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. 1 No.1, 2015

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Insecurity, Foreign Direct Investment and Economic Growth in Nigeria

Dr. Sunday E. Akiri, Michael Y. Tyokohol & Msugh Waya

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Abstract

This study expounded on the effect of Insecurity on Foreign Direct Investment (FDI) and by extension on Economic Growth. It also tried to verify the nature of the relationship between FDI and economic growth (proxied by Real GDP). Data used in the study were time series annual data (from 1986 to 2014) obtained from the CBN Statistical Bulletin. In addition Insecurity was employed as a dummy variable. The Augmented Dickey-Fuller test was used to test the data for the presence of unit root after which the Granger Causality test was employed to verify the nature of the relationship between FDI and Real GDP. Also, the Ordinary Least Squares Multiple Regressions technique was used to estimate the relationship between Exchange Rate, Insecurity and FDI. The findings indicated that Real GDP is Granger caused by FDI, but not the other way round. The OLS results also showed that Insecurity affects FDI negatively, though negligibly. By implication, Insecurity also affects growth, though in an insignificant manner. It is thus recommended that the government continue to devise means of encouraging FDI inflows into the economy. Such ways include eliminating all forms of insurgency; increasing power generation to reduce the cost of doing business, eliminating multiple taxation, etc.

keywords:

Insecurity, Foreign Direct Investment (FDI), Economic Growth

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