The Effects of Foreign Direct Investment on Sustainable Development in Nigeria

Cletus usman Idoko, Daniel Idachaba, Agenyi Emmanuel


Foreign direct Investment (FDI) has for long been the most viable method of wealth and technological transfer between the developing and the developed countries of the world. This is because FDI coordinated through multinational corporations have the potential to improve the wellbeing of many societies. In view of this therefore, the study attempted to empirically determine the effects of foreign direct investment on economic growth and sustainable development in Nigeria using ordinary least square estimate. The study employs time series analysis from 1980-2013. Data for the study were obtained from World Bank data base, Central Bank of Nigeria, and National Bureau of Statistics. The result of the analysis  revealed that , foreign direct investment, inflation rate and balance of payment has t-statistics greater than or equal to two in absolute term. Given the above, it implies that, 1% increase in FDI will result to a 10% increase in Real Gross Domestic Product (RGDP) or sustainable development. In the same way, a 1% increase in Inflation will cause Real Gross Domestic Product (RGDP) that is, sustainable development to decrease by 5% while, a unit change in BOP will cause Real Gross Domestic Product (RGDP) or sustainable development to move in the same direction by 8.47 units. Exchange rate does not have any significant impact on RGDP given the result of this research. The R2 value of 0.912043 shows that the overall effects is statistically significant, which confirms that there isn’t any problem in the long-run equilibrium relation between the independent and dependent variables. From the result of this study, it portrays that for effective economic growth and sustainable development to be achieved in Nigeria, it will be better to focus on the improvement of infrastructural development, human resource, entrepreneurship, and stable macroeconomic framework capable of fostering productive investment that can argument the process of sustainable development.

Keywords: FDI; Economic Growth; sustainable development, ordinary least square,

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