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RE-VISITING THE DETERMINANTS OF FDI INFLOW IN NIGERIA IN THE FACE OF GLOBAL OIL PRICE CRISES

Yıl 2020, Cilt: 4 Sayı: 6, 11 - 25, 31.08.2020

Udi Joshua

Öz

This study mainly seeks to investigate the determinants of FDI inflow to Nigeria within the time frame from 1980 to 2018. The empirical analysis begins with stationarity test which revealed a mixed order of integration. The dynamic ARDL bound test was adapted for this study. The findings show that only economic openness and economic expansion are the main determinants of FDI inflow to Nigeria in the period under investigation, while industrialization and oil price exert negative impact on FDI inflow. A 1% change in GDP will cause 46% and 68% increase in FDI inflow though in an insignificant way. Similarly, a 1% changes in the economic openness will bring about a significant increase of 100% and 180% in FDI inflow both in the short and long run. The insignificant impact of economic expansion in attracting FDI inflow may be connected with the recent recession face in the country from 2015 till date. Thus, this study suggests two probable policy measures which includes government intervention in the working of the economic as supported by J.S Keynes through various spending policies directed to the productive sector of the economic to help raise demand and to revive the economy and position it on the path that will significantly influence potential foreign investors into the economy. Secondly, there is the need for diversification of the economy to help diversify FDI inflow to other sectors to avoid been caught up with the oil price shock in the future in an attempt to avoid future occurrence of a short fall in FDI inflow.

Anahtar Kelimeler

Foreign Direct Investment FDI ARDL

Kaynakça

  • Ajayi, S. I. (2006). The determinants of foreign direct investment in Africa: A survey of the evidence. Foreign Direct Investment in Sub-‐Saharan Africa: Origins, Targets, Impact and Potential.
  • Antonescu, D. (2015). Empirical analysis of foreign direct investments at NUTS 2 region, in European Union and Romania. Procedia Economics and Finance, 22, 681-689.
  • Asiedu, E. (2002). On the determinants of foreign direct investment to developing countries: is Africa different?. World development, 30(1), 107-119.
  • Asiedu, E. (2006). Foreign direct investment in Africa: The role of natural resources, market size, government policy, institutions and political instability. World economy, 29(1), 63-77. Ayanwale, A. B. (2007). FDI and economic Growth: Evidence from Nigeria. Babatunde, A. (2011). Trade Openness, Infrastructure, FDI and Growth in Sub-Saharan African Countries. Journal of Management Policy & Practice, 12(7).
  • Bilgili, F., Tülüce, N. S. H., & Doğan, İ. (2012). The determinants of FDI in Turkey: A Markov regime-switching approach. Economic Modelling, 29(4), 1161-1169.
  • Boateng, A., Hua, X., Nisar, S., & Wu, J. (2015). Examining the determinants of inward FDI: Evidence from Norway. Economic Modelling, 47, 118-127.
  • Chan, M. L., Hou, K., Li, X., & Mountain, D. C. (2014). Foreign direct investment and its determinants: A regional panel causality analysis. The Quarterly Review of Economics and Finance, 54(4), 579-589.
  • Chidlow, A., Salciuviene, L., & Young, S. (2009). Regional determinants of inward FDI distribution in Poland. International business review, 18(2), 119-133.
  • Hunady, J., & Orviska, M. (2014). Determinants of Foreign Direct Investment in EU Countries–Do Corporate Taxes Really Matter?. Procedia Economics and Finance, 12, 243-250.
  • Joshua, U. (2019). An ARDL Approach to the Government Expenditure and Economic Growth Nexus in Nigeria. Academic Journal of Economic Studies, 5(3), 152-160.
  • Joshua, U., Bekun, F.V. & Adedoyin, F.F. (2020) Modeling the nexus between coal consumption, FDI inflow and economic expansion: does industrialization matter in South Kalotay, K., & Sulstarova, A. (2010). Modelling Russian outward FDI. Journal of international management, 16(2), 131-142.
  • Kinoshita, Y., & Campos, N. F. (2003). Why does FDI go where it goes? New evidence from the transition economies(No. 3-228). International Monetary Fund.
  • Kinuthia, B. K., & Murshed, S. M. (2015). FDI determinants: Kenya and Malaysia compared. Journal of Policy Modeling, 37(2), 388-400.
  • Mat, S. H. C., & Harun, M. (2012). The impact of infrastructure on foreign direct investment: The case of Malaysia. Procedia-Social and Behavioral Sciences, 65, 205-211.
  • Na, L., & Lightfoot, W. S. (2006). Determinants of foreign direct investment at the regional level in China. Journal of Technology Management in China, 1(3), 262-278.
  • Nunnenkamp, P. (2002). Determinants of FDI in developing countries: has globalization changed the rules of the game?(No. 1122). Kiel Working Paper.
  • Nurudeen, A., Wafure, O. G., & Auta, E. M. (2011). Determinants of foreign direct investment: The case of Nigeria. IUP Journal of Monetary Economics, 9(3), 50.
  • Ogunkola, E. O., & Jerome, A. (2006). Foreign direct investment in Nigeria: Magnitude, direction and prospects. Foreign Direct Investment.
  • Onyeiwu, S., & Shrestha, H. (2004). Determinants of foreign direct investment in Africa. Journal of Developing Societies, 20(1-2), 89-106.
  • Raluca, D. A., & Alecsandru, S. V. (2012). Main determinants of foreign direct investments in Romania-a quantitative view of the regional characteristics involved in the investment strategies of foreign companies. Procedia-Social and Behavioral Sciences, 58, 1193-1203.
  • Shahbaz, M., Mateev, M., Abosedra, S., Nasir, M. A., & Jiao, Z. (2019). Determinants of FDI in France: Role of Transport Infrastructure, Education, Financial Development and Energy Consumption.
  • Singhania, M., & Gupta, A. (2011). Determinants of foreign direct investment in India. Journal of international trade law and policy, 10(1), 64-82.
  • Tang, C. F., Yip, C. Y., & Ozturk, I. (2014). The determinants of foreign direct investment in Malaysia: A case for electrical and electronic industry. Economic Modelling, 43, 287-292.
  • Tintin, C. (2013). The determinants of foreign direct investment inflows in the Central and Eastern European Countries: The importance of institutions. Communist and Post-Communist Studies, 46(2), 287-298.
  • Udoh, E., & Egwaikhide, F. O. (2008). Exchange rate volatility, inflation uncertainty and foreign direct investment in Nigeria. Botswana Journal of Economics, 5(7), 14-31.
  • Wafure, O. G., & Nurudeen, A. (2010). Determinants of foreign direct investment in Nigeria: An empirical analysis. Global Journal of Human-Social Science Research, 10(1).

