Tag Archives: Foreign Direct Investment

Influence of Foreign Direct Investment on Economic Growth in Nigeria (1989- 2019) (Published)

The aim of this study is to determine the Influence of Foreign Direct Investment in Economic Growth and Deployment of Nigeria. The study employed Ordinary Least Square (OLS) method of estimation using multiple regression analysis. The data generated for this study comprises of Foreign Direct Investment (FDI), Real Gross Domestic Product (RGDP) and Exchange Rate (EXR). The data was sourced from Central Bank of Nigeria statistical bulletin spanning the period of 1989-2019 (30years). We found that FDI has positive and significant influence on real economic growth. EXR also has positive and significant impact on economic growth in Nigeria. Results also showed that the overall regression is significant at 5% level of significance given that the F-statistic is 0.0000 which is less than 0.05. Based on the results, the study recommends an improvement in the level of institutional development on which the inflow of FDI is based. The study also recommends that government should as a matter of urgency takes appropriate measures in order to stabilize the exchange rate that may attract more investors in the country for desired economic growth and Development.

Keywords: Foreign Direct Investment, Real Gross Domestic Product, exchange rate and economic growth.

Tax Rates and Foreign Direct Investments in Sub-Sahara Africa, (Published)

The relevance of foreign direct investments (FDIs) in sub-Sahara Africa has been more overstated in recent years. The benefits it attracts cannot be quantified as it generally boosts a nation’s economy and standard of living. The volume of the influx of Foreign Direct Investments is, however, dependent on various factors. One of the numerous considerable factors includes Tax rates. Tax rates are the percentages at which an individual or corporation is taxed. The rates of tax can either positively or negatively affect the inflow of Foreign Direct Investments (FDIs) in a country. This study is carried out to examine the relationship and effect of tax rates with/on Foreign Direct Investments (FDIs), finding out if Value Added Tax is adversely related with FDI, if Personal Income Tax and Corporate Income Tax are significantly associated with FDI, and if Tax rates are major determinants of FDI in sub-Sahara Africa. Data was obtained from UNCTAD reports, World Bank reports, and Trading Economics reports. Multiple regression and correlation analysis were used to carry out analysis. From the analysis, it was discovered that Value Added Tax has an adverse and significant relationship with FDIs, Personal Income Tax rates has a negative and insignificant relationship with FDIs, and Corporate Income Tax rates has a positive but insignificant relationship with FDIs. It was also derived from the analysis that rates of tax do not majorly and significantly affect the inflows of Foreign Direct Investments (FDIs). It is recommended that the governments and tax regulatory bodies of every country should emphasize the importance of the tax rates in attracting foreign direct investments and foreign investors should also support tax rates by considering it more when investing in other countries.

Keywords: Africa, Foreign Direct Investment, Taxation

Effect of Foreign Direct Investment on Exchange Rate of Naira: A Multi-Sectoral Analysis (Published)

This study examines the effect of foreign direct investment on exchange rate of naira. It covers the period between 1990 and 2016. The unusual depreciation of the naira accompanied by the declining trend of foreign direct investment inflows among other things necessitated this study. Ordinary Least Square Regression Analysis was used to estimate the model relationships. It made use of time series secondary data with five explanatory variables (FDI inflows to Agriculture, forestry and fishery, building and construction, manufacturing and processing, mining and quarrying and transport and communication) and one dependent variable (Exchange Rate). The data were sourced from Central Bank of Nigeria (CBN) statistical bulletin, World Bank Data and Journal Articles. Tests that were carried out include Unit Root Test, Co-integration test and Granger Causality test. The study reveals that there is a positive significant effect of FDI inflow to building and construction on real exchange rate; there is a positive significant effect of FDI inflows to mining and quarrying on real exchange rate and there is a positive significant effect of FDI inflows to transport and communication on real exchange rate. However, there is an universe effect of FDI inflows to agriculture, forestry, fishery on real exchange rate and an inverse effect of FDI inflows to manufacturing and processing on real exchange rate. Based on these findings, the study recommends: massive investment of local investors in the agricultural and manufacturing sectors to strengthen the exchange rate of naira and also serious efforts to increase foreign direct investment inflows in the building, mining and transport sectors in Nigeria be sustained and improved upon to have a strong exchange rate of naira.   

