Abstract
This study investigates the relationship between Expenditure on Security and Foreign Direct Investment in Nigeria using secondary data spanned through 1985 to 2012. Preliminary unit root tests were conducted using the Philip-Perron approach. Co-integration and Error Correction Mechanism (ECM) was employed to examine the nexus between Expenditure on Security and Foreign Direct Investment. The study found that internal security expenditure and Inflation maintained negative long run relationship with index of Foreign Direct Investment while defense expenditure exhibited long run positive relationship with the dependent variable. Consequently, it is recommended that an investment friendly environment capable of attracting Foreign Direct Investment should be of priority to the federal government. Likewise, serious and tight border strategic management is direly needed now as Nigeria borders have been porous and weak to the extent that ammunitions and other weapons freely fly across our borders unchecked. If these are allowed, a higher inflow of direct investment into Nigeria is imminent.
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