Macroeconomic environment and foreign direct investment inflows in Nigeria

2021, Vol. 3, Issue 2

Macroeconomic environment and foreign direct investment inflows in Nigeria

authors
Clement Korgbeelo

abstract
Over the years, the performance of foreign direct investment (FDI) in flows in Nigeria has not been satisfactory. A country’s macroeconomic environment plays an important role in the inflow of FDI. This study therefore investigates the impact of Nigeria’s macroeconomic environment on the inflows of FDI. Specifically, the study examines the impact of selected macroeconomic variables on the inflows of FDI in Nigeria. The selected macroeconomic variables include economic growth. (proxied by per capita real gross domestic product), interest rate, inflation rate, crude oil prices and corruption perception index. A variety of analytical techniques including Philips-Person unit root test, autoregressive distributed lag (ARDL) approach to cointegration and error correction model (ECM) was applied on annual time-services data covering the period 1981 to 2019. The data were obtained from secondary sources. The findings from the study indicated that economic growth and oil prices have weak positive impact on FDI inflows. On the other hand, inflation rate and corruption perception index have strong negative impact on FDI inflows while interest rate has weak negative impact on FDI inflows in Nigeria. It is recommended, among other things, that there is the need to improve the country’s macroeconomic environment through policies that will stimulate growth, reduce inflation and interest rates, and reduce corruption in the country.

Download | Pages : 21-28

How to cite this article:

Clement Korgbeelo. Macroeconomic environment and foreign direct investment inflows in Nigeria. International Journal of Social Research and Development, Volume 3, Issue 2, 2021, Pages 21-28