Estimation of the Long-Run Relationship between Foreign Direct Investment and Economic Growth in Nigeria

Abstract

This study examines the long-run relationship between foreign direct investment and economic growth of Nigeria. The empirical results from this study show that the level of cumulative FDI has been rising since 1970, but cumulative FDI by activity has fluctuated up and down. The co-integration equation shows that a positive relationship exists between FDI, Labour (GNS), and real Gross Capital Formation in the long-run. The conclusion that emerged from the results was that FDI would be growth enhancing if inflow were greatly channeled to other productive sections of the economy such as manufacturing, agriculture, transport and communication.