Foreign Direct Investment and Economic Growth in Nigeria (1980-2015). | Raadaa
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Foreign Direct Investment and Economic Growth in Nigeria (1980-2015).

By Dr. Adofu Ilemona  et al

Summary

Economic growth and factors that determine it has been a conflicting debate mainly in developing countries. This paper strive to analyse the empirical and causal relationship between foreign direct investment, balance of payment, real exchange rate, investment rate, gross national savings and gross domestic product growth in Nigeria covering the period 1980 to 2015. It makes use of the Vector Error Correction Model approach and the Granger causality test. The results show that there is only one cointegrating equation. Taking into account a long term relationship, foreign direct investment, balance of payment and investment rate moves positively with GDP growth rate. Real exchange rate had a negative relationship with GDP growth rate. Furthermore, the Granger causality test revealed unidirectional influence from foreign direct investment and GDP growth, real exchange rate and GDP growth and investment rate to GDP growth. The study recommend a huge investment in public infrastructure such as rail, power, roads, education, health services, etc. because they are complementary to private investment which can increase the marginal product of private capital thereby enhancing growth.
Foreign Direct Investment and Economic Growth in Nigeria (1980-2015).
 
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Published: February 2, 2018

Uploaded by: Dr. Adofu Ilemona

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Abstract

Economic growth and factors that determine it has been a conflicting debate mainly in developing countries. This paper strive to analyse the empirical and causal relationship  between foreign direct investment, balance of payment, real exchange rate, investment rate, gross national savings and gross domestic product growth in Nigeria covering the period 1980 to 2015.  It makes use of the Vector Error Correction Model approach and the Granger causality test. The results show that there is only one cointegrating equation. Taking into account a long term relationship, foreign direct investment, balance of payment and investment rate moves positively with GDP growth rate. Real exchange rate had a negative relationship with GDP growth rate. Furthermore, the Granger causality test revealed unidirectional influence from foreign direct investment and GDP growth, real exchange rate and GDP growth and investment rate to GDP growth. The study recommend a huge investment in public infrastructure such as rail, power, roads, education, health services, etc. because they are complementary to private investment which can increase the marginal product of private capital thereby enhancing growth.

About the Authors

Dr. Adofu Ilemona

Dr. Adofu Ilemona

Gimba Obadiah J

Gimba Obadiah J

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