IDEAS home Printed from https://ideas.repec.org/a/sae/jouinf/v13y2021i1p65-78.html
   My bibliography  Save this article

Foreign Direct Investment and Growth Nexus: Further Evidence from Africa’s Largest Economy

Author

Listed:
  • Anthony Orji
  • Godson Umunna Nwagu
  • Jonathan E. Ogbuabor
  • Onyinye I. Anthony-Orji

Abstract

The study investigated the effect of foreign direct investment (FDI) on economic growth in Nigeria, which is currently Africa’s largest economy, and also determined the long-run relationship between FDI and economic growth in Nigeria from 1981 to 2017. The study adopted the autoregressive distributed lag modelling approach and ordinary least square in the analysis. The empirical results revealed that FDI has a positive and significant relationship with economic growth in Nigeria within the period under review. The study concluded and recommended that Nigerian Government should formulate policies that will attract more FDI in all sectors of the economy especially in the service and manufacturing sectors, so as to improve the infrastructural facilities and production of goods in the country and also expand its labour force. Finally, there is need to improve the educational policy of the country in order to raise the stock of human capital in the country that will make useful policies for the attraction for productive FDIs in the country. JEL Classification : E22, F21, F23, F43

Suggested Citation

  • Anthony Orji & Godson Umunna Nwagu & Jonathan E. Ogbuabor & Onyinye I. Anthony-Orji, 2021. "Foreign Direct Investment and Growth Nexus: Further Evidence from Africa’s Largest Economy," Journal of Infrastructure Development, India Development Foundation, vol. 13(1), pages 65-78, June.
    • Handle: RePEc:sae:jouinf:v:13:y:2021:i:1:p:65-78
    DOI: 10.1177/09749306211024433
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/09749306211024433
    Download Restriction: no
    File URL: https://libkey.io/10.1177/09749306211024433?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. repec:eco:journ1:2014-03-23 is not listed on IDEAS
    2. Laura Alfaro & Areendam Chanda & Sebnem Kalemli-Ozcan & Selin Sayek, 2006. "How Does Foreign Direct Investment Promote Economic Growth? Exploring the Effects of Financial Markets on Linkages," NBER Working Papers 12522, National Bureau of Economic Research, Inc.
    3. Azman-Saini, W.N.W. & Baharumshah, Ahmad Zubaidi & Law, Siong Hook, 2010. "Foreign direct investment, economic freedom and economic growth: International evidence," Economic Modelling, Elsevier, vol. 27(5), pages 1079-1089, September.
    4. Edwin Mansfield & Anthony Romeo, 1980. "Technology Transfer to Overseas Subsidiaries by U. S.-Based Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(4), pages 737-750.
    5. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    6. Samargandi, Nahla & Fidrmuc, Jan & Ghosh, Sugata, 2015. "Is the Relationship Between Financial Development and Economic Growth Monotonic? Evidence from a Sample of Middle-Income Countries," World Development, Elsevier, vol. 68(C), pages 66-81.
    7. Onyinye I Anthony-Orji & Anthony-Orji & Jonathan E Ogbuabor & Emmanuel O Nwosu, 2018. "Foreign Capital Inflows and Unemployment in Nigeria: A New Evidence from ARDL-Bounds Testing Approach," International Journal of Business, Economics and Management, Conscientia Beam, vol. 5(6), pages 176-188.
    8. Elisa Valeriani & Sara Peluso, 2011. "The Impact Of Institutional Quality On Economic Growth And Development: An Empirical Study," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 1(6), pages 1-25, October.
    9. Onyinye I. Anthony-Orji & Anthony Orji & Jonathan E. Ogbuabor & Emmanuel O. Nwosu, 2018. "Disaggregated Foreign Capital Inflows and Economic Growth in a Developing Economy: Empirical Evidence from Nigeria," Journal of Empirical Studies, Conscientia Beam, vol. 5(1), pages 1-11.
    10. Emmanuel O Nwosu & Anthony Orji & Nathaniel Urama & Joseph I Amuka, 2013. "Regional Integration and Foreign Investment: The Case of Asean Countries," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(12), pages 1670-1680.
    11. Onyinye I. Anthony-Orji & Anthony Orji & Jonathan E. Ogbuabor, 2018. "Analysis of Stock Market Development, Foreign Private Investment and Economic Growth in Nigeria," Journal of Infrastructure Development, India Development Foundation, vol. 10(1-2), pages 1-17, June.
    12. Mr. Ewe-Ghee Lim, 2001. "Determinants of, and the Relation Between, Foreign Direct Investment and Growth: A Summary of the Recent Literature," IMF Working Papers 2001/175, International Monetary Fund.
    13. Onyinye I Anthony-Orji & Anthony Orji & Jonathan E Ogbuabor & Emmanuel O Nwosu, 2018. "Disaggregated Foreign Capital Inflows and Economic Growth in a Developing Economy: Empirical Evidence from Nigeria," Journal of Empirical Studies, Conscientia Beam, vol. 5(1), pages 1-11.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Feihong Zheng & Yue Niu, 2023. "Environmental Decentralization, Resource Endowment and Urban Industrial Transformation and Upgrading: A Comparison of Resource-Based and Non-Resource-Based Cities in China," Sustainability, MDPI, vol. 15(13), pages 1-20, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anthony Orji & Jonathan E. Ogbuabor & Chiamaka F. Okolomike & Onyinye I. Anthony-Orji, 2022. "Do Capital Inflows and Financial Development, Influence Economic Growth in West Africa? Further Evidence from Transmission Mechanisms," Econometric Research in Finance, SGH Warsaw School of Economics, Collegium of Economic Analysis, vol. 7(1), pages 71-94.