RE-VISITING THE DETERMINANTS OF FDI INFLOW IN NIGERIA IN THE FACE OF GLOBAL OIL PRICE CRISES

Yıl 2020, Cilt: 4 Sayı: 6, 11 - 25, 31.08.2020

Udi Joshua

Öz

This study mainly seeks to investigate the determinants of FDI inflow to Nigeria within the time frame from 1980 to 2018. The empirical analysis begins with stationarity test which revealed a mixed order of integration. The dynamic ARDL bound test was adapted for this study. The findings show that only economic openness and economic expansion are the main determinants of FDI inflow to Nigeria in the period under investigation, while industrialization and oil price exert negative impact on FDI inflow. A 1% change in GDP will cause 46% and 68% increase in FDI inflow though in an insignificant way. Similarly, a 1% changes in the economic openness will bring about a significant increase of 100% and 180% in FDI inflow both in the short and long run. The insignificant impact of economic expansion in attracting FDI inflow may be connected with the recent recession face in the country from 2015 till date. Thus, this study suggests two probable policy measures which includes government intervention in the working of the economic as supported by J.S Keynes through various spending policies directed to the productive sector of the economic to help raise demand and to revive the economy and position it on the path that will significantly influence potential foreign investors into the economy. Secondly, there is the need for diversification of the economy to help diversify FDI inflow to other sectors to avoid been caught up with the oil price shock in the future in an attempt to avoid future occurrence of a short fall in FDI inflow.

