Foreign Direct Investment and Nigerian Economic Growth
Abstract
This paper examined the relationship between foreign direct investment (FDI) and economic growth (GDP) in Nigeria between 1981 and 2020, using Autoregressive Distributed Lag Bound technique (ARDL). From the findings, there existed a long-run significant relationship among the variables employed. Foreign direct investment (FDI) and real exchange rates (REXCR) showed positive significant short, and long-run impacts on economic growth (GDP) which is aligned with Abu (2013) and John (2016). While interest rates and trade openness have insignificant short and long-run impacts on the economic growth. The Pairwise Granger Causality exhibited bidirectional causality between foreign direct investment (FDI) and economic growth (GDP), demonstrating the influence of these two variables on each other, as supported by Mounir & Atef (2018). It is therefore recommended that government should introduce new approach to foreign direct investment by supporting with zero-interest loan and credit facilities for it to have better significant impacts on economic growth both in the short and long-run. Adequate Exportation of Nigerian products should be encouraged by export-promotion decree in order to boost trade openness to have significant impacts on the economic growth. Real Exchange rates (REXCR) should be properly controlled by monetary authorities for economic stability to maintain its significant impacts in future on Nigerian economy.
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