The Effects of Foreign Direct Investment on Economic Development in Nigeria

Abstract This study examines the effects of foreign direct investment on economic development in Nigeria. Using foreign portfolio investment, foreign capital formation and degree of trade openness to proxy foreign direct Investment, while poverty, unemployment and par capital income were used to proxy economic development. Time series non-experimental research design was adopted for this study. The ordinary least square (OLS) method of the classical linear regression model was adopted in this study which is to cover an annual period of (1995– 2016). The finding shows that foreign portfolio Investment (FPI), degree of trade openness (DTO) and foreign capital formation (FCF) has significant positive effect on per capita income in Nigeria. More so, Foreign portfolio investment (FPI), trade openness and foreign capital formation (FCF) was discovered to also have a significant positive effect on unemployment rate in Nigeria. However, FPI, DTO and FCF have no significant positive effect on poverty reduction rates in Nigeria. The Study recommend that the Nigeria government should at the macroeconomic level encourage the inflow of foreign direct investment into the country because it comes along with some positive effects on the economy of Nigeria. The countries policy direction on FPI, DTO and FCF should be enhance for effective human capital, enhanced efficiency and ground-breaking competences of the manufacturing and other sectors of the economy to help reduce poverty.

TABLE OF CONTENTS Cover page  i Certification ………………………………..      ii Declaration …  iii Dedication ….. iv Acknowledgement ……………………………  v Abstract ……...      vi Table of contents …………………………….   vii
CHAPTER ONE INTRODUCTION 1.1 Background of the Study……………… 1 1.2 Statement of the Problem……………… 4 1.3 Research Questions …………………     5 1.4 Objective of the Study………………….      6 1.5 Statement of Hypotheses ………………      6 1.6 Significance of the Study………………. 7 1.7 Scope of the Study ………............  7 1.8 Definition of term and acronyms ...........     8
CHAPTER TWO LITERATURE REVIEW 2.1 Conceptual Framework ………………….    10 2.2 Empirical Review on Effects of Foreign Direct Investment and Economic Development ……… 25 2.3 Theoretical Framework……………………  33 2.4 Summary     42  
CHAPTER THREE RESEARCH METHODOLOGY 3.1 Research Design………………………….    43 3.2 Method of Data Collection ………………     43 3.3 Technique for Data Analysis ………………….. 43 3.4 Justification of Methods Used……………     46  
CHAPTER FOUR DATA PRESENTATION AND ANALYSIS 4.1 Data Presentation ……………………….     47 4.2 Data Analysis …………………………….   48 4.3 Statistical Test of Hypothesis ……………….   49 4.4 Summary of findings ……………............      53

CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATIONS 5.1 Summary ………………………………..      55 5.2 Conclusion ………………………………     56 5.3 Recommendations ………………………     58 5.4 Limitations of the Study ............  58 5.4 Suggestion for further studies ………..   58 References Appendices