An Econometric Investigation of the FDI-Economic Growth Nexus in Nigeria
Abraham, Ochoche; AC-Ogbonna, Chris

Abstract
This study employs autoregressive distributed lag (ARDL) framework to investigate the existence and nature of the foreign direct investment (FDI) – economic growth nexus using annual data of FDI, gross domestic product (GDP) which was used as proxy for economic growth, exchange rate, inflation, trade openness (computed as sum of exports and imports as a percentage of GDP) for the period 1981 to 2017. To set this study apart, the possible effects of structural breaks in the data was not ignored. The findings revealed that FDI in Nigeria has no significant impact on economic growth during the study period. Exchange rate on the other hand does have a negative and statistically significant relationship with economic growth. Inflation and trade openness have no significant impact on economic growth. Given the study findings, it is recommended that the monetary authority continues with its current flexible exchange rate regime by intervening in the foreign exchange market as much as necessary. Also, the monetary authority should consider exchange rate targeting as a monetary policy framework as against the current monetary targeting framework or a suitable combination of both frameworks.

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