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. 9 2016

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Foreign Direct Investment and Economic Growth Nexus: An Empirical Investigation, Bound Testing Approach.

Ogunbiyi, Sunday Samuel Ph.D and Abina, Praise Adedigba

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Abstract

The study investigated foreign direct investment and economic growth nexus within the period of 1986 – 2014. The study used time series data on foreign direct investment, trade openness, external reserve, external debt, and gross domestic product. It assumes that foreign direct investment helps in creating an atmosphere for non-indigene of a country to invest in her home country which will eventually lead to economic development. Data sourced for the study were gotten from the Central Bank of Nigeria (CBN). The study employed ADF Dickey-Fuller test, ARDL Bounds Test and autoregressive distributed lag (ARDL) bond test as the econometric tools. Estimation results showed that there is a long run relationship between the foreign direct investment and gross domestic product, it was recommended that if the home countries also have a reasonable share in the foreign investing countries economy, the risk of sudden withdrawal that can crumble the economy of the home country will be mitigated and this will invariably mean that the country is not over depending on foreign investors but both countries are leveraging on themselves for survival.

keywords:

Foreign Direct Investment, Trade Openness, External Reserve, External Debt, Gross Domestic Product.

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