ABSTRACT

The purpose of this study is to examine the effect of sectoral Foreign Direct Investment on economic growth in Nigeria making use of time series data for the period 1981-2018. An Auto-regressive Distributed Lag (ARDL) technique (with emphasis on short run estimates) is used to examine the relationship for series that are I(0) and I(1). The study considers  five  FDI  sectors  which  includes:  Telecommunication  infrastructures,  oil, Agriculture, Manufacturing, Services  and other infrastructures sectors as its variables representing sectoral foreign direct investment while Gross Domestic Product (GDP) is employed as a proxy for economic growth.

The study observes no long run relationship between sectoral FDI and economic growth. Hence, short run estimation without accounting for adjustment mechanism is estimated. The results shows that Telecommunication infrastructures FDI, Services FDI and other infrastructures    FDI    are    significant    to    economic    growth.    However,    only Telecommunication infrastructures FDI spurs economic growth while Services FDI and other infrastructures FDI drag economic growth in Nigeria.

Conclusively,   this   study   recommends   that   government   should   ensure   stable macroeconomic policies as a stabilization tool to prompt the attraction of more FDI into Nigeria and dependency on foreign direct investment should remain limited.