FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN NIGERIA (1986 – 2017)

This study examines the causal effect of foreign direct investment and economic growth in Nigeria using secondary data sourced from the central bank of Nigeria statistical bulletin between the period of 1986 through 2017. The study adopted vector error correction model and pairwise granger causality test to determine the direction of causality between variables under study. The result shows that out of the six exogenous variables used as an indicator of foreign direct investment, one, the non-oil related foreign direct investment, trade openness and market capitalization was able to pass test of hypothesis, which suggest that of the six independent variables employed, three established the fact that foreign direct investment is a stimulant to economic performance via economic growth in Nigeria with much more emphasis on the non-oil related foreign direct investment. This study further concludes that non-oil related foreign direct investments are more beneficial to Nigeria’s economy vis-a-vis to oil related foreign direct investment inflows. Nonetheless, it is recommended that both Nigeria’s private and public sectors should encourage and intensify efforts to attract further direct investment inflows into the non- oil related sectors of the economy, while relatively de-emphasizing attraction of inflows into the oil related sectors in the interest of the economy.