DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN NIGERIA

Abstract

Most countries strive to attract foreign direct investment (FDI) because of its perceived advantages as a tool of economic development. This study investigates the determinant of FDI in Nigeria from 1985 to 2015. The study sourced secondary data from Central Bank of Nigeria (CBN) statistical bulletin (2013), IMF financial report (2013) and World Bank Data base. The data obtained were subjected to Units root test, Johansen Co-integration test and Error correction method. Essentially, the variables in the model show a long-run disequilibrium. It was discovered that market size (GDP) and openness impacted positively on FDI flow while inflation, exchange rate, and infrastructure development were unfavourable. Since the success of FDI in any host country is dependent upon the level of infrastructural facilities, political and social security in terms of lives and property in the country, we therefore recommend that improvement in infrastructure and technological development through knowledge spillover, sound monetary and fiscal policy management, maintaining a conducive political and social environment for development will go along way in attracting FDI to Nigeria.