Keywords: Depreciation, Exchange Rate, Foreign Direct Investment, Naira, Study, building and construction, inflows, manufacturing and processing, mining and quarrying

Foreign Direct Investment, Remittances and Economic Growth in Nigeria. Do these inflows stimulate Growth? (Published)

The effect of international inflow of capital on economic growth has generated a lot of argument and debate over time. Some concluded that capital inflow does not matter and in effect cannot stimulate the desired growth while others believed it does matter in promoting the key macro-economic variables such as the reduction in unemployment and poverty, price stability, industrialization just to mention a few. Hence, this study was set out to investigate the effect of Foreign Direct Investment and Remittances on economic growth in Nigeria. The study adopted other explanatory variables and data were sourced from the World Development Indicator and Central Bank of Nigeria spanning from 1980 to 2019 and Ordinary Least Square was used to analyze the data after it has been subjected to unit root stationary test. The study found that Foreign Direct Investment has a negative relationship with economic growth and Remittances seem to have a positive effect on economic growth. The study, therefore, concluded that FDI does not stimulate desired growth while remittances promote growth in Nigeria. In the light of these findings, the study, therefore, recommended that government should remove impediments discouraging investment policies that will stimulate the use of FDI in the country. The Nigeria government should also encourage inflow and monitoring of remittances through financial institutions to enable them to have adequate data on this inflow to gear it into the growth process. 

Keywords: Foreign Direct Investment, Remittances, economic growth

Foreign Direct Investment and Revenue Generation in Nigeria (1970-2018) (Published)

This study examined the effect of Foreign Direct Investments flow to agriculture, manufacturing and processing, and mining and quarrying subsectors of the Nigerian economy on revenue generation in Nigeria proxied by company income tax and petroleum profit. The six hypotheses that guided the study were formulated in line with the stated objectives and relevant theoretical as well as empirical literature were reviewed and evaluated. The relevant data were extracted from the annual statistical bulletin of the central Bank of Nigeria. Unit root tests were carried out using Augmented Dickey Fuller method which revealed that the variables were integrated at different orders. The autoregressive distributive lag/bound test was used to explore the long run relationship existing among the variables in each model and the result of the bound test showed that the variables in the two models are co-integrated thus the study proceeded in evaluating the long run as well as the co-integrating form in each model. It was found that Foreign Direct Investments to agriculture does not enhance the generation of company income tax and petroleum profit tax in Nigeria in the long run as its coefficient turned out negative and insignificant whereas the coefficient of manufacturing and processing was positive but not significant in relations with company income tax, but negative and non-significant with respect to petroleum profit tax. Going further, Foreign Direct Investments to mining and quarrying had positive and significant relationship with both company income tax and petroleum profit tax generation in Nigeria.  The study recommended that Government can by the use of moral suasion; appeal to foreign investors to plough back about 70% of their earnings so as to expand their output as such expansion will invariably increase the company income tax and petroleum profit tax revenues of government. Tax holidays should be granted to investors in Agriculture and Manufacturing and Processing sectors so as to encourage Foreign Direct Investments inflow to these sub-sectors which will no doubt increase output, stimulate growth and increase the government tax revenue generation capacity in Nigeria.

Keywords: Agricultural Sector, Company Income Tax, Foreign Direct Investment, Manufacturing sector, Petroleum Profit Tax, mining and quarrying sector

Impact of Foreign Direct Investment on Economic Development in Nigeria (Published)

This study was carried out to ascertain the impact of foreign direct investment on economic development in Nigeria between 1981 and 2018. Data employed for this study was elicited from World Bank Data Base-World Developmental Indicators of 2018 and Central Bank of Nigeria Statistical Bulletin of 2018. This study employed gross fixed capital formation as proxy for economic development in Nigeria, and exchange rate was employed as a controlled variable while data on foreign direct investment inflow to Nigeria was adopted as the explanatory variable. This study employed Auto Regressive Distributed Lag (ARDL) Model to analyze data; other diagnostic tests such as: stability test, Auto correlation test, Heteroskedasticity test and Breusch-Godfrey Serial Correlation LM test were also carried out and they confirmed the validity and reliability of the model employed. The inferential results pointed out that foreign direct investment impacted positively but insignificantly on economic development in Nigeria between 1981 and 2018. These results also conform to apriori economic expectations. The study recommended that government of Nigeria should provide enabling environment that will be conducive for doing business, so as to attract additional inflow of foreign direct investment. Government can provide enabling business environment by provision of steady supply of electricity and ameliorating or exterminating insurgent activities in the country and restore confidence of investors to come into Nigeria and invest, when this is done, the volume of foreign direct investment into Nigeria would increase and would enhance exports thereby reducing exchange rate.

