THE CASE OF EXTERNAL CAPITAL INFLOWS AND ECONOMIC PERFORMANCE: NEW EVIDENCE FROM NIGERIA
Keywords:Foreign Direct Investment, Developing Country, Growth, Time Series
Government is put in place to ensure peace, tranquility, protection and wellbeing of the citizens. By extension, government actions through policies and programmes influence the direction of economic activities such as inflows of external capital; for example foreign direct investment, which are invaluable in the quest for sustainable growth and development in most developing countries such as Nigeria. In this light, this study investigated the impact foreign direct investment has on economic growth in Nigeria for the period 1981 to 2022 using error correction mechanism technique. To this end and based on neoclassical growth model, a model was drawn. The results from the analysis shows that foreign direct investment positively and significantly impact economic growth in the short run and long run. The error correction term was negative and statistically significant indicative amongst others of the existence of co-integrating relationship among variables. Based on the findings of the study, it was held that relevant policies should be put in place to sustain and further attract foreign direct investment inflow to the Nigeria economy.
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