FOREIGN INVESTMENT INFLOW AND ECONOMIC PERFORMANCE IN NIGERIA

Abstract

This study investigated the effect of foreign investment inflow on the economic performance of Nigeria for the period 2005-2022. The specific objectives of the study were to: determine the impact of foreign direct investment (FDI) on economic performance, investigate the impact of foreign portfolio investment (FPI) on economic performance, and examine the impact of foreign loans (FL) on economic performance of Nigeria. The study used time series data sources from the CBN statistical Bulletin. The study adopted the ex post facto research design and employed the vector error correction mechanism (VECM) method to analyze the data. The empirical result indicated that foreign direct investment has positive significant impact on economic growth of Nigeria, foreign portfolio investment has significant positive impact on the economic growth in Nigeria, and foreign loan has significant positive impact on the economic growth in Nigeria. The implication of the study is that foreign investment inflows are strategic to economic growth in Nigeria. The policy recommendations following the findings are: government should ensure a good ease of business in order to attract more direct investments into the country, this will enhance the performance of the economic sectors and improve aggregate output; there is need to strengthen the capital markets to be able to stimulate foreign portfolio investment inflow in the country to boost the economy; and the government could obtain more loans and ensure it is only directed towards growth generating investments that will boost economic growth.

Keywords: Investment, Foreign inflow, Economic performance, Vector error Correction.