Foreign Direct Investment and the Nigerian Economy

Abstract

Most economic rationale for granting special incentives for attracting Foreign Direct Investment (FDI) is based on the belief that FDI bridges the ‘idea gaps’ between rich and the poor nations in addition to the generation of technological transfers and spillovers. The study examines the applicability of FDI and the Impact they makes to the Nigerian economy hypothesis using empirical evidence from Nigeria were used. Empirical literature however finds controversial, the effects of FDI on productivity. In some literatures, it was revealed that multinational corporations are highly adaptive social agents and therefore, the degree to which they can help in improving economic activities through FDI will be heavily influenced by the policy choice of the host country. Data were collected for the period of more than 30 years. For analyzing the data both econometric and statistical method were applied. In order to evaluate the relationship between FDI and major economic indicators such as GDP, IIP and GFCF ordinary least square was used. The model revealed a positive relationship between FDI and those variables but FDI has not contribute much to the growth and development of the Nigerian economy and was evidence due to repatriation of profits, contract fees, and interest payment on foreign loans. The study therefore recommends human capacity building, infrastructural facilities and strategic policies to attract FDI inflow.