The Impact of Foreign Direct Investment on Nigeria’s Economic Growth; 1980-2009: Evidence from the Johansen’s Cointegration Approach
- Egwaikhide Christian Imoudu and Ohwofasa Bright Onoriode
This paper investigates the relationship between foreign direct investment (FDI) and economic growth in Nigeria between 1980-2009 through the application of Johansen Co-integration technique and Vector Error Correction Methodology in which FDI is disaggregated into various components. Similarly, it examines the determinants of FDI in Nigeria. The Johansen Co-integration result establishes that the impact of the disaggregated FDI on real growth in Nigeria namely: agriculture, mining, manufacturing and petroleum sectors is very little with the exception of the telecom sector which has a good and promising future, especially in the long run. Furthermore, past level of FDI and level of infrastructures are FDI enhancing. In the light of the above, the paper recommends, among other things, the creation of enabling investment climate in Nigeria through the overhauling of the security system which will help in no small measure in boosting investors’ confidence as instability scare way prospective investors. And also, there is the need to liberalise the foreign sector in Nigeria while all barriers that are inimical to cross-border trade such as arbitrary tariffs; import and export duties and other levies should be reduce to the beeriest minimum or, if possible, removed.
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