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This study was on Determinant of foreign direct investment inflow on the economic growth of Nigeria (1990-2020). The total population for the study is 200 staff of national bureaus of statistics, Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made statisticians, accountants cadre, programme analysts and administrative officers were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies.

Chapter one


  • Background of the study


One major objective of Government of Sovereign nations all over the world is to embark on policies and programmes which are geared towards the improvement of the living standards of her citizenry and also ensure economic growth and development. The attainment of this cardinal objective in developing countries like Nigeria and other sub-Sahara African (SSA) countries has been hampered by low levels of capital formation occasioned by vicious cycles of low productivity, low income and low level earnings (Adepoju, et al 2007). This calls for public and private attention and the need for a financial and non-financial bridging from abroad to address them has become somewhat imperative. One vehicle or channel through which foreign financial bridging flows into developing countries like Nigeria is by Foreign Direct Investment (FDI). Adefeso, et al (2012) stated that the overwhelming importance of Foreign Direct Investment (FDI) inflows to the developing countries has occupied a substantial body of economic literature. Again, it addresses the vicious circle of economic misalignments. According to Ngowi (2001) in Adefeso, et al (2012) FDI creates employment and acts as a vehicle of technology transfer, provides superior skills and management techniques, facilitates local firm’s access to internationals markets and increase product diversity and overall an engine of economic growth and development in Africa where its need cannot be over emphasized. Unfortunately, Nigeria (before 2003) had has not enjoyed these benefits because she has witnessed declining and fluctuating foreign investment inflows. Nigeria alone cannot provide all the needed domestic funds to invest in all the sectors of the economy, to make it one of the twenty largest economies in the world by 2020 and to meet the Millennium Development Goals (MDGs) in 2015. The need to harness her foreign direct investment becomes a sin quo non for a healthy economy. Uwubanwen et al (2012) observed that economic growth as explained by the neoclassical growth theory emanates from the increase in the quantity of factors of production as well as the efficiency in their allocation (which are partly generated externally). In a simple world of two factor economy (i.e labour and capital), it is a known fact that developing economies (such as Nigeria) have abundant manpower but scarce capital due to shortage of domestic savings mobilization which places limitation on capital formation and economic development. Even when domestically generated capital and manpower are in abundant supply, increased production may be constrained by shortage of foreign input (machines) upon which manufacturing of goods and services in developing economies depend. This therefore makes international capital flow an important aspect of the efforts by developing countries to close their investment-savings gap. Montiel and Reinhart (2002) further posited that either from the perceived or rational meaning of FDI as seen above, there is little or no doubt that FDI directly augment the real resources available for production in the host country’s economy. Indeed, the opinions in literature is that FDI is “a good cholesterol” necessary for closing the existing investment-savings gaps in developing economies. They concluded that the attraction of FDI into developing economies (such as Nigeria) is usually premised on the implicit assumption that greater inflow of FDI will accelerate the level of economic growth (measured by GDP) and the mobilization of domestic capital as well as improvement in balance of payments.

Statement of the problem

The net result of this dive is that Nigeria Government has implemented various policy reforms so as to attract foreign direct investment. Despite these reforms, the perceived and obvious needs for FDI inflows to Nigeria have remained low compared to other developing countries. This development is disturbing and sending signals of seemingly little hope of economic

Objective of the study

The objectives of the study are;

  1. To ascertain the relationship between foreign investment and economic growth of Nigeria
  2. To determine the impact of GDP on FDI inflow in Nigeria
  3. To determine the effect of interest rates on FDI inflows in Nigeria

Research hypotheses

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H0:   there is no relationship between foreign investment and economic growth of Nigeria

H1: there is relationship between foreign investment and economic growth of Nigeria.

H02: there is no impact of GDP on FDI inflow in Nigeria.

H2: there is impact of GDP on FDI inflow in Nigeria

Significance of the study

The study will broaden the knowledge of the researcher as well contribute to the existing literature on the subject matter by providing an expository analysis of the pattern of FDI in the Nigerian economy. This would enhance policy formulation in the economic policy and as well address our economic challenges in general. It would also be an invaluable tool for students, academic, institutions and individuals that want to know more about the link between FDI and economic growth.

Scope and limitation of the study

The scope of the study covers determinant of foreign investment inflow on the economic growth of Nigeria. The researcher encounters some constrain which limited the scope of the study;

  1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
  2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.



FOREIGN DIRECT INVESTMENT: A foreign direct investment is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct control.

ECONOMIC GROWTH: Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.


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