Effect of Foreign Direct Investment on Economic Growth in Nigeria (1987 - 2019)

Abstract

Foreign direct investment relates to investment that grants controlling ownership of a business in one country to different entity in other country. The main objective of this study is to examine foreign direct investment on economic growth in Nigeria. The specific objectives of the study are to determine effect of foreign direct investment in agriculture on economic growth, to ascertain effect of foreign direct investment in petroleum production on economic growth in Nigeria, and to establish the effect of foreign direct investment on capital market on the economic growth in Nigeria. The study adopts an ex-post facto research design since the secondary data for study were sourced from Central Bank of Nigeria (CBN). Statistical bulletin, annual reports and statement of accounts of CBN were equally considered in sourcing for the secondary data. Data collated were analyzed using econometric techniques involving augmented Diker fuller (ADF) test and Ordinary Least Square (OSL). Available results from the analyses depicts that foreign direct investment on agriculture, foreign direct investment on petroleum and foreign direct investment on capital market has positive and significant effect on GDP within the period under review. The study concluded generally that foreign direct investments (FDI) if properly sourced and utilize is capable of lifting thousands of our people from poverty and misery through the provision of job opportunity. The study thus recommends that; regulatory framework should be strengthened to enable financial institutions and foreign investors direct their resources to the agricultural sectors to boost the Nigerian economy.