Abstract
Foreign Direct Investment (FDI) has attracted the attention of many developing countries. Hence, the study examined the effects of Foreign Direct Investment on economic growth and captured the impacts of other macro-economic variables on economic growth in Nigeria between the period of 1986-2017. The secondary data used in this study were obtained from Central bank of Nigeria (CBN) Statistical Bulletin and World Development Indicator (WDI). To avoid spurious regression, Augmented Dickey Fuller unit root test was conducted on all variables. Multiple regression and Granger Causality Test were also conducted to target the study objectives. The multiple regression reveals that Foreign Direct Investment is statistically significant at 5% level of significance. Thus, Foreign Direct Investment has a significant effect on economic growth in Nigeria. The Granger Causality Test also confirms that Foreign Direct Investment Granger causes economic growth in Nigeria. The conclusion is that Foreign Direct Investment has a positive and significant effect on economic growth. It also Granger causes economic growth in Nigeria. There is high prospect for Foreign Direct Investment to further boost economic growth if enabling environment such as regular infrastructure and microeconomic stability prevail in Nigeria. Keywords: Foreign Direct Investment, Economic growth, Granger causality. DOI: 10.7176/RHSS/10-6-06 Publication date: March 31 st 2020
Highlights
Various policies of the Nigeria government have been directed towards sustaining economic growth and attainment of economic development by stimulating the flow of foreign finance into the economy
From the findings above, the multiple regression reveals that Foreign Direct Investment with p-value of 0.00321 is statistically significant at 5% level of significance
Foreign Direct Investment has a significant effect on economic growth in Nigeria
Summary
Various policies of the Nigeria government have been directed towards sustaining economic growth and attainment of economic development by stimulating the flow of foreign finance into the economy. The only valid conclusion is that foreign private investment may be an important stimulus to economic growth and social development as long as the interest of MNCs and host countries government coincide and that MNCs who provide FDI capital adopt a long-run perspective by adapting their technologies of production to the resources of developing nations. The Nigerian government has been focusing on policies that will help attract foreign investors and yet the economy is still dwindling In line with this background, he study the impact of foreign direct investment on economic growth in Nigeria for the period 1970-2010 making use of annual time series data through a neo-classical framework.
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