Effect of Foreign Direct Investment (FDI) Inflows on Economic Development in Nigeria: 1984-2016


Faculty: Management Sciences
Department: Banking And Finance


Obi-Nwosu, V. O.
Ibenta, S. N.
Adigwe, P. K.


This study evaluates the effect of Foreign Direct Investment (FDI) inflows on economic development of Nigeria. Foreign Direct Investment is an important factor for Nigerian economic development. This is predicated on the fact that FDI inflows have facilitated increase in income, employment and savings of developing and emerging countries. The main objective of the study is to evaluate the effect of FDI on economic development of Nigeria. The specific objectives of this study is to examine the effect of FDI inflows on Nigerian economic development variables: Gross Domestic Product (GDP), Manufacturing Capacity/Utilization (MU), Gross National Savings (GNS), Gross Domestic Fixed Capital Formation (GDFCF), Market Capitalization (MC) and Agricultural Production (AP). The study anchored on endogenous growth model theory and eclectic theory used secondary data obtained from Central Bank of Nigeria Statistical Bulletin of various years and subjected them to ADF stationarity test and Granger causality analysis to analyse the study over the period of 1984 to 2016. The findings of the study showed that the economic growth variables used were positively and significantly affected by FDI inflows. The study therefore concludes that FDI inflows affect the economic activities in Nigeria as shown in the economic growth variables considered in the study. Hence, the study recommends among others image building via building political stability, improving investment policies, protection of life and property and advertisement of investment opportunities to attract further FDI inflows into the key areas of the Nigerian economy.