The paper investigates the impact of foreign direct investment fdi on economic growth in nigeria, for the period 19702001. Foreign direct investment and economic growth in latin. This implies that foreign direct investment is an engine of economic growth. The outcome of the investigation indicates that there is a significant relationship between the variables.
Foreign direct investment and economic growth in the gcc countries. Both static panel regression techniques and dynamic panel estimates were employed to assess the causal link of our regressors, namely, fdi, trade openness, domestic investment. Foreign direct investment and economic growth in botswana. Using annual time series data that span the period from 1981 to 2014, and employing the fully modified ordinary least squares fmols estimation technique, the empirical evidence indicates that.
Therefore, this study specifically test the hypothesis on whether or not fdi has positive. The paper employs granger causality test and ordinary least square method. Raw material revolution and impact on industrialization in nigeria. Does stock market development play any role in the effect of. This study analyses the impact of foreign direct investment on economic growth in nigeria using data for 32 years, from 19852016. Request pdf foreign direct investment and growth in nigeria.
Many theoretical and empirical studies have identified several channels through which fdi may positively or negatively affect economic growth. Corruption, foreign direct and economic growth in nigeria. This study investigated the impact of foreign direct investment on economic growth in nigeria. An empirical analysis on the contribution of foreign direct. Organization for economic cooperation and development countries. The study examines the applicability of fdi and the impact they makes to the nigerian economy hypothesis using empirical. The effort of most african countries to attract fdi has not been quite successful in recent times. Applying time series technique this paper observes that fdi flow to nigeria is resourceseeking fdi during 19702006. From the empirical evidence, we have been able to establish that foreign direct investment into manufacturing and telecommunication exhibit positive impacts on ec onomic growth in nigeria, t. Effect of foreign direct investment on economic growth in. While some researchers suggest a positive effect, others found a negative effect. However, empirical studies have found divergent views on the effect of fdi on growth and development. An empirical investigation journal of economics and sustainable development. Although the overall effect of fdi on the whole economy.
A causality investigation using heterogeneous panel analysis. Descriptive and regression analyses were used as the estimation. The impact of foreign direct investment on economic growth in nigeria. Pdf domestic investment and economy growth in nigeria. This study investigates the empirical relationship between foreign direct investment and economic growth in nigeria. Regression analysis technique was adopted with the aid of eview version 9.
Foreign direct investment and economic growth in india. Pdf exports, foreign direct investment and economic. Foreign direct investment provides capital for it investment. The study found that fdi has significant positive impact on the. The findings for the study show that fdi induces nations economic growth. Pdf foreign direct investment and economic growth in nigeria. Impact of foreign direct investment on nigeria economic growth.
The results show that di is positive and significantly correlated with economic growth in both the ols and fixed effects estimation, but fdi is positive and significant only in the. Furthermore, adigwe, ezeagba and udeh 2015 investigated the relationship between foreign direct investment and economic growth in nigeria, using pearson correlation analysis. Foreign direct investment and growth in ep and is countries. The motivation behind this empirical investigation comes from the inconclusive evidence produced by a flurry of previous empirical studies on foreign direct investment fdi growth nexus.
Determinants of foreign direct investment in nigeria. Foreign direct investment fdi has been held to provide developing nations including nigeria with much needed capital for economic growth. Developing countries, nigeria inclusive, face a shortage of investible funds and hence strive to attract foreign direct investment fdi because of its acknowledged potentials as a tool of economic development. Their result revealed that foreign direct investment had significant impact on economic growth in nigeria. The study revealed that foreign direct investment on financial sector. Exploring foreign direct investmenteconomic growth. It is conventionally measured as the percent rate of increase in real gross domestic product, or real gdp. Topics in middle eastern and north african economies, 91, 1a31. This study investigates empirically the relationship between trade openness open and foreign direct investment fdi on the economic growth for a panel of four 4 west african countries cote divoire, ghana, nigeria, and senegal during the period of 1998 to 2017. It aimed at determining functional relationships that exist.
Introduction foreign direct investment fdi has played a leading role in many of the economies of the africa. This work examines the effect of foreign direct investment fdi on economic growth in 19 latin american countries. This study will examine the determinants of foreign direct investment fdi based on empirical evidence from nigeria. Domestic private investment and economic growth in nigeria. This article investigates the effect of infrastructure and foreign direct investment fdi on economic growth in subsaharan africa ssa using panel data on 46 countries covering the period 20032017. The ecm results show that both private capital and lagged foreign capital have small, and not a statistically significant effect, on the economic growth. Key words fdi, gdp, inflation, economic growth, ghana 1. The data were analyzed using fixed effects, random effects, and system generalized method of moments gmm estimation techniques. However, some say that corruption could have a positive effect on investment. The study about the relationship between fdi and economic growth in malaysia for the period 19702005 using time series data found that there is a significant relationship between economic growth and foreign direct investment inflows. An empirical investigation ade oyedijo akinlabi 1, babatunde hamed 2, awoniyi m. The results also showed long run significant relationship exists between the variable examined and domestic investment.
