DETERMINATION OF LONG TERM RELATIONSHIP BETWEEN FOREIGN PRIVATE INVESTMENT AND GROSS DOMESTIC PRODUCT USING COINTEGRATION

This study examines the long run relationship between Foreign Private Investment (FPI) and Gross Domestic Product (GDP) using cointegration between the period 1965-2012. Secondary data from Central Bank of Nigeria was used in order to achieve the objective of this study. The data was analyzed using E-View 6.1 version for unit root test, granger causality, Cointegration. The result of the unit root in tables 1 and 2 show that the series is stationary at I(1) as in figure 2. Granger causality test in table 3 reveal that granger causality is unidirectional i.e. GDP granger caused FPI with p-values of 0.0394 which is less than 0.05 while FPI does not granger cause GDP. The result of Cointegration test as presented in Table 4 shows the existence of one Cointegrating equation from Likelihood Ratio test (L.R) at 5% significance level which indicates the present of long run relationship between GDP and FPI.