFR), interest rate (INTR), exchange rate (EXR) and trade openness (TOPN) as independent variables. While foreign Direct Investment (FDI) was used as the dependent variable. The result indicates that exchange rate (EXR) and trade openness (TOPN) are all positive determinants of FDI in the Nigerian economy as their corresponding coefficients are positive. The result further shows that for the Nigerian economy to attract FDI significantly by one percent, exchange rate and trade openness will increase by 0.18 and 5.00 percent respectively. On the other hand, inflation rate (INFR), and interest rate (INTR) are negative determinants of foreign direct investment in Nigeria. Meaning that, an attempt to increase either of these variables would result to a decline in foreign direct investment in the country and vice versa. We therefore conclude that both EXR and TOPN had a positive and significant impact on the FDI inflow to the Nigerian economy, and are therefore adjudged positive determinants of FDI inflow into the Nigerian economy within the period 1981-2019. INFR and INTR on the other hand maintained their negative influence on FDI inflow to the Nigerian Economy, hence, are negative determinants of FDI inflow into the Nigerian economy within the period 1981-2019. Finally, we recommend that government should sustain its drive for import substitutions which will encourage export, expand its bilateral trade ties with developed economies so as to woo FDI inflows. Also, government through it monetary authorities should reduce inflation and interest rates. This will help to woo FDI inflow into the Nigerian economy.
Osemene OF, Kolawole KD, Olanpeleke ID. Determinants of foreign direct investment and its causal effect on economic growth in Nigeria. KCA Journal of Business Management. 2017;8(1):39-58.
Li X, Liu X. Foreign direct investment and economic growth: An increasingly endogenous relationship. World Develop-ment. 2005;33:393-407.
Liu XM, Shu C, Sinclair P. Trade, foreign direct investment and economic growth in Asian economies. Applied Economics. 2009;41:1603-1612.
Alfaro R, Chanda A, Kalemli-Ozcan, Sayek S. Does foreign direct investment promote growth? Exploring the role of financial markets on linkages. Journal of Development Economics. 2010;91:242-256.
Lee SH, Levendis J, Gutierrez L. Telecommunications and economic growth. Applied Economics. 2012;44(4): 461- 469.
Yao S. On economic growth, FDI and exports in China. Applied Economics. 2006;38:339-351.
Ramirez MD. Economic and institutional determinants of foreign direct investment in Chile: A time series analysis, 1960-2001. Contemporary Economic Policy. 2006;24: 459- 471.
Wafure OG, Nurudeen A. Determinants of foreign direct investment in Nigeria: An empirical analysis. Global Journal of Human Social Science. 2010;10(1):26-34.
Ajibola A, Isiaka M, Ogunleye O, Adeyemi O. Foreign direct investment and economic growth in Nigeria Revisited: A sector level analysis. Nile Journal of 16 Business and Economics. 2018;4(10):69-85.
Masanja CR. The extent to which foreign direct investment (FDI) contribute to the growth of host economies: Evidence from Tanzania. Business Management Review. 2018;21(1):1-22.
Olagbaju IO, Akinlo AE. FDI and economic growth relationship in Sub-Saharan Africa: Is the domestic financial system a significant intermediator? Archives of Business Research. 2018;6(5):90-112.
Steinbock D. Nigeria’s huge FDI flow: Is this benefiting Nigerians?; 2013.
Ekperiware CM. Oil and non-oil FDI and economic growth in Nigeria. Journal of Emerging Trends in Economics and Management Sciences. 2011;2(4):333-340.
Omoregie U. Nigeria’s petroleum sector and GDP: The missing oil refining link. Journal of Advances in Economics and Finance (JAEF). 2019;4.
Akinlo AE. Determinants of foreign direct investment in Nigeria: A markov regime switching approach. Review of Innovation and Competitiveness (RIC). 2017;3(1):21-48.
Adejumo AV. Foreign direct investment, export performance and sustainable development in Nigeria. Journal of Sustainable Development. 2019;12(2):110-122.
Anyanwu JC. Determinants of foreign direct investment inflows to Africa (1980- 2007). African Development Bank Group, Working Paper, 2011;136:1-32.
Seid SH. Global Regulations of Foreign Direct Investment. USA: Ashgate Publishing Company 131 Main Street Burlington, VT. 2002;05401-5600.
Mukolu MO, Otalu JA, Awosusi CT. Assessment of the impacts of foreign direct investment and interest rate on the growth of Nigerian Economy. IOSR Journal of Business and Management. 2013;15(3): 40-44.
Oyatoye EO, Arogundade KK, Adebisi SO, Oluwakayode EF. Foreign direct investment, export and economic growth in Nigeria. European Journal of Humanities and Social Sciences. 2011;2(1):67.
Okon JU, Augustine OJ, Chuku AC. Foreign direct investment and economic growth in Nigeria: An analysis of the endogenous effects. Current Research Journal of Economic Theory. 2012;4(3): 53-60.
Fuat E, Ekrem T. Locational determinants of determinants of foreign direct investment in an emerging market economy: Evidence from Turkey. Multinational Business Review. 2002; 10(1).
Ogundipe MA, Aworinde OB. An analysis of causality between economic growth and foreign direct investment in pre and post deregulated Nigerian economy (1970– 2007). European Journal of Scientific Research. 2011;53:317–325.
Fofana KH, Xia E, Traore MB. Dynamic relationship between Chinese FDI, agricultural and economic growth In West African: An application of the pool mean group model. Journal of Physics: Conf. Series. 2018;1060:1-8.
Pesaran MH, Shin Y, Smith R. Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics. 2001;16(3):289–326.