The Impact of Foreign Direct Investment on Revenue Generation in Nigeria: Mediating on the Role of Company Tax
Keywords:Company Income Tax; Foreign Direct Investment; Petroleum Profit Tax; Corporate Tax; Revenue Generation
This study examined foreign direct investment and its impact on revenue generation in Nigeria, with emphases on the role of company income tax as mediating factor. This Study is predicated on the Doctrine of Unbalanced Growth Theory, Solow-Swan growth theory and Romer Growth Model
Secondary data source was explored in presenting the facts of the situation. The secondary data were obtained from relevant literatures, Central Bank of Nigeria Statistical Bulletin and National Bureau of Statistics publications among other. In an attempt to do this, ordinary least square regression technique was employed in which T-test, R-Square, Standard Error Test and Durbin Watson test ADF/PP unit root and co-integration test were used in the data analysis, information concerning foreign direct investment, company income tax, petroleum profit tax and corporate tax from 1990-2020 were extracted.
The empirical evidence shows that FDI has positive impact on revenue generation in Nigeria. The result of the finding revealed consistence present of co –integration among the variables which is a clear indication that foreign direct investment has a significant and positive relationship with revenue generation with strong emphasize on company income tax as mediating factor.In conclusion, foreign direct investment increase revenue generation which through company income tax generated to boost economic growth in Nigeria. Therefore, in other boost government revenue generation which will promote growth and development in the economy, government should give priority or pay more attention to policies that could promote FDI inflow into the country and use this avenue to generate more tax to enhance infrastructural development
Adenugba, A. A., & Chike, F. O. (2013). The effect of internal revenue generation on Infrastructural development. A study of Lagos state internal revenue services. Journal of Education and Social Research, 3(2), 419–436.
Adeolu, B. A. (2007). FDI and economic growth: Evidence from Nigeria, African economic research consortium. Nairobi: AERC Research Paper 165.
Agrawal, G. (2015). Foreign direct investment and economic growth in Brics economies: a panel data analysis. Journal of Economics, Business and Management, 3(4).
Ake, K. (2001). Basic approach to government, Lagos: Joja educational and research publishers Ltd.
Amin, S. (1976). Accumulation on a world scale: A critique of the theory of underdevelopment, monthly press review, New York, (1974).
Anyanwu, J.C. (1993). Monetary economics: Theory policy and institution. Onitsha: Hybrid Publishers Ltd.
Aremu, J.A. (2005). Foreign direct investment and performance. Paper delivered at a workshop on foreign investment policy and practice organized by the Nigerian Institute of Advanced Legal Studies, Lagos on 24 March.
Asimiyu, A.G., & Kizito, E.U. (2014). Analysis of internally generated revenue and its implications on fiscal viability of State Governments in Nigeria. Journal of Empirical Economics, 2(4), 216-228.
Ayanwale, A. B. (2017). FDI and economic growth: Evidence from Nigeria. A research paper No. 165 published by African economic research consortium, Nairobi.
Bailey, N. (2018). Exploring the relationship between institutional factors and FDI attractiveness: A meta-analytic review. Int. Bus., 27, 139–148.
Balasubramanyam, V. N., Salism, M., & Sapsfold, D. (1999). Foreign direct investment as an engine of growth. Journal of International Trade and Economic Development, 8(1) 2740.
Balogun, A. (2015). Developing internally generated revenue in an era of diversification.
Baridam, D. M. (2001). Research method in administrative sciences. Beck Publishers, Port Harcourt.
Barrell, R., & Pain, N. (2007). Foreign direct investment, technological change, and economic growth within Europe. The Economic Journal, 107(445).
Barro, R. J. (1991). Economic growth in a cross section of countries. Quarterly Journal of Economics, 106(2), 407 – 443.
Blomström, M., & Wolff, E. (2004). Multinational corporations and productivity convergence in Mexico”, in W. Baumol, R. Nelson and E. Wolff, eds., Convergence of productivity: cross-national studies and historical evidence. Oxford: Oxford University Press.
Central Bank of Nigeria (2019). CBN Annual Report and Statistical Bulletin for the year Ended 31st December 2019
Chenery, H. B., & Stout, A. (1996). Foreign assistance and economic development. American Economic Review, 55, 679-733.
Clark, J. M. (1917). Business acceleration and the law of demand. 11 Journal of Political Egouqmi, XM, March, 1917.
Dixon, S. (2005). The administration of social services in Nigeria: The challenge to state governments, Ile-Ife, State Government, Training Programme, Paper 1.
Ekankumo, B., & Braye, K. (2011). Stimulating internally generated revenue in Nigeria: The entrepreneurial option revisited. European Journal of Social Sciences, 23(4), 520-530.
