Sectorial Impact of Foreign Direct Investment Inflow on Economic Growth in Nigeria

Abstract

The study examined the impact of foreign direct investment on economic growth in Nigeria between 1986 to 2019. The data used for this study were sourced from CBN statistical bulletin, and world bank development indicators. By means of expost factor research design, pre-estimation tests were carried out on each of the variables using Augmented Dickey Fuller (ADF) unit root test to avoid spurious regression results. The cointegration test result showed that long-run equilibrium relationship exists between foreign direct investment and economic growth in Nigeria. Findings from the study revealed that there is a significant relationship between foreign direct investment in manufacturing and economic growth in Nigeria. It showed that the attraction of multinational firms in the manufacturing sector has enhanced the output growth of the economy. Based on these findings, the study recommends that there is the need to sustain the FDI inflow into the manufacturing sector as it serves as a means for skills acquisition from industrialized to developing countries’ manufacturing sector. The study also recommends that the government should initiate policies that will promote the long-run growth of the economy at large.