Foreign direct investment and growth in Nigeria - An empirical investigation

The paper investigates the impact of foreign direct investment (FDI) on economic growth in Nigeria, for the period 1970-2001. The ECM results show that both private capital and lagged foreign capital have small, and not a statistically significant effect, on the economic growth. The results seem to support the argument that extractive FDI might not be growth enhancing as much as manufacturing FDI In addition, the results show that export has a positive and statistically significant effect on growth. Financial development measured as M2/GDP ratio has significant negative effect on growth, which might be due to high capital flight it generates. Finally, the results show that labour force and human capital have significant positive effect on growth. These findings suggest the need for labour force expansion and education policy to raise the stock of human capital in the country. (C) 2004 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved.