Foreign Direct Investment and Economic Growth:  The Nigerian Context

Enyi Chika Henry; Ibianga Gift Adeyinka

doi:10.31149/ijefsd.v6i2.5223

Enyi Chika Henry Department of Accounting, Faculty of Management Sciences, Ignatius Ajuru University of Education, Rivers State, Nigeria
Ibianga Gift Adeyinka Department of Accounting, Faculty of Management Sciences, University of Port Harcourt

DOI: https://doi.org/10.31149/ijefsd.v6i2.5223

Keywords: Foreign direct investment, Economic Growth

Abstract

Despite the flow of FDI in Nigeria, there is still high rate of unemployment, leading to greater level of insecurity, banditry, kidnapping etc. Until adequate economic investments are actualized, it will be difficult to achieve and measure both human and material resources. The study investigated the relationship between foreign direct investment and economic growth in Nigeria using ex-post-facto research design. The time series data used covered the time period 1990-2022. The data were obtained from the Annual Statistical Bulletin of the Central Bank of Nigeria. The population for this study consists of the national economic data that is pertinent to this research. However, this limitation applies specifically to foreign direct investment, which includes both oil and non-oil foreign direct investment, as well as economic growth measured by real gross domestic product (RGDP). In line with the positivist investigation ethic and quantitative design, this study use parametric statistics as the technique for inferential analysis. This technique involves the utilisation of quantitative models to determine the connection between two variables. It uses sample-based parameters as metrics to make inferences about the population being studied. The analysis was conducted with linear regression. The analysis confirmed a substantial correlation between characteristics related to foreign direct investment and economic growth. Consequently, the study demonstrated a substantial and favourable correlation between variables related to foreign direct investment and economic growth. Hence, the study recommends that policymakers should formulate policies that both encourage foreign investment and safeguard and enhance domestic production and investment. These policies should align with the development objectives of the host countries. The Nigerian government should prioritise substantial investments in non-oil sectors like agriculture and mining to generate a multiplier effect and boost the productive capacity of non-oil exports. This will contribute to the long-term economic growth and sustainability of Nigeria.

References

1. Arp, B. (2024). The regulation of foreign direct investment in Bolivia: Some current challenges. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4658856
2. Bailey, B. (2022). Business Day, India Today
3. Bhatti, J. S., Azra, Khan, A., & Taj, H. (2024). The impact of foreign direct investment and domestic investment on tourism in Pakistan. Qlantic Journal of Social Sciences, 5(1), 24–34. https://doi.org/10.55737/qjss.711255591
4. Cao, Y., & Du, K. (2024). Outbound tourism and outward foreign direct investment. Annals of Tourism Research, 105, 103713. https://doi.org/10.1016/j.annals.2023.103713
5. Darazo, I., & Adaramola, A. O. (2021). Impact of international trade and foreign direct investment on economic growth: The Nigerian perspective. International Journal of Interdisciplinary Research in Social Sciences, 1(1).
6. Emmanuel, I. J. (2016). Effect of foreign direct investment on economic growth in Nigeria. European Business and Management, 2(2), 40-46.
7. Emmanuel-Amadi, B. U. & Christian, E. J. (2022). Foreign direct investment and the economic growth in Nigeria. Business Management, 05(11), 38-51.
8. Esiaka, J. C., Uwaleke, U. & Amana, S. A. (2021). Impact of non-oil foreign trade on economic growth in Nigeria. International Journal of Development Strategies in Humanities, Management and Social Sciences, 11(1), 30-43
9. Eze C.N. (2020). Foreign direct investment. A panacea to national economic development in Nigeria? International Kindle Paperwhite, Munich GRIN Verlag.
10. Giwa, B. A., George, E. O., Okodua, H., & Adeniran, O. S. (2020). Empirical analysis of the effects of foreign direct investment inflows on Nigerian real economic growth. Implications for sustainable development goal-17. Cogent Social Sciences, 6(1), https://doi.org/10.1080/23311886.2020.1727621
11. Gomes, O. (2024). Economic growth in the age of ubiquitous threats: How global risks are reshaping growth theory. Economics, 18(1). https://doi.org/10.1515/econ-2022-0059
12. Hassen, S. & Anis, O. (2012). Foreign direct investment (FDI) and economic growth: An approach in terms of co-integration for the case of Tunisia. Journal of Applied Finance & Banking, 2(4), 193-207.
13. Ireti, O. O. & Clement, F. (2022). Foreign direct investment and Nigerian economic growth. Journal of Applied and Theoretical Social Sciences, 4(3), 313-327.
14. Klein, M. A., & Yang, Y. (2024). Blocking patents, rent protection and economic growth. Review of Economic Dynamics, 52, 1–20. https://doi.org/10.1016/j.red.2023.11.003
15. Liu, Y., Yang, M., & Cui, J. (2024). Urbanization, economic agglomeration and economic growth. Heliyon, 10(1), e23772. https://doi.org/10.1016/j.heliyon.2023.e23772
16. National Bureau of Statistics (2022)
17. Nnamdi, I. S. and Daniel E.E. (2018). Foreign direct investment and economic performance in a developing economy. Nigerian Evidence. European Journal of Business and Management, 10(6).
18. Osemene, O. F., Kolawole, K. D., &Olanipekun, I. D. (2019). Determinants of FDI and Its Causal Effect on Economic Growth in Nigeria. KJBM, 8(1).
19. Oyegoke, O. E., & Aras, O. N. (2021). Impact of foreign direct investment on economic growth in Nigeria. Journal of Management, Economics and Industrial Organization, 5(1), 21-38.
20. Perugini, F. (2024). Local government efficiency and economic growth: The Italian case. Socio-Economic Planning Sciences, 91, 101775. https://doi.org/10.1016/j.seps.2023.101775
21. Quoc, H. L., Quynh, A. D., Hong C. P. & Thanh, D. N. (2021). The impact of foreign direct investment on income inequality in Vietnam. Global Journal of Economics, 9(1), 27
22. Sam, H., Dimitrios, P. & Mostafa, E. A. (2021). Does foreign direct investment and trade promote economic growth? Evidence from Albania. Economies, 9(1). doi.org/10.3390/economies9010001.
23. Shin, M. J., & Park, S. (2024). Natural disasters, foreign direct investment, and women’s rights in developing countries. Social Science Research, 117, 102937. https://doi.org/10.1016/j.ssresearch.2023.102937
24. Soto, G. H. (2024). The effects of foreign direct investment on environmentally related technologies in Latin America. Resources Policy, 90, 104711. https://doi.org/10.1016/j.resourpol.2024.104711
25. Tang, J., & Jiang, Y. (2024). Natural resources-environment dilemma: The context of foreign direct investment and international trade. Resources Policy, 89, 104597. https://doi.org/10.1016/j.resourpol.2023.104597
26. Tsaurai, K. (2022). Effect of foreign direct investment on domestic investment in BRICS. Investment Management and Financial Innovations, 19(4), 260–273. https://doi.org/10.21511/imfi.19(4).2022.21
27. UNCTAD, U. (2019). World Investment Report. United Nations Publications.
28. Wang, X., Xu, Z., Qin, Y. & Skare, M. (2021). Foreign direct investment and economic growth: a dynamic study of measurement approaches and results. Economic Research-EkonomskaIstrazivanja Journal, 35(1).
29. World Investment Report (2021).