An Investigation of the Impact of Foreign Direct Investment on Economic Growth in Nigeria

Abstract

This paper posits to investigate the impact of foreign direct investment on economic growth in Nigeria. A study of this nature is necessary because foreign direct investment is an important component of private investment which is widely believed to be the engine of economic growth in any modern economy. In order to investigate the impact of foreign direct investment on economic growth in Nigeria and the causal relationship between them, liner regression and granger causality test were used. The data used were from central bank of Nigeria statistical bulletin (2006) and national account of Nigeria (2007). The study has shown that foreign direct investment has a positive impact on gross domestic product in Nigeria and we therefore accept the alternative hypothesis. It is recommended that there is the need to put in place concrete policies to engender a positive and competitive enabling environment that would attract more foreign investors. There must also be relentless wars against corruption and insecurity in order to give confidence to investors.

Key words: Domestic investment; Foreign direct investment; Capital formation and economic growth