IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 2 NO. 5 2016

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Foreign Direct Investment and Economic Growth in Nigeria: An Empirical Investigation

Dr. Sunday Edesiri Akiri, Blessing Mngunengen Vehe and Odike Abraham Ijuo

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Abstract

This study was carried out to empirically investigate the impact of foreign direct investment on the growth of Nigerian economy over the period, 1981-2014. The study captured foreign direct investment (FDI), government capital expenditure (GCE), exchange rate (EXR), interest rate (IR) and growth domestic product (GDP) proxied for economic growth. It employed econometric tools of unit root test, co-integration and error correction model to analyze the influence of these variables on economic growth. The study found that FDI has significant positive impact on the growth of Nigerian economy. Contrary to the supposed positive impact of GCE to economic growth, the study found that it exact negative influence which the authors assumed may partly be as a result of high rate of abandoned government capital projects on which large sum of funds are committed to thereby inhibiting the expected contributions of these projects to the growth of the economy. The study therefore recommends that government should ensure stability in the economy in other to attract more foreign direct investment. On the other hand, for the successive governments to ensure continuity of policies that have positive impacts in the economy, hence to see that projects in progress are completed to curb the incessant cases of uncompleted or abandoned projects. The multiplier effect of this will again stimulate the growth of FDI and general economic growth.

keywords:

foreign direct investment (FDI), GCE, EXR, IR, and economic growth

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