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Factors Determining FDI to Nigeria: An Empirical Investigation

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  • Dinda, Soumyananda

Abstract

This study empirically investigates the determinants of foreign direct investment (FDI) to Nigeria during 1970-2006. This study suggests that the endowment of natural resources, trade intensity, macroeconomic risk factors like inflation and exchange rates are significant determinants of FDI flow to Nigeria. The findings also suggest that in long run market size is not the significant factor for attracting FDI to Nigeria, it contradicts the existing literature. Our results indicate that FDI flow to Nigeria is resource-seeking FDI. Results also suggest that trading partner like the UK in North-South (N - S) and China in South-South (S - S) trade relation have strong influence on Nigeria’s natural resource outflow.

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File URL: http://mpra.ub.uni-muenchen.de/28097/
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File URL: http://mpra.ub.uni-muenchen.de/40170/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 28097.

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Date of creation: Jul 2008
Date of revision: Nov 2010
Handle: RePEc:pra:mprapa:28097

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Keywords: FDI; Natural resource export; exchange rate; openness; inflation rate; VECM; North-South and South-South trade;

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  1. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 12(2-3), pages 231-254.
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  8. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198288107, October.
  9. M. Hashem Pesaran & Ron P. Smith, 1998. "Structural Analysis of Cointegrating VARs," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 12(5), pages 471-505, December.
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  11. Hines, James R, Jr, 1996. "Altered States: Taxes and the Location of Foreign Direct Investment in America," American Economic Review, American Economic Association, American Economic Association, vol. 86(5), pages 1076-94, December.
  12. Pesaran, M. H. & Shin, Y. & Smith, R. J., 1996. "Testing for the 'Existence of a Long-run Relationship'," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 9622, Faculty of Economics, University of Cambridge.
  13. Gastanaga, Victor M. & Nugent, Jeffrey B. & Pashamova, Bistra, 1998. "Host Country Reforms and FDI Inflows: How Much Difference do they Make?," World Development, Elsevier, Elsevier, vol. 26(7), pages 1299-1314, July.
  14. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
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Cited by:
  1. Dinda, Soumyananda, 2012. "Factors Determining FDI in Nigeria: Role of Emerging Economies," MPRA Paper 40192, University Library of Munich, Germany, revised 20 Jul 2012.
  2. K. Gonchar & Philipp Marek, 2013. "Natural-resource or Market-seeking FDI in Russia? An Empirical Study of Locational Factors Affecting the Regional Distribution of FDI Entries," IWH Discussion Papers, Halle Institute for Economic Research 3, Halle Institute for Economic Research.
  3. Nasrollahi Shahri, Nima, 2010. "The Effectiveness of international investment instruments on the amount of foreign investment (a case study of Iran)," MPRA Paper 36317, University Library of Munich, Germany.
  4. Dinda, Soumyananda, 2011. "Climate Change and Development: Trade Opportunities of Climate Smart Goods and Technologies in Asia," MPRA Paper 34883, University Library of Munich, Germany, revised Nov 2011.
  5. Okpara, Godwin Chigozie, 2012. "An Error Correction Model Analysis of the Determinant of Foreign Direct Investment: Evidence from Nigeria," MPRA Paper 36676, University Library of Munich, Germany, revised 14 Feb 2012.
  6. Kolawole Olayiwola & Henry Okodua, 2013. "Foreign Direct Investment, Non-Oil Exports, and Economic Growth in Nigeria: A Causality Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, Asian Economic and Social Society, vol. 3(11), pages 1479-1496, November.
  7. Ksenia Gonchar & Philipp Marek, 2013. "Natural-resource or market-seeking FDI in Russia? An empirical study of locational factors affecting the regional distribution of FDI entries," HSE Working papers, National Research University Higher School of Economics WP BRP 26/EC/2013, National Research University Higher School of Economics.

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