Foreign Direct Investment and Economic Growth in Nigeria from 1991 to 2021
Abstract
This research investigates the impact of Foreign Direct Investment (FDI) in developing economies growth, with a specific emphasis on Nigeria. The rate to which FDI affects the Gross Domestic Product (GDP) of Nigeria is evaluated. Utilizing the VECM (Vector Error Correction Model), the study examines both the short and long-term relationship of the dependent variable and key macroeconomic factors such as unemployment, interest rate, gross domestic investment (independent variables) amongst others. Additionally, test for normality and stability inclusive of residual autocorrelation test were performed adopting the Jarque-Bera and Lagrange Multiplier. Increase in the awareness of numerous opportunities of investment and stock market activity to enhance the capital market that will bring about a reduction in the petroleum industry reliance were recommended by the paper.
References
Adeniyi, F. O. (2020). Impact of foreign direct investment and inflation on economic growth of five randomly selected countries in Africa. Journal of Economics and International Finance, 12(2), 65-73.
Akhter, H. S. (1993). Foreign direct investment in developing countries: The openness hypothesis and policy implications. The International Trade Journal, 7, 655-672.
Alfaro, L. (2017). Multinational activity in emerging markets: How and when does foreign direct investment promote growth? In Advances in Strategic Management, pp. 429-462. Emerald Publishing Limited.
Alhassan, T. F., Owusu Ansah, E., Niyazbekova, S. U., & Blokhina, T. K. (2024). The impact of foreign investment in financing sustainable development in Sub-Saharan African countries. Russian Journal of Economics, 10(1), 60-83.
Anyanwu, J. C. (2017). Foreign direct investment. In Handbook of Globalisation and Development. Edward Elgar Publishing.
Anyanwu, J. C., & Oaikhenan, H. E. (1995). Modern macroeconomics: Theory and applications in Nigeria. Joanee Educational Publishers Ltd.
Ashamu, S. O., & Abiola, J. O. (2014). Exploration of the impact of international trade on the growth of Nigeria’s manufacturing sector: 1975-2010. Journal of Business Administration and Management Sciences Research, 3(1), 6-11.
Asiedu, E. (2002). The determinants of foreign direct investment in developing countries: Is Africa different? World Development, 30(1), 107-119.
Barro, R. J., & Sala-I-Martin, X. (1992). Convergence. Journal of Political Economy, 100, 223-251.
Bermejo Carbonell, J., & Werner, R. A. (2018). Does foreign direct investment generate economic growth? A new empirical approach applied to Spain. Economic Geography, 94(4), 425-456.
Biglaiser, G., & Lee, H. (2019). The effects of different entry modes of foreign direct investment on labor rights in the developing world. Journal of Human Rights, 18(2), 165-183.
Blomstrom, M. (1990). Host country benefits of foreign investment. National Bureau of Economic Research Working Paper (NBER), W3615. Washington D.C.
Borin, A., & Mancini, M. (2016). Foreign direct investment and firm performance: An empirical analysis of Italian firms. Review of World Economics, 152(4), 705-732.
Bosworth, B. P., & Collins, S. M. (1999). Capital flows to developing economies: Implications for saving and investment. Brookings Papers on Economic Activity, 1.
Contractor, F. J., Dangol, R., Nuruzzaman, N., & Raghunath, S. (2020). How do country regulations and business environment impact foreign direct investment (FDI) inflows? International Business Review, 29(2).
Donaubauer, J., Kannen, P., & Steglich, F. (2022). Foreign direct investment & petty corruption in sub-Saharan Africa: An empirical analysis at the local level. The Journal of Development Studies, 58(1), 76-95.
Egbo, O. P. (2010). An analysis of foreign direct investment inflow and economic growth in Nigeria. Doctoral thesis, University of Nigeria, Enugu Campus.
Gbosi, A. N. (2002). Contemporary issues in Nigeria’s public finance and fiscal policy. Park Publishers.
Hlaváček, P., & Bal-Domańska, B. (2016). Impact of foreign direct investment on economic growth in Central European countries. Engineering Economics, 27(3).
Hymer, S. (1976). The international operations of national firms: A study of foreign direct investment. 1960 dissertation. MIT Press.
Javorcik, B. S., Lo Turco, A., & Maggioni, D. (2018). New and improved: Does FDI boost production complexity in host countries? Economic Journal, 128(614), 2507-2537.
Jenkins, C., & Thomas, L. (2002). Foreign direct investment in Southern Africa: Determinants, characteristics, and implications for economic growth and poverty alleviation. Globalization and Poverty Project, University of Oxford.
Jones, C. I. (2016). The facts of economic growth. In Handbook of Macroeconomics, pp. 3-69. Elsevier.
Li, C., & Tanna, S. (2019). The impact of foreign direct investment on productivity: New evidence for developing countries. Economic Modelling, 80, 453-466.
Liesbeth, C., Maertens, M., & Swinnen, J. (2009). Foreign direct investment as an engine for economic growth and development: A review of the arguments and empirical evidence. Human Rights and International Legal Discourse, 3, 177-227.
Long, M. A., Stretesky, P. B., & Lynch, M. J. (2017). Foreign direct investment, ecological withdrawals, and natural-resource-dependent economies. Society & Natural Resources, 30(10), 1261-1276.
MacDougall, G. D. A. (1960). The benefits and costs of private investment from abroad: A theoretical approach. Economic Record, 36, 13-35.
Maji, A., & Odoba, A. J. (2011). An investigation of the impact of foreign direct investment on economic growth in Nigeria. International Business and Management, 3(1), 232-238.
Makoa, A. J. (2021). Impact of foreign direct investment on local Tanzanian industries: The case of Dar es Salaam region. Master’s thesis, The Open University of Tanzania.
Muchlinski, P. (1997). Multinational enterprises and the law. Blackwell Publishers.
UNCTAD. (2020). World investment report 2020: International production beyond the pandemic. United Nations Conference on Trade and Development. Retrieved from https://unctad.org/webflyer/world-investment-report-2020.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Oluwatoyosi Adekoya, Micheal Adeyanju
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
