An ARDL Approach on the Nexus of Foreign Direct Investment and Export in Nigeria

Abstract

The opening of the Nigerian economy to foreign investors via economic restructuring, to strengthen export accomplishment for efficient return resulting in increased exports and export competitiveness through foreign direct investments, has met with some pressures leading to neglect in output and closure of some businesses. This necessitated the study to examine foreign direct investment's impact on export accomplishment in Nigeria from 1986 to 2019. Foreign direct investment, trade openness, money supply, rate of inflation and interest were the explanatory variables while export was the control variable. The Auto-Regressive Distributed Lag (ARDL) model was employed using time series data. The results of the analysis showed a positive effect of foreign direct investment on the country's export though insignificant. Trade openness has a significantly positive influence, whereas money supply, inflation rate and interest rate were negative on export accomplishment. The conclusion derived from the results is a positive but insignificant relationship between foreign direct investment and export accomplishment in Nigeria while the reverse is the case for money supply, inflation and interest rate. The recommendation is that the Nigerian government through its policy formulators should encourage stable and sustainable foreign direct investment in a conductive economic and political environment for improvement of the nation's productivity, international trade competitiveness, technological advancement and external reserves via export.