The Determinants of Foreign Direct Investment in Nigeria: An Empirical Study

Abstract

The objective of this study is to detect which elements act as a key driver of high FDI inflows in Nigeria. It is predictable to help foreign investors to get better understanding in the nature of FDI and support the investment decision. In lieu of the above, extensive hypothesis were developed to identify a suitable model of foreign direct investment for Nigeria. After the hypothesis, data were then collected from various official data base for Nigeria to conduct the empirical research. However, the study foresees the gathering of reliable and consistent secondary information for the retro 1980-2022 from World Development Indicators (WDI) record on the World Bank. Data were composed on variables that were supposed to have the potential in persuading foreign direct investment in Nigeria which was based mainly on the features of the economy. The data collected were analyzed via various econometric techniques. Findings from the study show that the size of the Nigerian market and the level of their economy openness are major determinants of FDI inflows. The result further suggests that high inflation rate is a hindrance to FDI. Several policy recommendations were made as the research will be a practical mean, not only for academic purpose. Its discoveries, if applied will cause for sure a real improvement in the investment climate of Nigeria.