Impact of Foreign and Domestic Investments on Economic Growth in Nigeria: An Application of ARDL Approach

This paper investigates the relationship between economic growth, domestic and foreign investments in Nigeria for the 1981-2018 periods. The properties of time series variables were examined through the application of Augmented Dickey-Fuller technique and Autoregressive Distributed Lag approach in testing the long-and-short runs relationship. The results of unit root suggest that four variables in the model were stationary at first difference while one is stationary at level. The results of the main model revealed that foreign investment has positive impact on economic growth in the long-and-short runs, domestic investment has negative impact on economic growth in both long-and-short runs and trade openness impacted positively on economic growth in Nigeria. Therefore, this paper recommends that concerted effort should be made by government, policy makers and relevant authorities to formulate policies aim at creating a conducive investment environment so that Nigerians and non-Nigerian investors will be encourage to increase their propensity to invest in the country. Policy makers should also take step to ensure foreign exchange stability and improve trade openness so as to achieve meaningful economic growth.