Acta Universitatis Danubius. Œconomica, Vol. 14, No. 2 - part 1
Abstract
The study investigates the impact of oil price fluctuations on foreign direct investment
inflows in developing oil exporting countries using Nigeria as a case study by ARDL method and
VECM granger causality test to analyse the data spanning from 1970 to 2015. It was observed that oil
price fluctuations do not favour foreign direct investment in Nigeria both in the long-run and shortrun.
This implies that as oil price changes foreign direct investment inflows falls. VECM granger
causality test revealed that there is no direction of causality between oil price fluctuations and foreign
direct investment inflows in Nigeria. We therefore concluded that oil price is not an important
determinant of foreign direct investment inflows. The study recommends that government should take
the advantage of times of positive change in the oil price to fix the needs to attract foreign direct
investment inflows in the economy.
References
Abdulkareem, A. & Abdulhakeem, K.A. (2016). Analysing Oil Price- Macroeconomic Volatility in
Nigeria. CBN Journal of Applied Statistics, 7(1), pp. 1-22.
Ademakinwa, A.R. & Omokanmi, O.J. (2017). Oil Price Shocks and Foreign Direct Investment
(FDI): Implications for Economic Growth in Nigeria (1980-2014). Journal of Economics and
Sustainable Development, 8(4), pp. 170-177.
Ahmed, M. (2016). Foreign Direct Investment in Oil-Exporting Countries: Long-run Determinants
and Causal Relationship with Economic Growth. Leicester.
Ajuwon, O.S. (2013) Macroeconomic Environment, Policy Uncertainty and Inflow of Foreign Direct
Investment: Impact and Policy Implications for Nigeria. Mediterr. Journal of Social Science, 4, pp.
155–165.
Al-Mihya, S.N. (2017). The Economic Crisis in Kurdistan Region and its Impact on Foreign
Investment. International Journal of Economics and Management Science, 6(5), pp. 1-5.
Alshamsi, K.H.; Hussin, M. & Azam, M. (2015). The impact of inflation and GDP per capita on
foreign direct investment: the case of United Arab Emirates. Investment Management and Financial
Innovations (open-access), 12(3), pp. 132-141.
Asiedu, E. (2015). Foreign Direct Investment, Natural Resources and Institutions. International
Growth Centre, pp. 1-38.
Bianco, S.D. & To Loan, N.C. (2017). FDI Inflows, Price and Exchange Rate Volatility: New
Empirical Evidence from Latin America. International Journal of Financial Studies, 5(6), pp. 1-17.
Danja, K.H. (2012). Foreign Direct Investment and the Nigerian Economy. American Journal of
Economics, 2(3), pp. 33-40.
Ekperiware, M.C. (2011). Oil and Nonoil FDI and Economic Growth in Nigeria. Journal of Emerging
Trends in Economics and Management Sciences, 2(4), pp. 333-343.
Elheddad, M. (2016). Natural Resources and FDI in GCC Countries. International Journal of
Business and Social Research, 6(7), pp. 12-22.
Gummi, U.M.; Buhari, A.I. & Muhammad, A. (2017). Oil Price Fluctuations and Economic Growth
in Nigeria (Evidence from Granger Causality Test). Australasian Journal of Social Science, 3(1), pp.
1-16.
Haque, A.; Patnaik, A.K. & Hashmi, S.Z. (2016). Foreign Direct Investment and Growth: A Study in
the Context of Kuwait. International Journal of Financial Research, 8(1), pp. 9-13.
Kari, F. & Saddam, A. (2014). A Long-Run Dynamic Analysis of FDI, Growth and Oil Export in
GCC Countries: An Evidence From VECM Model. Canadian Social Science, 10(1), pp. 76-82.
Khuram, S. & Liu, H. (2014). Oil Prices Fluctuations & Its Impact on Russian’s Economy; An
Exchange Rate Exposure. Asian Journal of Economic Modelling, 2(4), pp. 169-177.
Lemi, A. & Asefa, S. (2001). Foreign Direct Investment and Uncertainty: Evidence from Africa.
African Finance Journal, 5, pp. 36–67.
Mahmood, I.; Ehsanullah, M. & Ahmed, H. (2011). Exchange Rate Volatility and Macroeconomic
Variables in Pakistan. Business Management Dynamics, 1, pp. 11–22.