Flesher, L., & Flesher, D. (2007). Revenue allocation in Nigeria 1970-1980, Nigerian Journal 1Economic and Social Studies, 17(2), 1-27.
Gujarati, D., & Sangeetha, N. (2007). Basic econometrics. Fourth Edition, Tata McGraw-Hill, New Delhi.
Hansen, H., & Rand J. (2016). On the causal links between FDI and growth in developing countries. The World Economy, 29, 21–41.
Javorcik B.S., (2004). Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages. American Economic Review, 94, 605-627.
Jyun-Yi, W., & Hsu, C. (2008). Does foreign direct investment promote economic growth?
evidence from a threshold regression analysis. Economics Bulletin, 15(12).
Keynes, J.M. (1936). The general theory of employment, interest and money.
Khaliq, A., & Noy, I. (2014). Foreign direct investment and economic growth: Empirical evidence from sectoral data in Indonesia. A paper published by Andalas University, Indonesia.
Kiabel, B.D., & Nwokah, N.G. (2009). Boosting revenue generation by state governments in Nigeria: The tax consultants’ option revisited. European Journal of Social Sciences, 8(4), 532-539.
Koojaroenprasit, S. (2012). The impact of foreign direct investment on economic growth: A case of South Korea. International Journal of Business and Social Science, 3(21).
Koutsoyiannis, A. (1977). Theory of econometrics. 2nd ed. MacMillan Publishing, New York.
Macaulay, E. D. (2011). Foreign direct investment and the performance of the Nigerian economy. Journal of Educational and Social Research, 1(5).
Macaulay, E.D. (2012). Foreign direct investment and the performance of the Nigerian economy. Proceedings of the 1st international technology, education and environment conference, pp. 629-633
Melnyk, L., Kubatko, O., & Pysarenko, S. (2014). The impact of foreign direct investment on economic growth: Case of communism post-transition economies. Problems and Perspectives in Management, 12(1).
Muntah, S., Khan, M., Haider, N., & Ahmad, A. (2015). Impact of foreign direct investment on economic growth of Pakistan. American Research Journal of Business and Management, 1(1).
Nachmias, D., & Frankfort-Nachmias, C. (1976). Research methods in the social sciences. New York: St. Martin's Press.
National Bureau of Statistics (2019). Economic report. Retrieved from: www National Bureau of Statistics.com.
Nwankwo, O. (2014). Impact of corruption on economic growth in Nigeria. Mediterranean Journal of Social Sciences, 5(6), 41–46
Nwankwo, O.G., Ademola, O., & Kehinde, O. (2013). Effects of globalization on foreign direct investment in Nigeria. Lorem Journal of Business and Economics (LJBE), 1(1), 11-17. Ojo, Seiyi (2003) Fundamental Principles of Nigerian Tax Lagos: Sagribra Tax Publications.
Olaoye, A. (2018). Tax in a borderless world. Organisation for Economic Cooperation and Development. The OECD Observer no. 257, (October 1): 10-11. http://www.proquest. com/. Accessed 24/08/ 2019.
Olayiwola, K., & Okodua, H. (2017). Foreign direct investment, non-oil exports, and economic growth in Nigeria: A causality analysis. JEL classification: C33, C32, F43, F21
Omankhanlen, A. E. (2018). Foreign direct investment and its effect on the Nigerian economy. Business Intelligence Journal, 4(2).
Onu, A.J.C. (2012). Impact of foreign direct investment on economic growth in Nigeria. Interdisciplinary Journal of Contemporary Research in Business, 4(5), 64-75.
Osuka, B. O., Otiwu, K. C., & Makwe, E. U., (2018). Foreign direct investments in selected service sectors and economic growth in Nigeria (1990 - 2016): International Conference on Managing Nigerian Economy: Organized by the Faculty of Business Administration, Imo State University, Owerri, Nigeria.
Ayadi W. I. (2009). Foreign direct investments and economic development and growth in Nigeria. Mediterranean Journal of Social Sciences, 5(2).
Pesaran, M.H., & Shin, Y. (1997). Long-run structural modelling. Un-published manuscript, University of Cambridge.
Pesaran, M.H., Shin, Y., & Smith, R.J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326.
Pfister, M. (2009). Taxation for investment and development: An overview of policy challenges in Africa, ministerial meeting and expert roundtable, NEPAD-OECD
Ayashagba and Abachi (2002). State government and administration: Nigerian government and politics under military rule, 1996-1979. London: The Macmillan Publication.
Osinubi and Amaghionyediwe (2010) Relationship between foreign private investment (FPI) and economic growth in Nigeria: Evidence from Uzbekistan. European Journal of Business and Management, 8(3).
Rekha, M. (2010). Foreign direct investment economic growth nexus in India. Centro Argentino de `Estudios Internacionales, 1-18.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.