Foreign Private Investment and the Developing Economies: Evidence from Nigeria

Abstract

This study is on foreign private investment and the developing economies. The study seeks to test the hypothesis that foreign private investment (FDI and FPI) has no impact on Nigeria economy within the periods under review. The secondary data which were obtained from the Central bank of Nigeria Statistical Bulletin (2010) were used. The data was collected for a period of forty years (1970-2010). The sophisticated econometric tools of the vector auto-regressions (VAR), Johansen Co-integration, and Granger causality tests were employed in the analysis of the data. It was found that both FDI and FPI were positive at short-run though statistical insignificant with economic growth in Nigeria. While on long-run there existed a positive significant relationship between FDI, FPI and economic growth in Nigeria. This implies that a continuous increase in both FDI and FPI will propel economic growth of Nigeria. The study recommended that efforts to attract more foreign private investment should be undertaken by the Nigeria government as one of the way of boosting the Nigeria economy. Keywords: FDI, FPI, VAR, Johansen Co-integration, Nigeria