Impact of foreign direct investment on Nigerian economy

Abstract

The study examined the impact of Foreign Direct Investment (FDI) on the growth of the Nigerian economy from 2010- Q2 2021. The aim is to investigate the impact of FDI in relation to other growth variables namely: External Debt (EXD), Domestic Investment (DI). Export (EXP) Inflation Rate (InfR) and Exchange rate (EXR) are the explanatory variables of the study on Gross Domestic Product (GDP) proxy for economic growth being the dependent variable. Data for the study were obtained from the Central Bank of Nigeria (CBN) and the National Bureau of Statistics (NBS) statistical bulletins. The data were analysed using E-view version 10.0. Results indicated that while DI, EXP and EXR have significance on GDP at a 10% level of significance, FDI, EXD and InfR showed a negative impact on GDP at the same level of significance. However, about 547 of the likely changes in GDP, growth in Nigeria is explained by a combination of the predicatory variables as indicated by the coefficient of determination (R)2 value of 0.544. The study recommended among others that domestic investment and the productive capacity of the nation should be encouraged. Also, the issue of insecurity in Nigeria should be sincerely tackled.