Abstract:
This paper is an assessment of government security spending, foreign direct investment and economic growth in Nigeria covering from 1986 to
2017. The study used time series data and econometrics tools were used
for testing for the stationarity, causality and co-integration. To show the long run
and short run impact and the relationships among the variables, Ordinary Least
Squares and Error Correction Model were adopted. The findings show that
there is short run and long run impact of government security spending and
foreign direct investment on economic growth in Nigeria. Some of government
security spending and foreign direct investment indicators were negatively
related to Real Gross Domestic Product while some were positively related to
Real Gross Domestic Product in Nigeria. Government internal security
spending shows strong and positive impact on economic growth in Nigeria. The
study shows that foreign direct investment has weak impact on Real Gross
Domestic Product in Nigeria and this weak impact may be due to the fact that the
sub-sector has been facing the problems of corruption and other socio-economic
issues that have increased the cost of doing business and as such foreign investors
would prefer to invest in countries with lower rates of corruption which is
believed to derive maximum profits from their investments. Therefore, the study
recommends that fiscal discipline should be adhered to strictly; the fight against
corruption should be total and transparent; government should straighten and
deepen all incentives, institutional and regulatory frameworks in the country,
issues of insecurity should be addressed without any sentiment in order to foster
foreign direct investment for sustainable economic growth in Nigeria.
