Foreign Direct Investment (FDI) Inflows and Real Sector of Nigerian Economy (2000 - 2015)

Abstract

This paper investigated the effects of foreign direct investment inflows on the real sector of the Nigerian economy (2000-2015). The specific objectives of the paper were to: evaluate the relationship between the FDI inflows and manufacturing sector output in Nigeria; determine the relationship between FDI inflows and agricultural production in Nigeria; and to assess the relationship between FDI inflows and the power generation in Nigeria. Data for the study were analyzed by the use of correlation and regression analysis aided by SPSS. The results of the analyses shows that, foreign direct investment inflows has no significant positive relationship with the manufacturing sector output; there is no significant positive relationship between foreign direct investment inflows and agricultural sector and; there is significant positive relationship between foreign direct investment inflows and the power generation in Nigeria. The paper recommended that, the Nigerian government should ensure the transparency of the operations of foreign investors within the economy so as to engender trust and confidence between the two parties and also good and stable infrastructural facilities such as electricity, roads, water etc. are highly needed to attract FDI inflows into the real sectors of Nigerian economy. All major factors that were documented as constraint to industrial growth and performance of manufacturing sector in Nigeria, since the 1980s, would need to be tackled in an urgent manner.