FOREIGN DIRECT INVESTMENT INFLOW AND MANUFACTURING CAPACITY IN NIGERIA

1984-2017

Abstract

The study examined the role of foreign direct investment on manufacturing capacity in Nigeria.
Secondary data were sourced from Central Bank of Nigeria Statistical bulletin of various years
for foreign direct investment (FDI), exchange rate (EXR), inflation rate (INFR) and
manufacturing capacity (MC) for the period of 1984 to 2017 and were subjected to Augmented
Dickey Fuller Unit Root test, Johansen Co-integration and Multiple regression analysis (OLS)
Model. The study discovered that FDI and EXR were able to impact manufacturing capacity
significantly while INFR were unable to play significant role on manufacturing capacity in
Nigeria. There is also the presence of long run relationship between the variables of study
within the period. Thus, the study concludes that foreign direct investment plays significant role
on the manufacturing capacity in Nigeria. Hence, the study recommends improvement of the
investment climate for existing domestic and foreign investors through infrastructure
development, provision of services and changes in the regulatory framework by relaxing laws
on profit repatriation, improve security situation, address issues that threaten the unity of the
country, consider investment agenda of the economy above political interest or affiliation.