Abstract
The study examined the relationship between foreign direct investment and fiscal policy and the implication of the relationship on the Nigerian economic growth, the years under review were 1980 to 2019. Variables such as government expenditure, government revenue among others were used to proxy fiscal policy while data on foreign direct investment were used for FDI. The GDP growth rate was used as a proxy for the Nigerian economic growth. The study applied Autoregressive Distributed Lags estimating techniques. The result from the analysis indicated that the association between foreign direct investment and fiscal policy could not have a significant effect on the economic growth of Nigeria in the long run but, in the short run, the association was significant. The study recommends more collaboration between fiscal policy and foreign direct investment in such a way that it will promote the growth of the Nigerian economy.
Highlights
Over the years, foreign direct investment has been a major incentive that peoples the Nigerian economic growth with its immense contributions to the revenue generation (Dada & Abanikanda, 2021)
Despite the huge revenue realized via foreign direct investment especially in the petroleum industry, the nature of fiscal policy practiced in Nigeria for the past two decades has been in form of deficit Ogege & Boloupremo, 2020)
Based on the result of the proxy for the key variables foreign direct investment, fiscal policy and economic growth, this study concluded that foreign direct investment and fiscal policy have insignificant long-run impacts, on economic growth
Summary
Foreign direct investment has been a major incentive that peoples the Nigerian economic growth with its immense contributions to the revenue generation (Dada & Abanikanda, 2021). Proponents of fiscal deficit believe the excess of government expenditure over revue is to boost infrastructure and promote domestic production to maintain sustainable economic growth (Ogege, 2020; Arain, Qureshi, Suthar, Pirzado, Khanzada, Baloch, Memon, 2021). This case has not been the situation in Nigeria where economic growth has been falling and fluctuating in recent times. Tax revenue fell by 6.7% and it was at the same period that Nigeria witnessed two economic recessions (CBN, 2019) The implication of this scenario is that it appears that there might be some connections among the three that is FDI, fiscal policy and Nigeria's economic growth
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