IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 6 NO. 2 2021

---

The Effect of Foreign Direct Investment on Nigeria’s Economic Development (1984-2018)

Linus E. Akujuobi PhD & Stephen Eguonor Ejitagha

---

Abstract

This research explored issues pertaining to sectorial allocation of FDI in the major sectors of the Nigerian economy. It focused on the effect of sectorial FDI on Nigerian economy in terms of Gross Domestic Product per capita (GDPpc) and Human Development Index (HDI). It estimated the effect of FDI on economic development employing sectorial data inflows of FDI to Nigeria from 1984 to 2018 (inclusive). Previous studies using sectorial inflows of FDI failed to reach some sort of consensus. However, this study provides an insight to sectorial FDI inflows by evaluating the cross-sector effect of FDI on growth and development. The central objective of the work was to determine the effect of FDI inflows to Mining & Quarrying (FDIMQ), Manufacturing & Processing (FDIMP), Agricultural Sector (FDIAG), Transport & Communication (FDITC), Building & Construction (FDIBC) and Trade & Business (FDITB). The effects seemed to be varying across the various economic sectors, with FDI in the manufacturing and processing sector having the greatest effect on GDPpc and HDI. On the other hand, FDI in the mining and quarrying sector appeared to have impacted positively on GDPpc, while, FDI in the agricultural sector, and FDI in the building and construction sector tended to have some degree of positive effects on HDI but negatively on GDPpc. Based on the findings, the study recommends amongst others that government should encourage the inflow of more FDI into the various sectors by creating an enabling environment and formulating strategic socio-economic policies that would enhance the ease of doing business in Nigeria

keywords:

Foreign Direct Investment, Gross Domestic Product, Gross Domestic Product Per Capita, Human Development Index

---

References:

Adams, S. (2009). Foreign direct investment, domestic investment, and economic growth in
Sub-Saharan Africa. Journal of Policy Modelling, 31(6), 939-949.

Adelegan, J. O. (2000). Foreign direct investment and economic growth in Nigeria: A
seemingly unrelated model. African Review of Money Finance and Banking, 5–25.
http://www.jstor.org/stable/23026281

Akindoyemi, A. (2011). Sustainable development in the midst of poverty in Nigeria: The
Options. A paper delivered at the 5th Annual Lecture of faculty of Environmental
Nandi Azikiwe University, Awka.

Ajayi, L.B., & Oke, M.O. (2012). Effect of external debt on economic growth and
Development of Nigeria. International Journal of Business and Social Science, 3(12),
297-304. Central Bank of Nigeria (2019). Statistical Bulletin. 10.

Ashraf, A., Herzer, D., & Nunnenkamp, P. (2016). The effects of greenfield FDI and cross
border m & as on total factor productivity. World economy 39 (11): 1728-55.

Asiedu, E & Lien, D. (2011). Democracy, Foreign direct investment and natural resources.
Journal of International Economics, 84 (11), 99-111.

Awosusu, O. & Awolusi, O. D. (2014). Technology transfer, foreign direct investment and
economic growth in Nigeria. Council for the Development of Social Science Research
in Africa.

Ayanwale, A.B. (2007). FDI and economic Growth: Evidence from Nigeria. African
Economic Research Consortium Paper 165. Nairobi

Bajo-Rubio, O., Diaz-Mora, C., and Diaz-Roldan, C. (2010). Foreign Direct Investment and
Regional Growth: An analysis of the Spanish Case Regional Studies 44(3):373-82.
Doi:10. 1080/00343400802508844.

Basnet, H.C, & Upadhyaya, K. P. Do remittances attract foreign direct Investment? An
empirical investigation. Global Economic journal, 14(1), 1-9, 2014 DOI:
https://doi.org/ 10.1515/gej-2013 -00521 published Online 22 Feb 2014.

Boga, S. (2019). Determinants of Foreign direct investment: a panel data analysis for Sub-
Saharan African Countries. Emerging Market Journal ISSAN 2159-24.

Bryman, A., & Bell, E. (2015). Business Research Methods. Oxford University Press, U.S.A.
Carbonell, J.B. & Werner, R.A. (2018). Does foreign direct investment generate economic
Growth? A New Empirical Approach Applied in Spain.
https://doi:org/10.1080/00130095.

Central Bank of Nigeria, (2015). Annual report and statement of account. Abuja Nigeria.

Central Bank of Nigeria, (2018). Annual report and statement of account. Abuja Nigeria.

Cleeve, E. (2012). Political and institutional impediments to foreign direct investment inflows
to Sub-Saharan Africa. Thurnderbird International Business Review, 54(4), 469-77.

Creswell, J.W. (2012). Educational research; planning, conducting, and evaluating
quantitative and qualitative research. Prentice Hall, Upper Saddle River, New Jersey.

Creswell, J. W., & Creswell, J. D. (2018). Research design: Qualitative, quantitative, and
mixed methods approaches. Sage publications.. Thousand Oaks, CA.

Denisia, V. (2010). Foreign direct investment theories: an overview of the main FDI theories.
Academy of Economic Studies 2(2), 104-110.

Dutse, A. Y. (2008). Nigeria?s economic growth: emphasizing the role of FDI in transfer of
technology. Journal of Communication of the IBIMA, 3(11), 76-83.

