Foreign Direct Investment and Economic Growth in Nigeria: A Sectoral Analysis

Abstract

This study was carried out to analyse the effect of sectoral FDI inflows on economic growth in Nigeria between the period of 1980 and 2012. VECM and co-integration techniques were employed. The findings show that there is a positive relationship between FDI flow to manufacturing sector and economic growth, a positive relationship between FDI inflows to the oil sector and economic growth, and a positive influence between FDI inflows to service sector economic growth in the long run. However, there is a negative long run relationship between FDI inflows into the agriculture sector and the telecommunication sectors and economic growth. The paper therefore concludes that there is a need for policy makers to formulate policy that will help the economy maximize the growth potentials of the telecommunication sector.

Key Words: FDI, Economic Growth, VECM, Co-integration, Sectorial