Impact of Foreign Direct Investment on Economic Growth in Nigeria: A Re-Assessment

Abstract

Although ordinary least square technique (OLS) is the general bread-and-butter tool in econometrics, it can at times play the hard game of garbage in, garbage out. There is, thus, a need for pre-processing of economic data variables before feeding them into the OLS computer software analysis. OLS is such a sensitive tool that even a single data point can significantly influence the entire results. The relationship between economic variables is complex. Rigorous OLS method is required to disentangle the individual effects of these parameters. The present investigation shows that Hausman ednogeneity test, granger causality test, two stage methods of least squares (2SLS) and the method of lagged variables are different stages of OLS analysis that could be integrated in order to understand the complex interplay between foreign direct investment and economic growth.