THE LONG RUN EFFECT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN NIGERIA
Authors:
KEMISOLA OSUNDINA
Publication Type: Journal article
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ISSN Number:
0
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Abstract
This paper examined the long run relationship between foreign direct investment (FDI) and economic growth in Nigeria, real Gross domestic Product was used as proxy to economic growth. Other variables include: foreign direct investment, trade openness, political risk to capture political stability, inflation rate to capture economic stability and government size. Augumented Dickey-Fuller (ADF) test was used for the unit root test in which none of the variables was stationary at level, Johansen Cointegration test was conducted to establish short and long run relationship between the two variables, ordinary least square (OLS) statistical technique was used to assess the degree of influence the variables have on each other. These techniques were applied on time series data obtained from the annual statistical bulletin of Central Bank of Nigeria for a period of 31 years. Empirical findings suggest that FDI has a significant short and long run effect on GDP in Nigeria. Policies to encourage foreign investors should be put in place and implemented with the view of reducing unemployment in Nigeria.