EFFECT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH: EVIDENCE FROM NIGERIA (1981-2020)
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Date
2021-12-18
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INTERNATIONAL JOURNAL OF ADVANCED RESEARCH IN MULTIDISCIPLINARY STUDIES (IJARMS)
Abstract
Foreign Direct Investment is seen as an important source of economic growth in the present global economic
environment. Most countries strive to attract FDI because of its acknowledged advantages as a tool of economic
development. Thus, the study has the specific objectives of investigating empirically the effect of FDI on economic
growth and sectoral output growth from 1980-2020. To achieve these objectives, data were obtained from World
Bank’s World Development Indicators. Neoclassical growth model was used as a theoretical background in the
study. The study estimated unit root test using Augmented Dickey-Fuller test, it was discovered that government
final consumption expenditure, export of goods and services, and gross fixed capital formation were significant at
first difference while other variables were significant at level. As a result, regression analysis, using Autoregressive
Distributive Lag technique was employed. The results show that current foreign direct investment has positive effect
on economic growth, FDI 3 years ago has positive effect on manufacturing output growth and finally, current FDI
has negative effect on agricultural output growth. Based on these findings, it was recommended among others, that
policy makers should target policies on promoting FDI inflow in order to achieve increase in manufacturing output
growth and economic growth.
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Citation
Sulaimon, Taofeekat & Nofiu, Nofiu. (2021). EFFECT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH: EVIDENCE FROM NIGERIA (1981-2020). 1. 55-64.