Foreign Direct Investment and Economic Growth in Nigeria: An Analysis of the Endogenous Effects

This research endeavour set out to empirically investigate the relationship between foreign direct investment and economic growth in Nigeria between 1970 and 2008. The paper makes the proposition that there is endogeniety i.e., bi-directional relationship between FDI and economic growth in Nigeria. Single and simultaneous equation systems are employed to examine if there is any sort of feed-back relationship between FDI and economic growth in Nigeria. The results obtained show that FDI and economic growth are jointly determined in Nigeria and there is positive feedback from FDI to growth and from growth to FDI. The overall policy implication of the result is that policies that attract more foreign direct investments to the economy, greater openness and increased private participation will need to be pursued and reinforced to ensure that the domestic economy captures greater spillovers from FDI inflows and attains higher economic growth rates.