Dwiviedi, D.N. (2009). Management Economics. 7th ed. Vikas Publishing House PVT.
New Delhi.

Eboh, M. (2011, July 15). Systematic planning, marketing will attract FDI to Nigeria.
Vanguard, p.14.

Egolum, C.C. (2011). Sustainable development in the midst of poverty in Nigeria: The
option. Preference to the topic, delivered at the 5th annual lecture of Faculty of
Environmental Sciences, Nnamdi Azikiwe University, Awka.

Erhieyovwe, E.K. & Onovwoakpoma, O. D. (2013). External debt burden and its impact on
growth: an assessment of major macro-economic variables in Nigeria. Academic
Journal of Interdisciplinary Studies, 2(2), 143-153

Erkisi, K. & Ceyhan, T. (2019). Trade liberalization and economic growth: a panel data
analysis for transition economics in Europe. Journal of Economics, Finance and
Accounting, 6(2), 82-94.

Ezeoha, A.E. & Cattanneo, N. (2012). FDI Flows to Sub-Saharan Africa: The impact of
Finance, Institution and Natural Resource Endowment. Comparative Economic
Studies, 54, 597-632.

Flick, U. (2015). Introduction research methodology: A beginner?s guide to doing a research
project. Sage publication Ltd. London.

Grossman, G.M. & Helpman, E. (2015). Globalisation and Growth. The American Economic
Review, 105(5), 100-104.

Gujarati, D. & Porter, A. (2009). Basic Econometrics. McGraw-Hill. New York.

Gupta, P. & Singh, A. (2016). Determinants of foreign Direct Investment Inflows in BRICS
Nations: A Panel Data Analysis. Emerging Economy Studies, 2(2), 181-198.
Holtbrugge, D. & Kreppel, H. (2012). Determinants of foreign direct investment from BRIC
countries: An explorative study. International Journal of Emerging Markets, 7(1), 4-
30. DOI: 10.1108/174688012/1197897.

Ibrahim, W. & Omoniyi, B.B. (2011). Determinants of foreign direct investment in Nigerian:
Political factor effects revisited. The Journal of Social Science, 3(1), 34-46.

ICAN (2014), Business Communication and Research Methodology professional Examination
11. Study Pack VI publication Lagos.

Jackson, S.L. (2009). Research methods and statistics: a critical thinking approach 3rd edn.
Wadsworth. Belmont, CA.

Kok, R. & Ersoy, B.A. (2009). Analyses of FDI determinants in developing Countries.
International journal of Social Economics, 36(1/2), 105-123.
https://doi.org/10.1108/030682909109212.

Liargovas, P.G. & Skandalis, K.S. (2011). Foreign Direct Investment and Trade Openness:
The Case of Developing Economics. Social Science, 6(8), 15-27.

Managi, S. & Bwalya, S.M. (2010). Foreign direct investment and technology spill overs in
Sub-Saharan Africa. Applied Economics Letters, 17(6), 605-608.

Miller-Nobles, T.L., Mattison, B. L. & Matsumura, E.M. (2018). Horngren?s Financial &
Management Accounting. 12th edition Pearson, New Jersey.

Muhammed, S.D., Azu, N.P., Oko, N.F. (2018). Influence of real exchange rate volatility on FDI Inflows in Nigeria. International Business Research, NIPC Act 1995.

Ogiogio, G. O. (1995). Government Expenditure and Economic Growth in Nigeria. Journal
of Economic Management, 2(1), 56-72.

Okodua, H. (2009). Foreign direct investment and economic growth: co-integration and
causality Analysis of Nigeria. The African Finance Journal, 11(1).

Oloyede, J.A., & Obamuyi, T.M. (2000). The impact of foreign direct investment on Nigerian
economy. Nigerian Journal of Banking and Financial Issues, 3(1), 1-2.

Osabutey, E.I.C. & Debrah, Y.A. (2013). Foreign direct investment and technology transfer
policies In Africa. A review of the Ghanian experience, Thunderbird International
Business Review, 54(201), 441-456.

Pandey, I.M. (2015). Financial Management. 11th edition. Vikas Publishing. New Delhi.

Peter, A.M. (2015). Economic Development in Nigeria: Where we were, where we are and
where we ought to be. https://www.researchgate.net/publication/319786248.

Rjoub, H., Aga, M., Alrub, A.A, & Bein, M. (2017). Financial reforms and determinants of
FDI: Evidence from Landlocked Countries in Sub-Saharan African. MDPI, Basel.

Saggi, K. (2002). Trade, Foreign Direct Investment and International Technology transfer:
A survey of world bank research. 17(2), 191-235.

Saini, N. & Singhania, M. (2016). Determinants of foreign direct investments in developed and
Developing countries. Journal of Economic Studies, 45(2), 348-382.

Shah, M.H. (2016). Financial Development and Foreign Direct Investment: The case of middle
East and North African (MENA) Developing Nations, MPRA Paper No. 82013.

Sichei, M.M. & Kinyondo, G. (2012). Determinants of foreign direct investment in Africa: A
panel Data analysis. Global Journal of Management and Business Resea

DOWNLOAD PDF

---

Back