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Effect of Foreign Direct Investment on Economic Growth in Nigeria

Received: 13 August 2016    Accepted: 19 November 2016    Published: 20 December 2016
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Abstract

There have been controversies regarding the effect of foreign direct investment on the growth of the host country’s economy. While some researchers suggest a positive effect, others found a negative effect. It is against this backdrop that this study examined the effect of foreign direct investment on economic growth in Nigeria. The study covered the period 1981 to 2015. The study used secondary data derived from the Central Bank of Nigeria statistical bulletin and publications of the National Bureau of Statistics. The study employed multiple regression technique and Gretl 1.9.8 econometric software was used for the analysis. The results showed that foreign direct investment has a positive and significant effect on gross domestic product. It was also found that exchange rate has a positive but not significant effect on gross domestic product. Thus, the study concluded that foreign direct investment has a positive effect on economic growth in Nigeria as opposed to the findings and belief of some researchers and other stakeholders that foreign direct investment has a negative effect on the growth of the economy. It was recommended that government should improve the state of infrastructures in the country in order to encourage meaningful investments in the economy. Also, the Central Bank of Nigeria should come-up with policies that will help to stabilize the Naira exchange rate vis-à-vis the major currencies of the world, like the United States Dollar. This will boost the investors’ confidence in the economy.

DOI 10.11648/j.ebm.20160202.14
Published in European Business & Management (Volume 2, Issue 2, November 2016)
Page(s) 40-46
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This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Foreign Direct Investment, Exchange Rate, Economic Growth, Nigeria

References
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Author Information
  • Department of Banking and Finance, Faculty of Management Sciences, Nnamdi Azikiwe University, Awka, Nigeria

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  • @article{10.11648/j.ebm.20160202.14,
      author = {Emmanuel Isaac John},
      title = {Effect of Foreign Direct Investment on Economic Growth in Nigeria},
      journal = {European Business & Management},
      volume = {2},
      number = {2},
      pages = {40-46},
      doi = {10.11648/j.ebm.20160202.14},
      url = {https://doi.org/10.11648/j.ebm.20160202.14},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ebm.20160202.14},
      abstract = {There have been controversies regarding the effect of foreign direct investment on the growth of the host country’s economy. While some researchers suggest a positive effect, others found a negative effect. It is against this backdrop that this study examined the effect of foreign direct investment on economic growth in Nigeria. The study covered the period 1981 to 2015. The study used secondary data derived from the Central Bank of Nigeria statistical bulletin and publications of the National Bureau of Statistics. The study employed multiple regression technique and Gretl 1.9.8 econometric software was used for the analysis. The results showed that foreign direct investment has a positive and significant effect on gross domestic product. It was also found that exchange rate has a positive but not significant effect on gross domestic product. Thus, the study concluded that foreign direct investment has a positive effect on economic growth in Nigeria as opposed to the findings and belief of some researchers and other stakeholders that foreign direct investment has a negative effect on the growth of the economy. It was recommended that government should improve the state of infrastructures in the country in order to encourage meaningful investments in the economy. Also, the Central Bank of Nigeria should come-up with policies that will help to stabilize the Naira exchange rate vis-à-vis the major currencies of the world, like the United States Dollar. This will boost the investors’ confidence in the economy.},
     year = {2016}
    }
    

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    T1  - Effect of Foreign Direct Investment on Economic Growth in Nigeria
    AU  - Emmanuel Isaac John
    Y1  - 2016/12/20
    PY  - 2016
    N1  - https://doi.org/10.11648/j.ebm.20160202.14
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    JF  - European Business & Management
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    PB  - Science Publishing Group
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    AB  - There have been controversies regarding the effect of foreign direct investment on the growth of the host country’s economy. While some researchers suggest a positive effect, others found a negative effect. It is against this backdrop that this study examined the effect of foreign direct investment on economic growth in Nigeria. The study covered the period 1981 to 2015. The study used secondary data derived from the Central Bank of Nigeria statistical bulletin and publications of the National Bureau of Statistics. The study employed multiple regression technique and Gretl 1.9.8 econometric software was used for the analysis. The results showed that foreign direct investment has a positive and significant effect on gross domestic product. It was also found that exchange rate has a positive but not significant effect on gross domestic product. Thus, the study concluded that foreign direct investment has a positive effect on economic growth in Nigeria as opposed to the findings and belief of some researchers and other stakeholders that foreign direct investment has a negative effect on the growth of the economy. It was recommended that government should improve the state of infrastructures in the country in order to encourage meaningful investments in the economy. Also, the Central Bank of Nigeria should come-up with policies that will help to stabilize the Naira exchange rate vis-à-vis the major currencies of the world, like the United States Dollar. This will boost the investors’ confidence in the economy.
    VL  - 2
    IS  - 2
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