The results therefore support earlier thoughts in literature on fdi which assert that positive spillovers exist were technology gaps between foreign firms and domestic firms exist, or in sectors open to fdi. Foreign direct investment fdi and nigerian economic. In the shortrun, estimates show that foreign direct investment has negative influence on growth of 24 countries out of which four benin, madagascar, nigeria and equatorial guinea are highly. Nigeria foreign direct investment 20072019 data 2020. The unctad world investment report 2006 shows that fdi inflow to west africa is mainly dominated by inflow to nigeria, who received 70% of the subregional total and 11% of africas total. Foreign direct investment and economic growth literature. The ecm results show that both private capital and lagged foreign capital have small, and not a statistically significant effect. Promoting and facilitating technology transfer through foreign direct investment fdi has assumed a prominent place in the strategies of economic revival and growth. Foreign direct investment fdi is argued to play a pivotal role in accelerating economic growth eg of a host country especially in developing and. Pdf the impact of foreign direct investment on economic. Corruption, foreign direct investment and economic growth in. Nov 02, 2016 there have been controversies regarding the effect of foreign direct investment on the growth of the host countrys economy.
This study examines empirically whether fdi is resource seeking in nigeria and its determining factors. This study examined the influence of foreign direct investment and exchange rate on economic growth in nigeria from 1971 to 20. Foreign direct investment and economic growth in developing. Student at department of accounting, nasarawa state university keffi, nigeria. Economic growth is the increase in the amount of goods and services produced by an economy over. Determinants of foreign direct investment in nigeria 1980.
Empirical analysis of the effects of foreign direct. The study employed trend lines and percentage to analysis the. Foreign direct investment in developing countries and growth. The impact of foreign direct investment on the nigerian.
In the case of nigeria, ayashagba and abachi 2002 carried empirical investigation on the effects of foreign direct investment on economic growth in nigeria. Secondary source of data was employed in this study from 1986 to 2017 which were sourced from central bank of nigeria statistical bulletin 2017 published in 2018 and world development indicator published in 2019. Considering the various critisism of empirical studies on how foreign direct investment in nigeria affects its economic growth, there is need for further studies to be carried out on how fdi affects the economic growth of the nigeria after the financial crisis. Corruption, foreign direct investment and economic growth in nigeria. Empirical investigation of the impact of foreign direct.
An empirical investigation the paper investigates the impact of foreign direct investment fdi. It is, therefore, necessary to investigate holistically domestic investment, and economic growth in nigeria between the periods of 19802016. Moreover, most existing studies were based on economies where large share of fdi is concentrated on the manufacturing. The impact of external debt and fo reign direct investment on economic growth. This page provides nigeria foreign direct investment. O economic development, innovation, technological change, and growth o5 economywide country studies o55 africa.
Latin america and asia, not many studies have been reported on the effects of fdi on economic growth. Efficiency seeking fdi under this type of foreign direct investment the investor will invest to get an advantage when there is a common governance of geographically dispersed activities, especially in the presence of economies of scope and scale and diversification of risk. Foreign direct investment in nigeria increased by 909. The impact of foreign direct investment on the nigerian economy. This study investigates the empirical relationship between foreign direct investment and economic growth in. It is conventionally measured as the percent rate of increase in real gross domestic. Determinants of energy demand in african frontier market. The study also examines the relationship between inflow of fdi and economic growth in nigeria. However, there are areas of knowledge gap on the part of the effects of industrial linkage on fdi inflows to the. Pdf economic growth and foreign direct investment in nigeria. The relationship between trade openness, foreign direct. Again the cointegration test shows that there is a long. Secondary data were sourced from the central bank of nigeria, international monetary fund and the federal office of.
Foreign direct investment and economic growth in nigeria. This paper examined the effects of foreign direct investment fdi on the development of nigerian economy. The role of foreign direct investment in the development of nigerian economy cannot be over emphasized. Corruption, foreign direct investment and economic growth. Effects of foreign direct investment fdi on economic. The ols estimation and the johansen cointegration test were the key techniques of analysis employed. Most economic rationale for granting special incentives for attracting foreign direct investment fdi is based on the belief that fdi bridges the idea gaps between rich and the poor nations in addition to the generation of technological transfers and spillovers. Foreign direct investment in nigeria averaged 1233. Using panel data econometrics, we found robust empirical evidence that suggests that the effect of fdi on economic growth is not statistically significant in aggregated form. There is a widespread belief among policymakers that foreign direct investment fdi enhances the productivity of host countries and promotes development. The results indicate that foreign direct investment has no positive impact on the nigerian economic growth. May 05, 2019 this study investigated the impact of foreign direct investment on economic growth in nigeria. The adf result shows that all the variable in the study are stationary. The study examines the relationship between financial sector development and economic growth in nigeria.
