The effect Foreign Portfolio Investment on Economic Growth in Nigeria

Abstract

This study examined the relationship between foreign portfolio investment and economic growth in Nigeria between the periods 1986 to 2017. The study employed the Vector Error Correction model (ECM) and granger causality. Market capitalization, foreign portfolio investment and trade openness were the independent variables while gross domestic product is proxy for economic growth in Nigeria. Findings revealed that of the three study variables, trade openness and market capitalization proved to be significant in promoting economic growth in Nigeria while foreign portfolio investment is negative and insignificant. As such, we recommend that policy makers should endeavour to boost the capital market activities so as to foster capital transactions and subsequently increase economic performance and growth in the nation.