Publisher: University of Calabar

The Determinants of Foreign Direct Investment and Their Impacts On Nigerian Economy (1975 - 2010)

Ndem, Samuel Etim, Okoronkwo Onyebuchi, Nwamuo Chimela Udo
KEYWORDS: THE DETERMINANTS OF FOREIGN DIRECT INVESTMENT AND THEIR IMPACTS ON NIGERIAN ECONOMY (1975 - 2010)

ABSTRACT:

In this study, we examined the determinants of foreign direct investment and their impact in Nigeria from 1975 - 2010. Specifically, we determined how exchange rate, market size (GDP), investment in infrastructure, openness and political risks have impacted on the flow of FDI in Nigeria from 1975 - 2010. The fluctuating and sluggish nature of the nation's economic growth and development coupled with increase in corruption rate makes it necessary to investigate the effectiveness of the role played by foreign resources inflow in Nigerian development process, and the factors that have influenced its inflow. In analysing the data using Ordinary Least Square (OLS), and co-integration Error Correction Method (ECM) we found out that Market Size (GDP), openness, and exchange rate impact much on FDI inflow while political risk was unfavorable to it. Investment in infrastructure was discovered to be favorable but its level is inadequate to improve FDI required for sustainable growth and development. We therefore recommend improvement in infrastructural development and technological development through knowledge spillover, maintaining a conducive political and social environment for development.




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