Faculty: Social Sciences
Department: Economics


Eshiobo, S. S.
Nwogwugwu, U.C.C.


This study evaluated the impact of investment climate on Nigeria’s economic development. Successive governments have tried to harness the country’s abundant resources to promote rapid socio-economic development but had experienced problems from the investment environment. Previous studies on this topic have equally tried various methods to address the economic challenges facing the country but to no much success. Most of the studies could not provide in-depth evaluation and analysis of the underlying microeconomic factors that affected the investment climate and economic development. This gap in knowledge in these previous studies, informed the use of the multi-method triangulation principle on a modified Neo-Classical production function. To explore the fundamental factors that affect Nigeria’s investment climate and economic development, the study used the co-integrated OLS regression technique and the exploratory dicriminant factor analysis to estimate the models of relationships. The ex-post facto research design adopted used the time series data of the primary investment climate determinants from 1981 to 2015. The study found that SECU, ELEC, TRDF, INFR and their underlying factors had significant negative impact on Nigeria’s investment climate (MCAP) and economic development indicators of GNICAP, LIFE, EDUC, EMPL, CAPD. Also PSCR and NDPL which have positive impact on investment climate and economic development were not significant. The result revealed a cointegrated relationship between investment climate factors and economic development indicators at order I (1) with an average ECM speed of adjustment of 50% per annum. The study recommends, among others, that the government should seriously address the problem of insecurity, electricity supply, foreign trade and infrastructure from the base of their underlying factors. They should encourage and support agro-allied industrial ventures to create jobs, protect pipes conveying gas to electricity generating stations, prevent vandalisation and theft of electrical parts, promote foreign trade policy, improve sea and air port facilities and increase the annual capital budget allocation to 50% while also avoiding its misapplication to finance recurrent budget deficit.