Foreign Direct Investment and Economic Growth in Nigeria (1986 – 2017)

Abstract

Foreign Direct Investment (FDI) has attracted the attention of many developing countries. Hence, the study examined the effects of Foreign Direct Investment on economic growth and captured the impacts of other macro-economic variables on economic growth in Nigeria between the period of 1986-2017. The secondary data used in this study were obtained from Central bank of Nigeria (CBN) Statistical Bulletin and World Development Indicator (WDI). To avoid spurious regression, Augmented Dickey Fuller unit root test was conducted on all variables. Multiple regression and Granger Causality Test were also conducted to target the study objectives. The multiple regression reveals that Foreign Direct Investment is statistically significant at 5% level of significance. Thus, Foreign Direct Investment has a significant effect on economic growth in Nigeria. The Granger Causality Test also confirms that Foreign Direct Investment Granger causes economic growth in Nigeria. The conclusion is that Foreign Direct Investment has a positive and significant effect on economic growth. It also Granger causes economic growth in Nigeria. There is high prospect for Foreign Direct Investment to further boost economic growth if enabling environment such as regular infrastructure and microeconomic stability prevail in Nigeria.

Keywords: Foreign Direct Investment, Economic growth, Granger causality.

DOI: 10.7176/RHSS/10-6-06

Publication date:March 31^st 2020