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Modeling Long-Run and Short-Run Dynamics of Foreign Direct Investment on the Manufacturing Sector Growth in Nigeria: The ARDL Bound Testing Approach

Author

Listed:
  • NseAbasi Imoh Etukafia
  • Ntiedo Bassey Ekpo
  • Ikenna Elias Asogwa

Abstract

This paper econometrically examines the long run and the short run dynamics of foreign direct investment (FDI) on the manufacturing sector growth in Nigeria between the period 1981 and 2015. Data used in this study were obtained from the Central Bank of Nigeria statistical bulletin published in 2016. The econometric methodology adopted was the bound test and auto regressive distributive lag (ARDL) approach to estimate cointegrating relationship as well as short run and long run dynamics of the FDI and other explanatory variables on output growth in the manufacturing sector. Results of the long run behaviour and short run dynamics (error correction model) indicate that economic liberalization is significant in influencing changes in manufacturing output growth. However, FDI has no significant effect in both the short run and the long run episode. Therefore, it is recommended that policies aimed at encouraging increased participation of private domestic investors in collaboration with multinational corporations in the manufacturing sector be crafted.

Suggested Citation

  • NseAbasi Imoh Etukafia & Ntiedo Bassey Ekpo & Ikenna Elias Asogwa, 2017. "Modeling Long-Run and Short-Run Dynamics of Foreign Direct Investment on the Manufacturing Sector Growth in Nigeria: The ARDL Bound Testing Approach," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(11), pages 128-136, November.
    • Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:11:p:128-136
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    References listed on IDEAS

    as
    1. Jose De Gregorio, 2003. "The Role of Foreign Direct Investment and Natural Resources in Economic Development," Working Papers Central Bank of Chile 196, Central Bank of Chile.
    2. Adeolu B. Ayanwale, 2007. "FDI and Economic Growth: Evidence from Nigeria," Working Papers 165, African Economic Research Consortium, Research Department.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    foreign direct investment; autoregressive distributive lag; bound test; manufacturing sector growth; domestic investmentn;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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