This study investigated the empirical relationship between nonextractive fdi and economic growth in nigeria and examined the determinants of fdi into the nigerian economy. The impact of foreign direct investment on economic growth. This in turn reduces energy consumption in the longrun. Financial sector development and economic growth in nigeria. An empiricial investigation based on crosscountry comparison. An econometric investigation of the determinants of foreign direct investment in nigeria. Empirical investigation of the impact of foreign direct investment on manufacturing firms and banks in nigeria. Impact of foreign direct investment on nigerias economy. This study investigated the empirical relationship between fdi and economic growth in nigeria. The impact of foreign direct investment on nigeria economic growth 19812016 pdf will be the focus of this research. This study evaluated the extent to which foreign direct investment fdi has contributed to the gross domestic product gdp in nigeria from 2000 to 2017. Impact of foreign direct investment on the economic growth. The objective of the paper is to investigate whether stock market development plays any role in the effect of foreign direct investment fdi on economic growth in nigeria. The granger causality test was also used to determine the causality between domestic investment, and economic growth in nigeria for the period of 19802016.
Effect of infrastructure and foreign direct investment on. There have been controversies regarding the effect of foreign direct investment on the growth of the host countrys economy. The foreign direct investment fdi inflow into developing countries including african countries is a source of employment and economic growth. Increases in industrialisation and foreign direct investment induced new and improved technology, growth and sources of competitive advantages. Foreign direct investment fdi and nigerian economic growth. The work covered a period of 19812009 using an annual data from central bank of nigeria statistical bulletin. Part of the foreign direct investment is the inflow of up to date technology and management skill. Foreign direct investment is also viewed as a major stimulus to. This study suggests that the endowment of natural resources, trade intensity, macroeconomic risk factors like inflation and exchange rates are significant determinants of fdi flow to nigeria. It is against this backdrop that this study examined the effect of foreign direct investment on economic growth in nigeria. The impact of external debt and fo reign direct investment.
The objectives of the study are to examine the effect of foreign direct investment on economic growth without conditioning on absorptive capacity in nigeria and. Foreign direct investment and economic growth in nigeria iiard. This study has made an attempt to investigate and analyze empirically the impact of foreign direct investment fdi on the economic growth for a panel of 32 subsaharan african countries during the period 20082014. Economic growth and foreign direct investment in nigeria. The study analyzes the impact of foreign direct investment fdi and domestic investment di on economic growth in subsaharan africa for the period 19902003. This is despite the perceived and obvious importance of fdi in the economic growth and development of a country. Department of business administration and management technology 2lagos state university external system ojo, nigeria. They identify the growth potential and revenue prospects of african infrastructure and related foreign investment are some key ingredients. This study empirically investigates the determinants of foreign direct investment fdi to nigeria during 19702006. This paper investigates the causality and effect of corruption on the foreign direct investment inflow to nigeria.
This study examines the impact of foreign direct investment inflows on the growth of nigerian economy. Economic theories have shown that foreign direct investment fdi being one of the key macroeconomic variables has a positive relationship with economic growth. This paper examines the determinants of foreign direct investment fdi in nigeria during 1980 2011. Expost facto research design was employed for the study.
Financial sector development and economic growth in. An empirical analysis of kenyan data daniel o abala, phd. Impact of foreign direct investment on economic growth. Nov 24, 2014 this paper examines the empirical relationship between foreign direct investment fdi and economic growth in nigeria. Therefore, the empirical evidence on foreign direct investment. However, the study concludes that the presence of foreign direct investment in the ldcs particularly in nigeria is not totally useful. In the course of this study, three hypotheses were formulated in line with the objectives of the study. This paper investigates the recent surge of fdi in nigeria, which is poor in terms of income but rich in natural resources. Nigeria for about two decades practiced restrictive policy towards fdi until the late 1989 when she overturned and liberalized the economy.
Pdf economic growth and foreign direct investment in. Foreign direct investment in botswana, 2011 industry fdi pula million mining 744 manufacturing 199 finance 3 228 retail and wholesale 417 electricity gas and water 65 real estate and business services 2 transport, storage and communication 193. This thesis is based on the econometric investigation of the impact of foreign direct investment on nigerian manufacturing firms and banks. Eravwoke and imide 20 analyzed corruption, foreign direct investment and its impact on. Foreign direct investment, domestic investment, and. Department of economics, nnamdi azikiwe university, awka, anambra state, nigeria. Exports, foreign direct investment and economic growth. Foreign direct investment and growth in nigeriaan empirical investigation. Absorptive capacity and the impact of foreign direct investment on.
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