Mehta, A.M. (2014). Searching for Hills among Plateaus, Mountains and Plains; Understanding
Determinants of Economic Growth in Pakistan. Journal of International Business and Economics,
2(2), pp. 83-90.
Muhammad, A. & Syed, A.A. (2012). Impact of Oil Prices on Country s Economy: a case study
South Asian Countries, pp. 1-9.
Olure, B.A.; Gbadebo, S. & Ajiteru, T. (2015). Falling Oil Price, Exchange Rate Volatility and
Marcoeconomic Variables in Nigeria. Journal of Investment and Management, 4(1), pp. 25-33.
Pacheco-López, P. (2014). Foreign Direct Investment, Exports and Exports in Mexico, pp. 1-24.
Quero-Virlaa, L. (2016). Macroeconomic Effects of Oil Price Fluctuations in Colombia. A Latin
America Journal of Applied Economics, 19(43), pp. 23-38.
Razmi, M.J. & Behname, M. (2012). FDI determinants and oil effects on foreign direct investment:
evidence from Islamic countries. Advances in Management & Applied Economics, pp. 261-270.
Rezazadehkarsalari, A.; Haghiri, F. & Behrooznia, A. (2013). The effects of oil price shocks on real
GDP in Iran. African Journal of Business Management, 7(33), pp. 3220-3232.
Shafi, K. & Liu, H. (2014). Oil Prices Fluctuations and Its Impact on Russian’s Economy; An
Exchange Rate Exposure. Asian Journal of Economic Modelling, 2(4), pp. 169-177.
Sharifi-Renania, H. & Mirfatah, M. (2012). The Impact of Exchange Rate Volatility on Foreign
Direct Investment in Iran. International Conference on Applied Economics (ICOAE), pp. 365-373.
Wadud, M.I. & Huson, J.A. (2014). Oil Price Volatility and Investment Responses. The Thai
Experience of Permanent and Transitory Oil Price Uncertainties, pp. 1-40.
Wong, K.N.; Goh, S.k. & Lean, H.H. (2015). Foreign direct investment, oil prices and global
financial crisis: Evidence from Singapore. Journal of Applied Economic Sciences, pp. 494-504.
Yazdanian, N. (2014). Investigation of the Determinants of Foreign Direct Investment in Oil-
Producing Countries. International Journal of Economy, Management and Social Sciences, 3(12), pp.
65-70.
Yousaf, S.; Shahzadi, I.; Kanwal, B. & Hassan, M. (2013). Impact of Exchange Rate Volatility on
FDI in Pakistan. Journal Business Managements, 12, pp. 79–86.
Nigeria. CBN Journal of Applied Statistics, 7(1), pp. 1-22.
Ademakinwa, A.R. & Omokanmi, O.J. (2017). Oil Price Shocks and Foreign Direct Investment
(FDI): Implications for Economic Growth in Nigeria (1980-2014). Journal of Economics and
Sustainable Development, 8(4), pp. 170-177.
Ahmed, M. (2016). Foreign Direct Investment in Oil-Exporting Countries: Long-run Determinants
and Causal Relationship with Economic Growth. Leicester.
Ajuwon, O.S. (2013) Macroeconomic Environment, Policy Uncertainty and Inflow of Foreign Direct
Investment: Impact and Policy Implications for Nigeria. Mediterr. Journal of Social Science, 4, pp.
155–165.
Al-Mihya, S.N. (2017). The Economic Crisis in Kurdistan Region and its Impact on Foreign
Investment. International Journal of Economics and Management Science, 6(5), pp. 1-5.
Alshamsi, K.H.; Hussin, M. & Azam, M. (2015). The impact of inflation and GDP per capita on
foreign direct investment: the case of United Arab Emirates. Investment Management and Financial
Innovations (open-access), 12(3), pp. 132-141.
Asiedu, E. (2015). Foreign Direct Investment, Natural Resources and Institutions. International
Growth Centre, pp. 1-38.
Bianco, S.D. & To Loan, N.C. (2017). FDI Inflows, Price and Exchange Rate Volatility: New
Empirical Evidence from Latin America. International Journal of Financial Studies, 5(6), pp. 1-17.
Danja, K.H. (2012). Foreign Direct Investment and the Nigerian Economy. American Journal of
Economics, 2(3), pp. 33-40.
Ekperiware, M.C. (2011). Oil and Nonoil FDI and Economic Growth in Nigeria. Journal of Emerging
Trends in Economics and Management Sciences, 2(4), pp. 333-343.
