Global Capital, National Growth: Foreign Investment–Economic Growth Dynamics in Nigeria
Keywords:
foreign direct investment, foreign portfolio investment, economic growth, NigeriaAbstract
Growth and development of any economy across the globe including Nigeria is largely dependent on the level of foreign direct investment (FDI) and foreign portfolio investment (FPI) in that economy. However, literature revealed low levels of foreign investment into Nigerian economy, thereby limiting the Nigerian economic growth and development. Therefore, this study aimed at examining the effect of foreign direct investment and foreign portfolio investment on economic growth in Nigeria between 1990 and 2023. The specific objectives were to: (I) investigate the effect of foreign direct investment on economic growth in Nigeria; and (II) examine the effect of foreign portfolio investment on economic growth in Nigeria. The study employed ex post facto research design. Secondary data were sourced from World Development Indicators (WDI) and CBN Statistical Bulletin for the periods covered. The study used ordinary least square (OLS) regression model as estimating techniques after carrying out preliminary tests. The findings were that: (I) FDI with (β = 0.337; p-value = 0.000) has significant positive effect on economic growth; and (II) FPI with (β = 0.688; p-value = 0.002) has significant positive effect on economic growth. Therefore, this study concluded that FDI and FPI have significant positive effect on economic growth in Nigeria. The study recommended that relevant economic managers like Central Bank of Nigeria (CBN) and Security Exchange Commission (SEC) should implement relevant policies (monetary and fiscal) that aligned with national development priorities, such as education, healthcare, and renewable energy and be made attractive to draw both domestic and foreign investors into these sectors of national interests. In addition, the government should create conducive business environment that guarantees the ease of doing business and provide security to ensures the safety of foreign investors and their investments.
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