Foreign direct investment in Nigeria. Volume,trends and its effect on the manufacturing output.(1981-2020)
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Date
2022-12-20
Journal Title
Journal ISSN
Volume Title
Publisher
Chiang mai University Journal of Economics
Abstract
In recent times, owing to the scantiness of earnings from the oil exports, the import-reliant
industrial structure became unsustainable as it could not essentially cater for the humongous
import bills. Hence, FDI has become more relevant to the developed nation and the vast
majority of developing nation (Nigeria) through improvement in the attraction of immense
inflows into these countries. Hence, the main thrust of this work is to ascertain the volume,
trend, and impact of FDI on the Nigerian manufacturing output from 1981 to 2020. This was
done by specifying and estimating a regression model using the Autoregressive Distributive
Lag model (ARDL). The estimated regression model was found to have desirable statistical
attributes thereby allowing valid statistical inferences to be made from it. The estimated
regression results surprisingly suggest that FDI hurt manufacturing output in the country as
it leads to a decline in the sector. Expectedly, exchange rate, has a positive effect on the
manufacturing output and this is statistically significant at 5%. The conclusion inferred from
this study is that FDI does not have a far-reaching effect on the manufacturing output in
Nigeria. Consequently, more efforts should be geared towards blocking the loopholes and
ensure that the inflow into the sectors are utilized for the purpose as to make its effect felt in
the sector. Also, the exchange rate should be allowed to freely float to ensure the high
competitiveness of the Nigerian manufacturing exports amongst others.
Keywords: FDI, Structural adjustment Programme and Manufacturing Output.
JEL Classification Code: H3, E6