Elheddad, M. (2016). Natural Resources and FDI in GCC Countries. International Journal of
Business and Social Research, 6(7), pp. 12-22.
Gummi, U.M.; Buhari, A.I. & Muhammad, A. (2017). Oil Price Fluctuations and Economic Growth
in Nigeria (Evidence from Granger Causality Test). Australasian Journal of Social Science, 3(1), pp.
1-16.
Haque, A.; Patnaik, A.K. & Hashmi, S.Z. (2016). Foreign Direct Investment and Growth: A Study in
the Context of Kuwait. International Journal of Financial Research, 8(1), pp. 9-13.
Kari, F. & Saddam, A. (2014). A Long-Run Dynamic Analysis of FDI, Growth and Oil Export in
GCC Countries: An Evidence From VECM Model. Canadian Social Science, 10(1), pp. 76-82.
Khuram, S. & Liu, H. (2014). Oil Prices Fluctuations & Its Impact on Russian’s Economy; An
Exchange Rate Exposure. Asian Journal of Economic Modelling, 2(4), pp. 169-177.
Lemi, A. & Asefa, S. (2001). Foreign Direct Investment and Uncertainty: Evidence from Africa.
African Finance Journal, 5, pp. 36–67.
Mahmood, I.; Ehsanullah, M. & Ahmed, H. (2011). Exchange Rate Volatility and Macroeconomic
Variables in Pakistan. Business Management Dynamics, 1, pp. 11–22.
Mehta, A.M. (2014). Searching for Hills among Plateaus, Mountains and Plains; Understanding
Determinants of Economic Growth in Pakistan. Journal of International Business and Economics,
2(2), pp. 83-90.
Muhammad, A. & Syed, A.A. (2012). Impact of Oil Prices on Country s Economy: a case study
South Asian Countries, pp. 1-9.
Olure, B.A.; Gbadebo, S. & Ajiteru, T. (2015). Falling Oil Price, Exchange Rate Volatility and
Marcoeconomic Variables in Nigeria. Journal of Investment and Management, 4(1), pp. 25-33.
Pacheco-López, P. (2014). Foreign Direct Investment, Exports and Exports in Mexico, pp. 1-24.
Quero-Virlaa, L. (2016). Macroeconomic Effects of Oil Price Fluctuations in Colombia. A Latin
America Journal of Applied Economics, 19(43), pp. 23-38.
Razmi, M.J. & Behname, M. (2012). FDI determinants and oil effects on foreign direct investment:
evidence from Islamic countries. Advances in Management & Applied Economics, pp. 261-270.
Rezazadehkarsalari, A.; Haghiri, F. & Behrooznia, A. (2013). The effects of oil price shocks on real
GDP in Iran. African Journal of Business Management, 7(33), pp. 3220-3232.
Shafi, K. & Liu, H. (2014). Oil Prices Fluctuations and Its Impact on Russian’s Economy; An
Exchange Rate Exposure. Asian Journal of Economic Modelling, 2(4), pp. 169-177.
Sharifi-Renania, H. & Mirfatah, M. (2012). The Impact of Exchange Rate Volatility on Foreign
Direct Investment in Iran. International Conference on Applied Economics (ICOAE), pp. 365-373.
Wadud, M.I. & Huson, J.A. (2014). Oil Price Volatility and Investment Responses. The Thai
Experience of Permanent and Transitory Oil Price Uncertainties, pp. 1-40.
Wong, K.N.; Goh, S.k. & Lean, H.H. (2015). Foreign direct investment, oil prices and global
financial crisis: Evidence from Singapore. Journal of Applied Economic Sciences, pp. 494-504.
Yazdanian, N. (2014). Investigation of the Determinants of Foreign Direct Investment in Oil-
Producing Countries. International Journal of Economy, Management and Social Sciences, 3(12), pp.
65-70.
Yousaf, S.; Shahzadi, I.; Kanwal, B. & Hassan, M. (2013). Impact of Exchange Rate Volatility on
FDI in Pakistan. Journal Business Managements, 12, pp. 79–86.
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Published
2021-06-18
How to Cite
Collective Authors. (2021). Acta Universitatis Danubius. Œconomica, Vol. 14, No. 2 - part 1: Array. Acta Universitatis Danubius. Œconomica, 14(2). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/1159
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