IMPACT OF FOREIGN DIRECT INVESTMENT (FDI) ON ECONOMIC GROWTH IN NIGERIA
Zakari Sale , Galadima Ahmadu Audu and Datti Muhammad Ibrahim
Volume 2 Issue 2
Abstract
This study investigated the impact of Foreign Direct Investment on Economic Growth in Nigeria, implication for poverty reduction, using data over the periods of 1988 – 2019. It is based on secondary data which was collected from the central Bank of Nigeria, National Bureau of Statistics, the World Bank, UNCTADs database, World development indicators and other related journals. ARDL bound test to cointegration was the technique employed to analyses the data, also Vector Error Corrections Model (VECM) were employed for the analysis. The results confirmed the existence of a long-run relationship among the variables. Foreign Direct Investment (FDI) had a positive and significant relationship with RGDP, and hence does have the potential of reducing poverty in the country. A unit increase in FDI will increase RGDP by 0.28 units. But Poverty on the other hand has a negative but insignificant relationship with RGDP. A unit increase in POVR will decrease RGDP by – 0.356 units in the long run and has insignificant impact of poverty reduction on the Nigerian economy. The findings also show that there is a causal relationship among the variables. The study concludes by recommending that: ( i) To achieve economic growth in Nigeria, there is a need to improve the business environment, `with the provision `of necessary infrastructures and political stability in the country. (ii) A related issue on the business environment is the importance of consciously curbing corruption. Agencies established to fight corruption such as the Economic and Financial Crime Commission(EFCC) and Independent Corrupt Practice Commission(ICPC), should be seen to do their job to convince both foreigners and Nationals that Nigeria is a safe to invest. (iii) Policy measures by government towards the combat of poverty should be strengthened towards employment generation as this will go a long way in reducing poverty rate thereby developing the Nigerian economy Key words: Foreign Direct Investment; Economic Growth, Poverty and ARDL Model
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