The Influence of Investments on Economic Growth: The Case of Nigeria

The study dwells on the effect of domestic investment, foreign direct investment and economic openness on the economic growth of Nigeria from 1970-2012. The approach of vector error correction model was adopted after some descriptive statistics, series of tests of the time series property and diagnostic tests. The study found amongst others the insignificant effect of the domestic investment in promoting growth at the period of study. The response of the foreign direct investment on growth was not satisfactory and was envisaged to be due to Nigeria is dominantly agrarian economy with insufficient technology and weak manufacturing sector needed to enhance sophisticated foreign production. Openness result seems inconclusive and unsatisfactory but further analysis depicted desirable effect in the long-run of its operation. Consequently, among the policy implications made were: fiscal and monetary incentives should intensively be pursued to encourage and stimulate domestic investments in small, medium and large scale industries especially in the rural areas dominantly occupied by the large proportion of the populace; acceleration of technological innovation needed by foreign investors and institutional reforms, elimination of double taxation, high import tariffs in some sectors of the economy should be avoided.