Econometric Analysis of Foreign Direct Investment and Nigeria’s Economic Performance

Abstract

The fluctuation in the economic fortune of developing economies coupled with the attendant low level of savings and unemployment has been a cause for concern among experts and policy makers in recent years. Motivated by the above and the controversy in international finance/economic literature with respect to the effectiveness and potency of foreign direct investment on economic performance of Nations; the study, using multiple regression analytical technique, discovered that a statistically significant relationship exist between GDP, FDI and EXR. . The result showed that variations in gross domestic product had been significantly influenced by FDI, Financial depth and exchange rate within the period under study. The study also confirmed the existence of long run relationship between GDP and FDI, with GDP granger causing FDI and not the other way round.  It is therefore recommended among others that government should put up policies that will nip insurgency and other vices in the bud, so as to create a conducive atmosphere for the attraction of foreign direct investment into the country. The issue of money and capital market deregulation should be sustained, so as to deepen the financial market space, as well.

Keywords: Foreign Direct Investment, Economic Performance, Financial deepening, Co-integration.