Foreign Capital Inflows and Economic Growth in Nigeria: An Empirical Approach
The study attempts to examine the nature of causality between foreign capital inflows components and real GDP (economic growth) and also, the impact of foreign capital inflows on economic growth in Nigeria. The dynamic interaction among aid, remittance, FDI and external debt and growth of the Nigerian economy was examined using the concept of cointegration, variance decomposition and impulse response analysis and block exogeneity tests.The results of the cointegration test revealed that causal relationship exists between foreign capital inflows and economic growth in Nigeria. The variance decomposition result supports that of cointegration analysis of causality which revealed that, causality runs from foreign aid, remittance (RMC), external debt (TED) and foreign direct investment (FDI) to real GDP (growth). Responses of the real GDP to one standard deviation innovations of the components of foreign capital inflows do appear to be very sensitive.The shocks appear to be very pronounced within the forecast period. However, the block of exogeneity tests shows that the granger causality runs from remittance (RMC) and external debt (TED) to real GDP (growth) only. Only remittance (RMC) and external debt (TED) are significant. But jointly they all enter the model. However, the result of the error correction model shows that there is a significant positive, negative, positive and negative effect of foreign aid, remittance, FDI and external debt on real GDP respectively. It takes some time before their impacts are manifested except FDI.
Volume (Year): 2 (2012)
Issue (Month): 5 (November)
|Contact details of provider:|| Postal: |
Web page: http://www.aessweb.com/
When requesting a correction, please mention this item's handle: RePEc:asi:ajoerj:2012:p:149-161. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qazi Muhammad Imran)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.