INVESTMENT AND ECONOMIC GROWTH NEXUS IN NIGERIA: A MODERATION ANALYSIS OF SECURITY THREATS

Abstract

This study assessed the moderating effects of security threats on investment-economic growth nexus in Nigeria from 1986 to 2021 using the Vector Error Correction Model approach. Domestic investment and FDI were found to have a positive impact on Nigeria's long-term economic growth. The study also found that security threats have a strong negative effect on economic growth in Nigeria, and that the presence of security threats significantly reduced the positive influence of investment on economic growth in Nigeria. Thus, the marginal effects of investment when there are security threats in Nigeria was worsened. The study therefore emphasized that security threats significantly hinder the positive contributions of domestic and foreign investments to economic growth, especially foreign direct investment. Therefore, the study recommends that Nigerian government should enhance security measures to combat political instability, terrorism, and social unrest in order to create a more favourable business environment and encourage both domestic and foreign investment