FOREIGN INVESTMENT INFLOWS AND THE STRUGGLE FOR A RENEWED ECONOMIC GROWTH IN NIGERIA: AN ECONOMETRIC STUDY

Authors

  • Aderopo Raphael Adediyan Economics Department, University of Benin, Benin City, Nigeria
  • Emmanuel Ekomoezor Economics Department, University of Benin, Benin City, Nigeria

DOI:

https://doi.org/10.29121/granthaalayah.v7.i8.2019.642

Keywords:

ARDL, Co-integration, Economic Growth, FDI, FPI

Abstract [English]

This study attempts to find answer to the question of whether Nigeria should intensify effort to draw home more foreign investment; would more of foreign investment inflows accelerate Nigeria economic performance? Methodologically, annual time series data from 1986 to 2018 was analyzed using ARDL approach. The key findings are that, although FDI has long-run positive impact on economic growth, FPI has no operational effect on the growth; this is true of FPI both in the long-run and short-run. Furthermore, labour force and trade openness were found to have long-run and short-run positive impact on growth. Hence, government must tactically open up economy to trans-border trade, increase labour supply and intensify effort to attract more FDI.

Downloads

Download data is not yet available.

References

Ahmad, Y.S., Cova, P. and Harrison, R. Foreign Direct Investment versus Portfolio Investment: A Global Games approach, Working Paper 05-03, 2014 November.

Albulescu, C. T. Do Foreign Direct and Portfolio Investments Affect Long-Term Economic Growth in Central and Eastern Europe? Procedia Economics and Finance Vol. 23, 2015, 507–12. Retrieved from www.sciencedirect.com DOI: https://doi.org/10.1016/S2212-5671(15)00539-0

Baghebo, M. and Apere, T. Foreign Portfolio Investment and Economic Growth in Nigeria, International Journal of Business and Social Science. Vol.5, No.11, 2014, 108 – 115. Retrieved from www.ijbssnet.com

Bhagwati, J.N., Free Trade: Old and New Challenges. Economic Journal, Vol.104, 1994, 231-246. DOI: https://doi.org/10.2307/2234745

Blanchard, O. and Johnson, D.R. Macroeconomics, 6th Ed. New York. Pearson Publishing, 2013.

Brecher R. A Second-best Policy for International Trade and Investment, Journal of International Economics, Vol.14, No.3-4, 1983, 313-320. DOI: https://doi.org/10.1016/0022-1996(83)90007-7

Brecher, R.A. and Alejandro, C.F.D. Tariffs, Foreign Capital and Immiserizing Growth, Journal of International Economics, Vol.7, No.3, 1977,317-322. DOI: https://doi.org/10.1016/0022-1996(77)90048-4

Brecher, R.A. and Findlay, R. Tariff, Foreign Capital and National Welfare with Sector Specific Factors, Journal of International Economics, Vol.14, 1983, 277-288. DOI: https://doi.org/10.1016/0022-1996(83)90005-3

Ibrahim T. R., Akinbobola, T.O. Foreign Portfolio Investment and Economic Growth in Nigeria Democratic Settings, Journal of Economics and Sustainable Development. Vol.8, No.5, 2017,33-52. Retrieved from www.iiste.org

Jhingan, M.L., Macroeconomics Theory, 11th Reversed and Enlarged Ed. Delhi, Vrinda Publishing, 2013.

Kania-Morales, J., and Mroz, R. Relationship between Foreign Direct Investment Stock and Foreign Portfolio Investment Stock. Do they really matter for GDP in Poland, Germany, and Great Britain? Ekonomia Journal, Vol.38, 2014,97-127.

