Domestic Investment and Foreign Direct Investment Flows In Nigeria

Abstract

In the heat of the scramble of externally injected fund-Foreign Direct Investment-especially among developing economies, a mound body of literature has sprung up to investigate and unravel the theoretical plausibility of the rationale behind FDI; the traditional, or contemporary, determinants of FDI; and, of recent, the causative pattern of FDI and some core macro-variable. This paper took an interesting turn to investigate the impact of domestic investment on FDI inflows in Nigeria. Adopting a decomposed, single-linear econometric model estimated by the OLS methodology within four decade {1970-2009}, and after subjecting the data set through series of preliminary tests, the findings were robust: private and public domestic investments as well as human capital and market size are negatively related to FDI inflows, while trade openness and natural resource are positively linked to FDI. Thus, being proponents advocating for more FDI, the policy implications engendered by these findings, in a peculiar manner of writing, is summarized in the triple-recommendation letters FDI.