IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 4 NO. 3 2018

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Comparisons of the Contributions of Foreign Direct Investments (FDIs) and Domestic Investments to Nigeria’s Economic Growth

Gbalam Peter Eze (Ph.D)

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Abstract

The research focused on the importance of Foreign Direct Investments (FDIs) and local investments role in growing the Nigerian economy from 1993to 2017, a space of twenty five years. A body of empirical evidence suggests a strong positive relationship between foreign investment and domestic investment. But in the last decade following the world financial crisis there have been a gradual slow down in the growth expected of FDIs. Ajayi (2003) lamented that despite the increase in FDIs there has been constrained in achieving great economic growth heights thereby causing the country to operate below its economic potentials. The objectives of study were collapsed in testable hypotheses which utilized regression methods, unit root tests and granger causality tests in analyzing data. By so doing the findings indicated that local investments were still playing a dominant role in Nigeria’s economic growth and that FDIs were still grossly inadequate for an economy with enormous commercial potentials such as Nigeria. This is largely consistent with the research done by Yartey (2008) that considered issues affecting fair trading practices, listing requirements, regulatory reform and how they affect foreign investments. Among the recommendations include reductions to restrictions on FDI to create flexible markets, more autonomy to the Nigerian Investment Promotion Council to release it from avoidable bureaucratic bottle necks, allowing foreign investors reasonable choices as to their investment and location decisions, provide needed infrastructure in line with competitive technological demands of a globally competitive market devoid of obsolescence, strengthen backward linkages with FDI and provision of access to credit through adequate reforms of the financial markets.

keywords:

Foreign Direct Investment, Economic growth, Nigeria and long run impact stud

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