    2. Mustapha Sadni Jallab & Monnet Benoît Patrick Gbakou & René Sandretto, 2008. "Foreign Direct Investment, Macroeconomic Instability And Economic Growth in MENA Countries," Working Papers 0817, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    3. Muhammad Shahbaz & Nuno Carlos leitão & Summaira Malik, 2011. "Foreign Direct Investment-Economic Growth Nexus: The Role of Domestic Financial Development in Portugal," Economics Bulletin, AccessEcon, vol. 31(4), pages 2824-2838.
    4. Syed Ali Raza & Nida Shah & Imtiaz Arif, 2021. "Relationship Between FDI and Economic Growth in the Presence of Good Governance System: Evidence from OECD Countries," Global Business Review, International Management Institute, vol. 22(6), pages 1471-1489, December.
    5. Syed Ali Raza & Mohd Zaini Abd Karim, 2018. "Influence of Systemic Banking Crises and Currency Crises on the FDI-Growth Nexus: Evidence from China," Global Business Review, International Management Institute, vol. 19(3), pages 572-589, June.
    6. Sandjong Tomi, Diderot Guy D'Estaing, 2015. "Foreign direct investment, economic growth and structural transformation: The case of West African Economies and Monetary Union Countries," MPRA Paper 62230, University Library of Munich, Germany.
    7. Friday Osemenshan Anetor, 2020. "Foreign Capital Inflows, Financial Development and Growth In Nigeria: A Structural VAR Approach," Journal of Developing Areas, Tennessee State University, College of Business, vol. 54(3), pages 69-86, July-Sept.
    8. Ashis Kumar Pradhan & Gourishankar S Hiremath, 2020. "Do external commercial borrowings and financial development affect exports?," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1796269-179, January.
    9. Dierk Herzer & Stephan Klasen & Felicitas Nowak-Lehmann D., 2006. "In search of FDI-led growth in developing countries," Ibero America Institute for Econ. Research (IAI) Discussion Papers 150, Ibero-America Institute for Economic Research.
    10. Evans, Olaniyi, 2020. "Fiscal Discipline, Financial Development & Economic Growth in Nigeria," MPRA Paper 99242, University Library of Munich, Germany.
    11. Ceyhun Haydaroglu, 2015. "The Relationship between Property Rights and Economic Growth: an Analysis of OECD and EU Countries," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 4, pages 217-239, December.
    12. Zahir, Faathih & Masih, Mansur, 2018. "Is the lead-lag relationship between financial development and economic growth symmetric ? new evidence from Bangladesh based on ARDL ad NARDL," MPRA Paper 87577, University Library of Munich, Germany.
    13. Chinmaya Behera & Bikash Ranjan Mishra & Biswashree Tanaya Priyadarsini & Lopamudra D. Satpathy, 2020. "Institutional Quality and Foreign Direct Investment Inflows: Evidence from Cross-country Data with Policy Implication," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 302-316.
    14. Sadam Hussain & Waqar Ahmad & Yasmeen Qamar & Muhammad Shahid Akram, 2019. "Impact of Inflation, CO2 Emissions and Foreign Investment on Economic Growth: A Case of Pakistan," Asian Development Policy Review, Asian Economic and Social Society, vol. 7(4), pages 307-317, December.
    15. Ines TROJETTE, 2016. "The Effect Of Foreign Direct Investment On Economic Growth: The Institutional Threshold," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 43, pages 111-138.
    16. Omri, Anis & kahouli, Bassem, 2014. "The nexus among foreign investment, domestic capital and economic growth: Empirical evidence from the MENA region," Research in Economics, Elsevier, vol. 68(3), pages 257-263.
    17. Damijan, Jože P. & Kostevc, Crt, 2007. "Knowledge Transfer, Innovation and Growth," Papers DYNREG06, Economic and Social Research Institute (ESRI).
    18. Benjamin Korankye & Xuezhou Wen & Appiah Michael & Easmond Baah-Nketiah, 2020. "Analyzing Economic Growth and Its impact on Poverty Reduction in Africa," International Journal of Science and Business, IJSAB International, vol. 4(12), pages 93-105.
    19. Tang, Chor Foon & Yip, Chee Yin & Ozturk, Ilhan, 2014. "The determinants of foreign direct investment in Malaysia: A case for electrical and electronic industry," Economic Modelling, Elsevier, vol. 43(C), pages 287-292.
    20. Chen, George S. & Yao, Yao & Malizard, Julien, 2017. "Does foreign direct investment crowd in or crowd out private domestic investment in China? The effect of entry mode," Economic Modelling, Elsevier, vol. 61(C), pages 409-419.

    More about this item

    Keywords

    Foreign direct investment; economic growth; autoregressive distributed lag; OLS; Nigeria;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:jouinf:v:13:y:2021:i:1:p:65-78. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.idfresearch.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.