FOREIGN DIRECT INVESTMENT AND MACROECONOMIC DYNAMICS IN NIGERIA

Abstract

Using time series data from the Central Bank of Nigeria statistical Bulletin (CBN, 2023) and the World Development Indicators (WDI, 2023), this study examined the effects of Foreign Direct Investment on Gross Domestic Product, Gross Capital Formation and Manufacturing Capacity Utilization in Nigeria during the 1986-2022 periods. Autoregressive Distributed Lag (ARDL) technique was adopted to estimate the dynamic relationship among the variables. The results indicated that FDI has a positive and statistically significant impact on both GDP (2.603904) and Gross Capital Formation (0.198195), but positive and non-significant impact on Capacity Utilization. The implication of the foregoing is that increase in FDI will increase GDP and Gross Capital Formation in the short run, while all the variables has a long run convergence to equilibrium.