Mankiw, N.G., Romer, D. and Weil, D.N. A Contribution to the Empirics of Economic Growth. Quarterly Journal of Economics. Vol.107, 1994, 407- 437. Retrieved from DOI: https://doi.org/10.2307/2118477

www.transcampus.org/journal

Moosa, I. Foreign Direct Investment: Theory, Evidence and Practice. New York, Palgrave. 2002. DOI: https://doi.org/10.1057/9781403907493

Narayan, P. K. Reformulating Critical Values for the Bounds F-Statistics Approach to Cointegration: An Application to the Tourism Demand Model for Fiji. Department of Economics, Monash University Discussion Papers. 2004 Retrieved from

https://www.researchgate.net/publication/268048533

NIPC, Invest in Nigeria, 2018, Available at https://www.nipc.gov.ng/investment-incentives/

Obadan, M.I. Foreign Investment Flows to the Nigerian Economy, Draft. 2004, Retrieved from www.academix.ng/documents/papers/1449052162_7128.pdf

Odubola, I.O. and Desalu, A.O. Analysis of the Impact of Foreign Direct Investment and Domestic Investment on Economic Growth in Nigeria, Equatorial Journal of Social Sciences and Human Behaviour, Vol.2, No.4, 2017, 121-134.

Okafor, I. G., Ugochukwu, U.S. and Chijindu, E.H. Foreign Capital Inflows and Nigerian Economic Growth Nexus: A Toda Yamamoto Approach. European Journal of Accounting, Auditing and Finance Research, Vol.4, No.3, 2016, 16-26. Retrieved from www.eajournals.org

Onosode, G. O. The Capital Market and Nigeria’s Economic Development, 1998, In Obadan, M.I., Foreign Investment Flows to the Nigerian Economy, Draft. Retrieved from

www.academix.ng/documents/papers/1449052162_7128.pdf

Onyeisi, O.S., Odo, I.S. and Anoke C.I. Foreign Portfolio Investment and Stock Market Growth in Nigeria. Developing Country Studies. Vol.6, No.11, 2016, 24-76. Retrieved from www.iiste.org

Ozurumba, B.A. The Impact of Stock Market Returns on Foreign Portfolio Investment in Nigeria, IOSR Journal of Business and Management, Vol.2, No.4, 2012, 10-19. Retrieved from www.iosrjournals.org DOI: https://doi.org/10.9790/487X-0241019

Pesaran, M.H., Shin, Y. and Smith, R.J. Bounds Testing Approaches to the Analysis of Level Relationships, Journal of Applied Econometric, Vol.16, 2001, 289-326. DOI: https://doi.org/10.1002/jae.616

Razin, A. FDI Contribution to Capital Flows and Investment in Capacity, NBER Working Paper No. W9204, 2002, September. DOI: https://doi.org/10.3386/w9204

Ricardo, D., On the Principles of Political Economy and Taxation, 1951, In Vol. I of the Works and Correspondence of David Ricardo, edited by Sraffa, P and Dobb, M. H., Cambridge: Cambridge University Press,

Romer, D., Advanced Macroeconomics, 4th Ed. New York, McGraw-Hill, Inc., 2012

Snowdon, B., and Vane. H.R., Modern Macroeconomics: Its Origins, Development and Current State, USA, Edward Elgar Cheltenham Publishing, 2005.

Tang D., Has the Foreign Direct Investment Boosted Economic Growth in the European Union Countries? Journal of International and Global Economic Studies, Vol.8, No.1, 2015,21-50

Todaro, M.P., Economic Development. 5th Ed. New York and London. Longman. 1994

Todaro, M.P. and Smith, C.S., Economic Development, 11th edition. New York. Addison-Wesley. 2012

Tumala, M.M., Ajibola, O. I., Omotosho, B.S. and Baruwa O.A., Survey of Foreign Assets and Liabilities in Nigeria 2011 Report, CBN Journal of Applied Statistics, Vol.3, No.2, 2013, 143–165

WDI. World Bank Development Indicator, 2018. Retrieved from www.data.worldbank.org

Downloads

Published

2019-08-31

How to Cite

Adediyan, A. R., & Ekomoezor, E. (2019). FOREIGN INVESTMENT INFLOWS AND THE STRUGGLE FOR A RENEWED ECONOMIC GROWTH IN NIGERIA: AN ECONOMETRIC STUDY. International Journal of Research -GRANTHAALAYAH, 7(8), 88–103. https://doi.org/10.29121/granthaalayah.v7.i8.2019.642