Abstract

Evidence abound about the registered increase in foreign investment inflows in recent years. While proponents emphasize that these inflows could engender economic growth, critics express concern that there could be destabilizing effect on the economy if not well managed. This study therefore, attempts to examine the effect of foreign investments (disaggregated into foreign direct investment and foreign portfolio investment) inflows on economic growth in Nigeria with a view to ascertaining the better contributor, using time series data from 1987-2012. The OLS and the Granger causality procedures were employed in analyzing the data. The result displays that both foreign direct investment and foreign portfolio investment have positive and significant effect on economic growth though the partial correlation coefficients show that foreign portfolio investment is the better contributor. Based on the result, government should pursue policies that encourage both foreign

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