Keywords: Economic Development, Exchange Rate, Foreign Direct Investment, gross fixed capital formation and auto regressive distributed lag (ARDL) model.

Does Real Exchange Rate Volatility Matters For Foreign Direct Investment (FDI) Inflow? An Empirical Reflection of the Nigerian Situation (Published)

The research has been on the Real Exchange Rate (RER) and Foreign Direct Investment (FDI) inflow.  This has become necessary given the declining competitiveness of the Nigeria currency and  economy.  The study covered the period between 1981 and 2017.  The Cointegration and the Error correction Model of the Ordinary least squares technique were used to analyze the data. The result of the Augmented Dickey Fuller (ADF) unit root test indicates that the variables became stationary after the first difference was taken.  The Johansen Cointegration test indicates a long run equilibrium relationship among the variables.  Also the result of the parsimonious Error Correction Model (ECM) indicates that the volatility of the Real Exchange Rate (RER) has a negative and significant impact on the inflow of Foreign Direct Investment (FDI) into Nigeria. The openness of the economy has a positive and significant relationship with the Foreign Direct Investment (FDI). The interest rates has a negative and significant impact on the Foreign Direct Investment (FDI) inflow.  It was therefore recommended amongst others  that the government should not only concentrate on the  manipulation of the exchange rate but should make concerted efforts to diversify the productive base of the economy so as to increase the competiveness of the Nigerian economy and hence its currency.

Keywords: Cointegration, Foreign Direct Investment, Real Exchange Rate, Real Exchange Rate Volatility

Foreign Direct Investment in Nigeria: Examining the Statutory Reach (Published)

A fundamental shift in economic policy in Nigeria is the focus on a market driven economy and the diversification of the revenue source expressed in the quest and solicitation for foreign direct investment (FDI) and entails a private sector-led growth strategy with foreign investors as its focal target. In order to attract the necessary foreign investments, Nigeria has increased efforts at liberalizing foreign investment entry through policies and statutes to reinvigorate the investment architecture. This paper examines the statutory framework for FDI to ascertain if the depth and pith inures for a sustained and profitable foreign investment inflow. The paper finds that inflow of foreign investment into Nigeria is impacted negatively by uncompetitive investment legislations. It recommends that the laws governing foreign direct investor be reviewed to provide for a wider platform for dispute resolution and investor confidence in the areas of implementation, compliance and supervision to assure their competitiveness.

Keywords: Foreign Direct Investment, Globalization, capital inflow, investor confidence

Real Effective Exchange Volatility and Fdi Sustainability: Implications for the Nigerian Economy (Published)

The paper investigates the empirical evidence of Real Effective Exchange Rate Volatility and FDI inflow into Nigeria. The vital role of FDI in bridging the development gap and the impediment caused by the volatility in the Real Effective Exchange Rate have been attested to by various literature There has been no consensus by studies in this issue as regards whether Real Effective Exchange Rate volatility has a negative or positive effect on the FDI. In addition, the investigation of such relationship has been grossly ignored in the Nigerian literature The main objective is thus to empirically investigate the relationship between the volatility in the Real Effective Exchange Rate and the level of FDI in Nigeria. The study covered the period between 1981 and 2016. The Ordinary Least Squares technique was used in analyzing the data. Specifically, the ECM and the cointegration models were adopted. The results indicate that the one period lagged FDI has a significant and positive impact on the current FDI. The REER has an insignificant and positive impact on the FDI. The REERV has a significant and negative impact on the FDI. The result indicates further that the REERV has a negative and significant impact on the FDI. Openness of the economy o has a positive and significant impact on the REER The paper recommends a production based devaluation of the Nigerian REER.     

Keywords: Error Correction Mechanism, Foreign Direct Investment, Real Effective Exchange Rate, Real Effective Exchange Rate volatility, openness

The Impact of Foreign Direct Investment and Import, Export on the Economic Growth of Pakistan: An Empirical Study (Published)

Purpose: The aim of this paper is to analyze the impact of foreign direct investment (FDI), export (EXPO) and import (IMP) in the economic growth of Pakistan from 1990 to 2015. Design/methodology/approach: The link of foreign direct investment (FDI), export (EXPO) and import(IMP) with economic growth is measured through multiple regression model. Foreign direct investment (FDI), export (EXPO) and import (IMP) treated as regrassors and gross domestic product (GDP) treated as regressand in this model.Eviews software used to analyze the annual time series data from 1990 to 2015. Findings: According to the findings, there is a negative and insignificant association between foreign direct investment (FDI) and GDP while there is significant and positive relationship found of export (EXPO) and import (IMP) with GDP. Originality/value: The empirical findings of this research play a vital role for policy maker of Pakistan in formulation of FDI and trade policies.

