Impact of Political Stability on Foreign Direct Investment Inflows in Nigeria
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Date
2026-07-27
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ECOSIGHT, Department of Economics and Development Studies, Kwara State University, Malete
Abstract
Foreign direct investment (FDI), through its contributions to expanded employment
opportunities, capital formation, technological growth, technology transfer, and
productivity, has been perceived as a key factor in economic advancement in
developing economies, particularly Nigeria. However, this largely depends on the
nature of the political environment. Despite these gains, Nigeria still faces many
challenges in further strengthening its investment environment through political
stability (PS). This study investigates the impact of PS on FDI inflows in Nigeria.
A time-series analysis was conducted using the ARDL model on secondary data
covering 1996 to 2024. The data employed were obtained from the Central Bank of
Nigeria Statistical Bulletin, as well as the World Bank WDI and WGI. The results
show that political stability (with coeff. = -12.5012; p = 0.0175) exerts a negative
and significant influence on FDI inflows in the study area. This suggests that PS
undermines investor confidence, thereby limiting the growth of capital inflows into
Nigeria. Building on this finding, the study suggests that the government should
strengthen political stability by creating a safer and more predictable environment
for both domestic and foreign investors. It also recommends improving foreign
exchange policies to attract and sustain cross-border economic cooperation.
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The article was read and accepted for publication in line with the journal's rules. It is useful for future researchers
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