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Does Stock Market Development Play Any Role In The Effect Of Fdi On Economic Growth In Nigeria? An Empirical Investigation

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  • Oziengbe Scott Aigheyisi

    (Department of Economics and Statistics, University of Benin, Nigeria)

Abstract

The objective of the paper is to investigate whether stock market development plays any role in the effect of foreign direct investment (FDI) on economic growth in Nigeria. Using annual time series data that span the period from 1981 to 2014, and employing the fully modified ordinary least squares (FMOLS) estimation technique, the empirical evidence indicates that FDI, domestic investment and stock market development positively and significantly affect economic growth, but the effect of the interaction between stock market development and FDI on economic growth is negative and significant, indicating that the Nigerian bourse is not yet fully developed to engender positive growth effect of FDI. The study further finds that government consumption expenditure and trade openness adversely affect the growth of the country’s real GDP per capita. Recommendations of the paper include efforts by the government to design and implement programmes and policies aimed at enhancing the attractiveness of the country to foreign and local investors, efforts by capital market regulators to enhance stock market efficiency, reduction of government consumption expenditures and import control.

Suggested Citation

  • Oziengbe Scott Aigheyisi, 2016. "Does Stock Market Development Play Any Role In The Effect Of Fdi On Economic Growth In Nigeria? An Empirical Investigation," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 51-61, September.
    • Handle: RePEc:ora:jrojbe:v:1:y:2016:i:2:p:51-61
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    References listed on IDEAS

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    Cited by:

    1. Mariana SEHLEANU, 2017. "Empirical Research Regarding The Factors That Influence Foreign Participation In The Share Capital Of Romanian Companies," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 181-191, July.

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    More about this item

    Keywords

    Foreign Direct Investment; Stock Market Development; Economic Growth; Interaction Term; FMOLS;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages

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