Keywords: Export, Foreign Direct Investment, GDP, economic growth, import

Fluctuation Rate Analysis of Rupiah Exchange in the Indonesian Open Economy (Published)

This research aimed to analyze the long-term balance between KURS (Rate of Exchange), inflation (INF), Foreign Direct Investment (FDI), interest rate of Bank Indonesia (SBI), and the degree of openness of Economics (DKE) An open economy Indonesia using time series data period 1998: 1-2016: 4. Models Autoregressive Distributed Lag (ARDL) was used to observe the effect of these variables. The results show that there is a balance of long-term fluctuations in the exchange Rate against the US dollar which is influenced by the variable inflation and SBI are negatively correlated with the exchange rate. While the FDI variable and the degree of economic openness is positively correlated with the exchange rate. The degree of openness of the economy, inflation, FDI leads to fluctuations on the exchange rate. In the long term, SBI gives a significant effect on the exchange rate. Among the exchange rate with the degree of economic openness has a positive and significant impact. This means that increasing the degree of economic openness, it will result in the appreciated (US dollar depreciated). Economic openness leads to significant fluctuations in exchange rates in the short term and long term.

Keywords: Autoreggressive Distribured Lag (ARDL), Degree of Openness, Exchange rate rupiah/US $, Foreign Direct Investment, Inflation, Interest Rate of Bank Indonesia

The Attractiveness of Investment in the Arab Countries: Comparative Study (Published)

The flow of investments in developing countries differs across countries. We have been focusing on this research on foreign direct investment as one type of foreign investment due to the lack of capital markets in some Arab countries. Investment comprises foreign direct investment (FDI) their role is one of these kinds of investments that inflows have provided the strong impetus for economic development across countries. The paper tries to make a comparison between Poland and some Arab countries in stability period in Arab region 2005-2010. The results show that the Poland has the higher attractive investment while in key determinants factors some Arab countries are in better position than Poland.

Keywords: Arab Countries, Attractive Investment, Composite indicator, Foreign Direct Investment, Key determinate’s, Poland

The Attractiveness of Investment in the Arab Countries: Comparative Study (Published)

The flow of investments in developing countries differs across countries. We have been focusing on this research on foreign direct investment as one type of foreign investment due to the lack of capital markets in some Arab countries. Investment comprises foreign direct investment (FDI) their role is one of these kinds of investments that inflows have provided the strong impetus for economic development across countries. The paper tries to make a comparison between Poland and some Arab countries in stability period in Arab region 2005-2010. The results show that the Poland has the higher attractive investment while in key determinants factors some Arab countries are in better position than Poland.

Keywords: Arab Countries, Attractive Investment, Composite indicator, Foreign Direct Investment, Key determinate’s, Poland

IMPACT OF THE NIGERIAN CAPITAL MARKET ON THE ECONOMY (Published)

There are elements upon which a nations’ economic development are dependent. The importance of Capital Market as one of the vehicles upon which most under-developed economies could grow cannot be overemphasized. The extent to which these economies experience the said growth is quite relative to the level of awareness and management of the market. Nigeria is not left out in the desire to maximize the gains of the capital market to boost its economy. This paper empirically examines the impact of the Nigerian Capital Market on the Nigerian economy looking at a 20 years period from 1992 to 2011. The Nigerian Capital Market was proxy as Market Capitalization against some variables of the economy such as Gross Domestic Product (GDP), Foreign Direct Investment, Inflation Rates, Total New Issues, Value of Transaction and Total Listing. Using the multiple regression analysis, we find that Capital Market has an insignificant impact on the Economy within the period under review. The study therefore advised that policies and measures that would boost investors’ confidence should be enshrined in the running of Nigerian Capital Market so that it could contribute significantly to the growth of Nigerian economy noting that all elements of the market are essential ingredients to the development of a nation.

Keywords: Capital market, Foreign Direct Investment, GDP, Inflation Rate, Total new issues, Value of Transaction, and Total listing