Foreign Direct Investment and Poverty Reduction in Nigeria: Implication for Sustainable Development

Chinwe Monica Madueke *

Department of Economics, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria.

Chinwe Ann Anisiobi

Department of Economics, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria.

Joan Nwamaka Ozoh

Department of Economics, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria.

*Author to whom correspondence should be addressed.


Abstract

The study examined the impact of Foreign Direct Investment on poverty reduction with implication on Sustainable development in Nigeria using Autoregressive Distributed Lag (ARDL) model technique on times series data collected from 1985 to 2020. Unit root test using Augmented Dickey-Fuller (ADF) found that Poverty Head Count Ratio (PHCR), Gross fixed capital formation (GFCF) and Real Exchange rate (REXR) are integrated of order 1(1) while Foreign Direct Investment (FDI) is integrated of order 1(0). The results show that FDI has a negative impact on poverty reduction in Nigeria and ARDL Bounds test result shows that there is a long run relationship among all the variables. Finally, lag value result indicates that gross fixed capital formation has a significant impact on poverty head count ratio in Nigeria. In view of these findings, the study concluded and recommended that FDI policies must be checked closely in order to make FDI growth enhancing in Nigeria so as to achieve Sustainable Development Goals (SDGs) one. Government should also encourage gross fixed capital formation to reduce poverty in Nigeria.

Keywords: ARDL, foreign direct investment, gross fiscal capital formation, poverty reduction, SDGs


How to Cite

Madueke, C. M., Anisiobi, C. A., & Ozoh, J. N. (2022). Foreign Direct Investment and Poverty Reduction in Nigeria: Implication for Sustainable Development. Asian Journal of Economics, Business and Accounting, 22(24), 1–12. https://doi.org/10.9734/ajeba/2022/v22i24889

Downloads

Download data is not yet available.

References

Oloyede BB. Effect of Poverty Reduction Programmes on Economic Development Evidence from Nigeria. Arabian Journal of Business andManagement Review. 2014;4 (1):26-37.

Anigbogu TU, Edoko TD, Okoli IM. Foreign Direct Investment and Poverty Reduction in Nigeria. International Journal of Business and Management Invention. 2016;5(6):19-28.

World Poverty Clock; 2018.

Available: https://worldpoverty.io/headline/.

Adebayo B. Nigeria overtakes India in extreme poverty ranking; 2018. Available: https://edition.cnn.com/2018/06/26/africa/nigeriaovertakesindiaextreme-poverty-

Aderemi TA, Amusa BO, Elufisian OO, Abalaba BP. Does Capital Flight Move Nigeria to the World`s Poverty Headquarters? An Implication for Sustainable Development. Journal of Academic Research in Economics. 2020; 12(1):31-44.

World Bank Group. Africa Western & Central Nigeria. Poverty data. worldbank.org; 2021.

National Bureau of Statistics; 2020.

Adeola OO. Foreign capital flows and economic growth in selected Sub-Saharan African economies. Dissertation presented for the degree of Doctor of Philosophy in Development Finance, Faculty of Economics at Stellenbosch University; 2017.

Abidemi C, Adegboye A, Ogbebor O, Egharvba MI. External capital flows and economic growth in Nigeria. Journal of Research in National Development. 2014;12(2).

Louis Kouamé Caningan. Foreign Direct Investment and sustainable development. The case of Côte d’Ivoire; 2012.

Ikiara MM. Foreign Direct Investment (FDI), Technological Transfer and Poverty Alleviation: Africa’s Hopes and Dilemma. ATPS Special Paper Series No. 16; 2003.

Ogunniyi MB, Igberi CO. The Impact of Foreign Direct Investment on Poverty Reduction in Nigeria. Journal of Economics and Sustainable Development. 2014;5 (14):73-83.

Adigun AO, Oke DF. Poverty reducing impact of Foreign direct investment in Nigeria, Journal of Research in National development,(JORIND). 2021;16(1).

