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. 8 NO. 5 2023
DOI: 10.56201/ijefm.v8.no5.2023.pg33.42

---

Deterministic Factors of Foreign Direct Investment Inflows and Nigeria Economy

Nwaoha, William Chimee, Onwuka, Onwuka Okwara, Akandu, Victor Chigozie, Agboriane, Nyore Sophia, Onuoha, Onyebuchi Gospel

---

Abstract

This study investigates the deterministic factors of Foreign Direct Investment (FDI) inflows to Nigeria economy during 1980 – 2019 using Error Correction Model (ECM). The data such as Real Gross Domestic Product (RGDP), Market Size, Availability of Natural Resources, Political Risk, Infrastructural Development, and Trade Openness were sourced from the statistical bulletin of the Central Bank of Nigeria (CBN). The result shows that Market size (at lags 2 and 3) and Trade-openness have positive but insignificant effect on RGDP in Nigeria while infrastructural developments are found to be positive and significant function of RGDP. The results also reveal that in the long-run, the available natural resources exert negative and significant impact on

keywords:

FDI; RGDP; CBN; Political Risk; Infrastructural Development

---

References:

Ajayi, S.I. (2006). The determinants of FDI in Africa: A survey of the evidence. Foreign direct
investment in Sub-Saharan Africa: origins, targets, impact and potential, AERC,16 – 19.
Anyanwu, J.C. (1998). An econometric investigation of determinants of foreign direct investment
in Nigeria. In investment in the growth process. Proceedings of the Nigerian economic
society conference, 198.,219 -240.
Asiedu, E. (2002). On the determinants of foreign direct investment to developing countries: Is
Africa different? World development 30 (1)., 107-119.
Assanie, N., & Singleton, B. (2002).The quality of FDI: Does it matter for economic growth?
http://www.asiapacificesearch.ca/caprn/FDI- _and_economic_growth-CEA-May_2002.
Bhattacharya, A., Montiel, P.J., & Sharma, S. (1996). Private capital flows to sub-saharan Africa:
An overview of trends and determinants, unpublished paper, World Bank, Washington
DC.
Chakrabarti, A. (2001). The determinants of foreign direct investment sensitivity analyses of crosscountry regressions, Kyklos vol. 54, 89-112.
Dinda, S. (2009). Factors Attracting FDI to Nigeria: An Empirical Investigation. Madras School
of Economics, Chennai, India.Fuat, E. and Ekrem, T. (2002). Locational determinants of determinants of foreign direct
investment in an emerging market economy: evidence from turkey. Multinational
Business Review,10(1).
Ibrahim, W. (2007). Determinants of Foreign Direct Investment in Nigeria: Political Factor Effect
Revisited. Department of Economics, Al-Hikmah University, Ilorin.
Jaspersen, F., Aylward, A.H., & Knox, A.D. (2000). The effect of risk on private investment:
Africa compared with other developing countries. In P. Collier and C. Pattillo, eds.
Investment and risk in Africa, pp.71-95. New York: St. Martins press.
Lehman, A. (1999). country risks and the investment activity of U.S. multinationals in developing
countries . IMF/Working paper No.133. International monetary fund, Washington, D.C.
Louis, N.C. (1998). Determination of FDI: An error correction specification. Journal of economic
and social studies. 40(1).
Masayuki, H., & Ivohasina, F.(2005). The Determinants of Foreign Direct Investment into Japan.
Kobe University Economic Review 51.
Mody, A., & Srinivasan, K. (1998). Japanese and United States firms as foreign investors: Do they
March to the same tune?. Canadian Journal of Economics, 31(4), 778-99.
Moore, M.O. (1993). Determinants of manufacturing direct investments pp. Weltwirtscaftsliches
Archive, 129., 120-137.
Ngowi, H.P. (2001). Can Africa increase its global share of foreign direct investment (FDI). West
African Review 2(2),1-9.
Nwankwo, A. (2006). The determinants of foreign direct investment inflows (FDI) in Nigeria. 6
th
Global Conference on Business & Economics.
Obadan, M.I. (1982). Direct foreign investment in Nigeria: An empirical analysis. African studies
review vol.1.
Odi (1997), Foreign direct investment flows to low-income countries: A review of the evidence.
Overseen development institute Brlefing paper vol.3.
Ragazzi, G. (1993). Theories of the determinants of foreign direct investment. The IMF staff
papers, 20, 471-498.
Sachs, J., & Siever, S. (1998). FDI in Africa. In Africa competitive report. Geneva: World
Economic Forum.
Singh, H., & Jun, K.W. (1995). Some new evidence on determinants of foreign direct investment
in developing countries. Policy research working paper No.1531, the World Bank,
Washington, D.C.Udeaja, A.E, Udoh .E.,& Ebong, F.S (2008). Do Determinants of Foreign Direct Investment in
Nigeria Differ Across Sectors? An Empirical Assessment. Economic and Financial
Review of the Central Bank of Nigeria, Vol.46 (2).
Wafure, O.G., & Nurudeen, A. (2010). Determinants of foreign direct investment in Nigeria: An
empirical analysis. Global journal of human social science, vol.10, Issue1., 26-34.
Wheeler, D., & Mody, A. (1992), International investment location Decision. The case of US
firms journal of international economics, 33,57-76.

DOWNLOAD PDF

---

Back