Drivers of Foreign Private Investment Inflows in Emerging Market: Evidence from Nigeria
Keywords:
ARDL; FDI; FPI; domestic savings and macroeconomic policyAbstract
In the globalized world with intense competition, emerging markets have attempted to attract more foreign private capital to bridge the dual gap and ultimately achieve their developmental goals. Against this backdrop, it has become imperative to ascertain the drivers of these inflows. This study advances the international private capital flows literature by empirically identifying the drivers of both foreign direct investment (FDI) and foreign private investment (FPI) inflows in Nigeria between 1986 and 2017. To achieve this objective, we employed ARDL bounds test for cointegration. The estimated model revealed counts of the number of significant push and pull factors influencing the flows of FDI to Nigeria in the short run. The findings further revealed that country-specific factors seem to be much more important than global factors in explaining the dynamics of FPI inflows to Nigeria both in the short-run and long-run. The policy inference of this study is that Nigerian policymakers should embrace a more open approach to international economic integration, combined with a proactive macroeconomic policy measure to managing the risks associated with volatile foreign private capital flows.
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Wafure, O. G., & Nurudeen, A. (2010). Determinants of foreign direct investment in Nigeria: An empirical analysis. Global Journal of Human Social Science, 10(1), 26-34.
Ahmad, F., Draz, M. U., & Yang, S. C. (2015). Determinants of foreign portfolio inflows: Analysis and implications for China. Asian Journal of Finance & Accounting, 7(2), 66-77.
Al-Smadi, M. O. (2018). Determinants of foreign portfolio investment: the case of Jordan. Investment management and financial innovations, 15(1), 328-336.
Arawomo, O., & Apanisile, J. F. (2018). Determinants of foreign direct investment in the Nigerian telecommunication sector. Modern Economy, 9(05), 907-923.
Asiedu, E. (2002). On the determinants of foreign direct investment to developing countries: is Africa different? World development, 30(1), 107-119.
Blonigen, B. A. (2005). A review of the empirical literature on FDI determinants. Atlantic economic journal, 33(4), 383-403.
De Vita, G., & Kyaw, K. S. (2008). Determinants of capital flows to developing countries: A structural VAR analysis. Journal of Economic Studies, 35(4), 304-322.
Duasa, J. (2007). Determinants of Malaysian trade balance: An ARDL bound testing approach. Global Economic Review, 36(1), 89-102.
Ekeocha, P. C., Ekeocha, C. S., Malaolu, V., & Oduh, M. O. (2012). Modelling the long run determinants of foreign portfolio investment in Nigeria. Journal of Economics and Sustainable development, 3(8), 194-205.
Fernandez-Arias, E. (1996). The new wave of private capital inflows: Push or pull? Journal of Development Economics, 2(48), 389-418.
Forbes, K. J. (2010). Why do foreigners invest in the United States? Journal of International Economics, 80(1), 3-21.
Fratzscher, M. (2012). Capital flows, push versus pull factors and the global financial crisis. Journal of International Economics, 88(2), 341-356.
Ghosh, A. R., Qureshi, M. S., & Tsangarides, C. G. (2013). Is the exchange rate regime really irrelevant for external adjustment? Economics Letters, 118(1), 104-109.
Gossel, S. J., & Biekpe, N. (2017). Push–pull effects on South Africa's capital inflows. Journal of international development, 29(6), 751-767.
Haug, A. A. (2002). Temporal aggregation and the power of cointegration tests: A Monte Carlo study. Oxford Bulletin of Economics and statistics, 64(4), 399-412.
Haider, M. A., Khan, M. A., & Abdulahi, E. (2016). Determinants of foreign portfolio investment and its effects on China. International Journal of Economics and Finance, 8(12), 143-150.
Haider, M. A., Khan, M. A., Saddique, S., & Hashmi, S. H. (2017). The impact of stock market performance on foreign portfolio investment in China. International journal of economics and financial issues, 7(2), 460-468
Haider, M. A., Khan, M. A., & Abdulahi, E. (2016). Determinants of foreign portfolio investment and its effects on China. International Journal of Economics and Finance, 8(12), 143-150.
Haider, M. A., Khan, M. A., Saddique, S., & Hashmi, S. H. (2017). The impact of stock market performance on foreign portfolio investment in China. International journal of economics and financial issues, 7(2), 460-468
Jabbar, A., & Awan, A. G. (2014). The determinants of capital inflow in developing countries with special reference to Pakistan. Developing country Studies, 4(12).
Nielsen, N, S., & Bjørnskov, C. (2012). Foreign portfolio investments in Sub-Saharan Africa - Why foreign investors might not seek the optimal opportunity. Aarhus School of Business and Social Sciences (unpublished)
Nwosa, P. I., & Adeleke, O. (2017). Determinants of FDI and FPI volatility: An E-GARCH approach. CBN Journal of Applied Statistics, 8(2), 47-67.
Ogbechie, C., & Anetor, F. (2016). Determinants of capital flows into Nigeria: An autoregressive-distributed lag (ARDL) approach. Journal of Economics and Trade, 1(1), 38-50.
Okafor, G., Piesse, J., & Webster, A. (2015). The motives for inward FDI into Sub-Saharan African countries. Journal of Policy Modeling, 37(5), 875-890.
Oke, B. O., Ezike, J. E., & Ojogbo, S. O. (2012). Locational determinants of foreign direct investments in Nigeria. International Business Research, 5(4), 103-111.
Onyeiwu, S., & Shrestha, H. (2004). Determinants of foreign direct investment in Africa. Journal of Developing Societies, 20(1-2), 89-106.
Pesaran, H. H., & Shin, Y. (1998). Generalized impulse response analysis in linear multivariate models. Economics letters, 58(1), 17-29.
Phillips, P. C., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335-346.
Rashid, I. M. (2018). Determinants of foreign direct investment inflow in Tanzania. Global Journal of Human-Social Science: Economics, 18(1), 39-56
Spencer, S. (2017). Investigating the drivers of portfolio inflows and outflows for Jamaica. Journal of Economic Literature, 11-23.
Suleiman, N. N., Kaliappan, S. R., & Ismail, N. W. (2015). Determinants of foreign direct investment: Empirical evidence from Southern Africa Customs Union (SACU) countries. International Journal of Economics & Management, 9(1).1-24
Vijayakumar, N., Sridharan, P., & Rao, K. C. S. (2010). Determinants of FDI in BRICS Countries: A panel analysis. International Journal of Business Science & Applied Management (IJBSAM), 5(3), 1-13.
Wafure, O. G., & Nurudeen, A. (2010). Determinants of foreign direct investment in Nigeria: An empirical analysis. Global Journal of Human Social Science, 10(1), 26-34.
Published
2020-10-08
How to Cite
Fagbola, O. O., Oke, B. O., & Adegbite, E. O. (2020). Drivers of Foreign Private Investment Inflows in Emerging Market: Evidence from Nigeria: Array. Acta Universitatis Danubius. Œconomica, 16(6). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/228
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Economic Development, Technological Change, and Growth
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