Macroeconomics and Monetary Economics - 1
The relationship between capital flight and Foreign Direct Investment (FDI) has generated
continuous debate in literature. This study aims at providing quantitative analysis of cointegration and
causality between capital flight and FDI in Nigeria from 1985 to 2015. The study employed secondary
data which was obtained from Statistical bulletin of Central Bank of Nigeria and data base of World
Bank.The data obtained were subjected to Units root test, Co-integration test and Pair–Wise test of
Granger Causality. The findings of co-integration revealed that the estimated equation and the series
are co-integrated. The Granger-Causality test shows that there is no bi-directional causality between
FDI and Capital Flight in Nigeria.The study concludes that the success to curtail capital flight in Nigeria
is to improve level of infrastructural facilities in the country which can facilitate increase in domestic
investment and also attract FDI. It is recommended that enhancing investment environment by
minimizing the obstacles to doing economic activities, and increasing the effort against international
financial crime will help reduce capital flight and improve FDI in Nigeria.
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