Determinant of Fdi in Nigeria
P a g e | 26 Vol. 10 Issue 1 (Ver 1.0), April 2010
Global Journal of Human Social Science
Determinants of Foreign Direct Investment in Nigeria: An Empirical Analysis
Obida Gobna Wafureα Abu, NurudeenΩ
Abstract: The role of foreign direct investment in the development of Nigerian economy cannot be over emphasized. Foreign direct investment provides capital for investment, it enhances job creation and managerial skills, and possibly technology transfer. This paper investigates the determinants of foreign direct investment in Nigeria. The error correction technique was employed to analyze the relationship between foreign direct investment and its determinants. The results reveal that the market size of the host country, deregulation, political instability, and exchange rate depreciation are the main determinants of foreign direct investment in Nigeria. The authors recommend the following policies among others: expansion of the country’s GDP via production incentives; further deregulation of the economy through privatization and reduction of government interference in economic activities; strengthening of the political institutions to sustain the ongoing democratic process; gradual depreciation of the exchange rate; and increased investment in the development of the nation’s infrastructure.
GJHSS Classification (FOR) 140103, 140202, 1502 & 1504
Keywords: Foreign direct investment, deregulation, unit root, co integration.
I.
INTRODUCTION
oreign direct investment (FDI) not only provides developing countries (including Nigeria) with the much needed capital for investment, it also enhances job creation, managerial skills as well as transfer of technology. All of these contribute to economic growth and development. To this end, Nigerian authorities have been trying to attract FDI via various reforms. The reforms included the deregulation of the economy, the new industrial policy of 1989, the establishment of the Nigeria Investment Promotion Commission
Global Journal of Human Social Science
Determinants of Foreign Direct Investment in Nigeria: An Empirical Analysis
Obida Gobna Wafureα Abu, NurudeenΩ
Abstract: The role of foreign direct investment in the development of Nigerian economy cannot be over emphasized. Foreign direct investment provides capital for investment, it enhances job creation and managerial skills, and possibly technology transfer. This paper investigates the determinants of foreign direct investment in Nigeria. The error correction technique was employed to analyze the relationship between foreign direct investment and its determinants. The results reveal that the market size of the host country, deregulation, political instability, and exchange rate depreciation are the main determinants of foreign direct investment in Nigeria. The authors recommend the following policies among others: expansion of the country’s GDP via production incentives; further deregulation of the economy through privatization and reduction of government interference in economic activities; strengthening of the political institutions to sustain the ongoing democratic process; gradual depreciation of the exchange rate; and increased investment in the development of the nation’s infrastructure.
GJHSS Classification (FOR) 140103, 140202, 1502 & 1504
Keywords: Foreign direct investment, deregulation, unit root, co integration.
I.
INTRODUCTION
oreign direct investment (FDI) not only provides developing countries (including Nigeria) with the much needed capital for investment, it also enhances job creation, managerial skills as well as transfer of technology. All of these contribute to economic growth and development. To this end, Nigerian authorities have been trying to attract FDI via various reforms. The reforms included the deregulation of the economy, the new industrial policy of 1989, the establishment of the Nigeria Investment Promotion Commission
References: Source: International Financial Statistics (2005) P a g e | 32 Vol