Foreign Direct Investment and Economic Growth in Nigeria

This study analyzes the relationship between foreign direct investment and economic growth in Nigeria. Secondary data on foreign direct investment, gross domestic product, and monetary policy rate were sourced from Central Bank of Nigeria. The model was analyzed using the Fully modified Least Squares, ADF Unit Root and the Johansen Cointegration test methods. The ADF test result revealed that the variables are not stationary at levels but stationary in first difference. There exists long-run relationship among the variables as shown from the Johansen Cointegration test result thereby forming the basis for employing the FMOLs. The Outcome of the Cointegrating test result shows that all the coefficients of the explanatory variable (FDI and MPR) are positive. However, only FDI was found to be significant. Based on the result of the research, the following recommendations were made among others: a combination of monetary, fiscal as well as other trade policies geared towards attracting foreign investors should be strategically deployed by the government, the government should create an enabling environment to encourage the inflow of foreign capital by the development of infrastructural facilities. There is also the need for a stable political environment to ensure the security of life and property.