EFFECT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN NIGERIA
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Date
2022
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Abstract
This paper examines the effect of foreign direct investment on economic growth in
Nigeria. In addition to complementing local investment, FDI is intended to help a
developing country like Nigeria, create employment, transfer technology, enhance
domestic competition and provide other beneficial externalities. The study employed
Augmented Dickey Fuller methodology to carry out unit root tests. It was discovered that
three of the variables are stationary at first difference. At the same time, the rest are
stationary at levels. Consequently, the Autoregressive Distributive Lag (ARDL)
technique is used to analyse the impact of foreign direct investment on the economic
growth of Nigeria. The results indicate that aggregate foreign direct investment, foreign
direct investment to the manufacturing sector, trade openness, inflation and government
consumption have significant effects on economic growth in Nigeria. The study also
looked at the effects of FDI inflows into the mining, manufacturing, and agriculture
sectors on economic growth. Besides FDI, the effects on growth of five control variables,
viz: labour force growth, gross capital formation, trade openness, inflation and
government consumption expenditure, were also examined. Based on these findings, the
study recommends that Nigeria accelerate relevant policies that could attract an
enormous inflow of FDI and strive for price stability in the economy.
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5. Aromasodun, O. M (2022). Effect of foreign direct investment on economic growth in Nigeria. Journal of Economic Growth and Entrepreneurship (JEGE), 5(3), 1-11.