Real Output Effects of Foreign Direct Investment in Nigeria

Saibu Olufemi M^1, and Keke Ndidi. Agnes²

¹Department of Economics, University of Lagos, Nigeria

²Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria

Cite this paper:
Saibu Olufemi M and Keke Ndidi. Agnes. Real Output Effects of Foreign Direct Investment in Nigeria. Journal of Behavioural Economics, Finance, Entrepreneurship, Accounting and Transport. 2014; 2(1):1-7. doi: 10.12691/jbe-2-1-1

Abstract

The study examined the impact of Foreign Private Investment on economic growth using annual time series data from Nigerian economy. Cointegration and Error Correction Mechanism (ECM) techniques were employed to empirically analyze the relationship between foreign private investment and economic growth and to draw policy inferences on the observed relationship. The result revealed that there was a substantial feedback of 116% and 78% from previous disequilibria between long-run economic growth and foreign private investment respectively. The findings also indicated that a substantial proportion of capital inflow were not productively invested however the relatively small proportion (22%) of net capital inflows invested, contributed significantly to economic growth in the Nigerian economy. The political environment was found to be unfavorable and overwhelmed the positive impact of foreign private investment. The paper concluded that there is high prospect for foreign private investment to boost economic growth if conducive environment, such as: political and macroeconomic stability are provided in Nigeria.

Keywords:
growth Private Investment Nigerian economy

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