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EFFECT OF FOREIGN DIRECT INVESTMENT AND EXCHANGE RATE ON ECONOMIC GROWTH IN NIGERIA
Abstract
Various empirical studies on foreign direct investment (FDI) and exchange rate on Nigeria’s economic growth have yielded indefinite results. However, we did not come across any study that examined the relationship between FDI and exchange rate on Nigeria’s Economic growth. The low level of FDI into Nigeria during the recession of 2016 and the significant fall in the value of the Naira motivated this study. The ordinary least squares regression technique was employed to estimate the relationship between Nigeria economic growth as measured by her gross domestic product and the value of FDI, exchange rate and inflation rate using time series data from 1981 to 2010. The analysis started with the test of statistical significance of the variables there after, testing for Autocorrelation of the independent variables was carried out. Diagnostic Criteria results showed that the model used was linear and statistically significant. The regression results showed that economic growth in Nigeria is influenced positively and significantly by foreign direct investment and exchange rate amongst other variables that were not measured in the study but were measured by other researched as stated in the empirical review of literature, like the market size of the host country, deregulation, and political instability.
Key Words:
Foreign Direct Investment, Exchange Rate, Gross Domestic Product, Nigeria.