Omorogbe VO. Foreign Direct Investment and Poverty Reduction in Nigeria. Journal of Research in National Development. 2007;5(2).

Gohou G, Soumare I. Does foreign direct investment reduce poverty in Africa and are there regional differences? World Development. 2012;40.

Okpe IJ, Abu GA. Foreign Private Investment and Poverty Reduction in Nigeria (1975 to 2003). Journal of Social Sciences. 2009;205-211.

Babasanya AO. Foreign direct investment and employment generation in Nigeria. Journal of Economics and Sustainable Development. 2018;9(4):42-47.

Todaro MP, Smith SC. Economic Development. Pearson Education Limited;2003.

Aladelusi KB, Olayiwola HO. Foreign direct investment and employment generation in nigeria. Canadian Social Science. 2021; 17(1):16 - 24.

Akubueze GI. Foreign Domestic Investments on the performance of entrepreneurship development in South-East, Nigeria. International Journal of Innovative Social Sciences & Humanities Research. 2020;8(4):118-130.

Okafor J. Accessing threshold issues in the impact of Foreign Direct Investment on economic growth: Evidence from Sub-Saharan African countries. Amity Journal of Economics. 2019;4 (1):49-64.

Omoniyi MB. The Role of Education in Poverty Alleviation and Economic Development: A Theoretical Perspective and Counselling Implications. British Journal of Arts and Social Sciences. 2013; 15(2):176-185.

Oke S, Olayemi O. Foreign Private Investment, Capital Formation and Poverty Reduction in Nigeria. European Journal of Business and Social Sciences. 2014; 2(10):157-168.

Koopmans TC. On the concept of optimal economic growth. In Econometric approach to development planning. North-Holland Publishing. 1965;1–76.

Lucas R. The Mechanisms of Economics development. Journal of Monetary Economics. 1988;80:155-173.

Solow RM. A Contribution to the Theory of Economic Growth. The Quarterly Journal of Economics. 1956;70:65-94.

Available: https://doi.org/10.2307/1884513

Meyer KE. Perspectives on multinational enterprises in emerging economies. Journal of International Business Studies. 2004;35(4):259–276.

Farole T, Winkler D. Foreign firm characteristics, absorptive capacity, and the institutional framework: The role of mediating factors for FDI spillovers in low-and middle-income countries. The World Bank; 2012.

Görg H, Greenaway D. Much ado about nothing? Do domestic firms really benefit from foreign direct investment? The World Bank Research Observer. 2004;19(2):171–197.

Available:https://doi.org/10.1093/wbro/lkh019

Calvo CC, Hernandez MA. Foreign Direct Investment and Poverty in Latin America. In Fifth Annual Postgraduate Conference. University of Nottingham. 2006;14.

Borenzstein EJ, Jong L. How does Foreign Direct Investment Affect Economic Growth?”. Journal of International Economics. 1998;45:115-135.

Adeolu BA. FDI and Economic Growth: Evidence from Nigeria. African Economic Research Consortium (AERC) Paper 165 Nairobi; 2007.

Olusanya SO. 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. 2013;9(25):335-355.

Adesiyan OI. Impact of foreign direct investment on poverty reduction in Nigeria, (1980- 2009). Journal of Economics and Sustainable Development. 2014;5(20): 34-45.

Fowowe B, Shuaibu MI. Is foreign direct investment good for the poor? new evidence from African countries. Eco Change Restruct. 2014;47.

Engle RF, Granger GW. Co- integration and Error Correction: Representation, Estimation and Testing”.Econometerica. 1987;55:251-276.

Pesaran B, Pesaran MH. Time-series Econometrics Using Microfit 5.0. Oxford University Press, Oxford; 2009.

Pesaran MH, Shin Y, Smith RJ. Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics. 2001;16(3):289- 326.

Available: https://doi.org/10.1002/jae.616