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The impact of major macroeconomic variables on foreign direct investment in Nigeria: evidence from a wavelet coherence technique

Author

Listed:
  • Tomiwa Sunday Adebayo

    (Cyprus International University)

  • Kelvin Onyibor

    (University of Manitoba)

  • Gbenga Daniel Akinsola

    (Girne American University)

Abstract

Utilizing Nigeria as a case study, the investigators explored the linkages between FDI inflows and some selected macroeconomic indicators (exports, gross capital formation, trade openness, inflation, and economic growth) utilizing yearly data spanning between 1981 and 2018. The study used ARDL technique to capture the linkages between FDI inflows and its determining indicators. Furthermore, the wavelet coherence techniques was used. The main novelty of wavelet coherence is that it can obtain information on dynamic correlation and/or causality between economic variables at different frequencies and different time periods. Additionally, the FMOLS and the DOLS are employed as a robustness check to the ARDL long-run estimation. The findings from the ARDL long-run estimate reveal that exports and trade openness exert positive impact on FDI inflows. The findings from the FMOLS and DOLS backed ARDL results. Furthermore, the results of the wavelet coherence-based causality and wavelet correlation techniques further provide supportive evidence to the ARDL technique. To the authors' knowledge, no previous studies have used the wavelet coherence and wavelet correlation techniques to explore these dynamics. Based on these findings, policy directions were initiated.

Suggested Citation

  • Tomiwa Sunday Adebayo & Kelvin Onyibor & Gbenga Daniel Akinsola, 2021. "The impact of major macroeconomic variables on foreign direct investment in Nigeria: evidence from a wavelet coherence technique," SN Business & Economics, Springer, vol. 1(1), pages 1-24, January.
    • Handle: RePEc:spr:snbeco:v:1:y:2021:i:1:d:10.1007_s43546-020-00018-5
    DOI: 10.1007/s43546-020-00018-5
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    Cited by:

    1. Patrick Ssekitoleko & Ifeanyi Mbukanma, 2022. "Advancing the Growth of Foreign Direct Investment Equity Inflow Amid Covid-19 Pandemic: An Exploratory Study of South Africa Context," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 11, November.
    2. Tomiwa Sunday Adebayo & Dervis Kirikkaleli, 2021. "Impact of renewable energy consumption, globalization, and technological innovation on environmental degradation in Japan: application of wavelet tools," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(11), pages 16057-16082, November.

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    More about this item

    Keywords

    Foreign direct investment; Economic growth; ARDL; Wavelet correlation; Wavelet coherence; Nigeria;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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