Anahtar Kelimeler

Foreign Direct Investment

Kaynakça

  • Ajayi, S. I. (2006). The determinants of foreign direct investment in Africa: A survey of the evidence. Foreign Direct Investment in Sub-‐Saharan Africa: Origins, Targets, Impact and Potential.
  • Antonescu, D. (2015). Empirical analysis of foreign direct investments at NUTS 2 region, in European Union and Romania. Procedia Economics and Finance, 22, 681-689.
  • Asiedu, E. (2002). On the determinants of foreign direct investment to developing countries: is Africa different?. World development, 30(1), 107-119.
  • Asiedu, E. (2006). Foreign direct investment in Africa: The role of natural resources, market size, government policy, institutions and political instability. World economy, 29(1), 63-77. Ayanwale, A. B. (2007). FDI and economic Growth: Evidence from Nigeria. Babatunde, A. (2011). Trade Openness, Infrastructure, FDI and Growth in Sub-Saharan African Countries. Journal of Management Policy & Practice, 12(7).
  • Bilgili, F., Tülüce, N. S. H., & Doğan, İ. (2012). The determinants of FDI in Turkey: A Markov regime-switching approach. Economic Modelling, 29(4), 1161-1169.
  • Boateng, A., Hua, X., Nisar, S., & Wu, J. (2015). Examining the determinants of inward FDI: Evidence from Norway. Economic Modelling, 47, 118-127.
  • Chan, M. L., Hou, K., Li, X., & Mountain, D. C. (2014). Foreign direct investment and its determinants: A regional panel causality analysis. The Quarterly Review of Economics and Finance, 54(4), 579-589.
  • Chidlow, A., Salciuviene, L., & Young, S. (2009). Regional determinants of inward FDI distribution in Poland. International business review, 18(2), 119-133.
  • Hunady, J., & Orviska, M. (2014). Determinants of Foreign Direct Investment in EU Countries–Do Corporate Taxes Really Matter?. Procedia Economics and Finance, 12, 243-250.
  • Joshua, U. (2019). An ARDL Approach to the Government Expenditure and Economic Growth Nexus in Nigeria. Academic Journal of Economic Studies, 5(3), 152-160.
  • Joshua, U., Bekun, F.V. & Adedoyin, F.F. (2020) Modeling the nexus between coal consumption, FDI inflow and economic expansion: does industrialization matter in South Kalotay, K., & Sulstarova, A. (2010). Modelling Russian outward FDI. Journal of international management, 16(2), 131-142.
  • Kinoshita, Y., & Campos, N. F. (2003). Why does FDI go where it goes? New evidence from the transition economies(No. 3-228). International Monetary Fund.
  • Kinuthia, B. K., & Murshed, S. M. (2015). FDI determinants: Kenya and Malaysia compared. Journal of Policy Modeling, 37(2), 388-400.
  • Mat, S. H. C., & Harun, M. (2012). The impact of infrastructure on foreign direct investment: The case of Malaysia. Procedia-Social and Behavioral Sciences, 65, 205-211.
  • Na, L., & Lightfoot, W. S. (2006). Determinants of foreign direct investment at the regional level in China. Journal of Technology Management in China, 1(3), 262-278.
  • Nunnenkamp, P. (2002). Determinants of FDI in developing countries: has globalization changed the rules of the game?(No. 1122). Kiel Working Paper.
  • Nurudeen, A., Wafure, O. G., & Auta, E. M. (2011). Determinants of foreign direct investment: The case of Nigeria. IUP Journal of Monetary Economics, 9(3), 50.
  • Ogunkola, E. O., & Jerome, A. (2006). Foreign direct investment in Nigeria: Magnitude, direction and prospects. Foreign Direct Investment.
  • Onyeiwu, S., & Shrestha, H. (2004). Determinants of foreign direct investment in Africa. Journal of Developing Societies, 20(1-2), 89-106.
  • Raluca, D. A., & Alecsandru, S. V. (2012). Main determinants of foreign direct investments in Romania-a quantitative view of the regional characteristics involved in the investment strategies of foreign companies. Procedia-Social and Behavioral Sciences, 58, 1193-1203.
  • Shahbaz, M., Mateev, M., Abosedra, S., Nasir, M. A., & Jiao, Z. (2019). Determinants of FDI in France: Role of Transport Infrastructure, Education, Financial Development and Energy Consumption.
  • Singhania, M., & Gupta, A. (2011). Determinants of foreign direct investment in India. Journal of international trade law and policy, 10(1), 64-82.
  • Tang, C. F., Yip, C. Y., & Ozturk, I. (2014). The determinants of foreign direct investment in Malaysia: A case for electrical and electronic industry. Economic Modelling, 43, 287-292.
  • Tintin, C. (2013). The determinants of foreign direct investment inflows in the Central and Eastern European Countries: The importance of institutions. Communist and Post-Communist Studies, 46(2), 287-298.
  • Udoh, E., & Egwaikhide, F. O. (2008). Exchange rate volatility, inflation uncertainty and foreign direct investment in Nigeria. Botswana Journal of Economics, 5(7), 14-31.
  • Wafure, O. G., & Nurudeen, A. (2010). Determinants of foreign direct investment in Nigeria: An empirical analysis. Global Journal of Human-Social Science Research, 10(1).
Toplam 26 adet kaynakça vardır.

Ayrıntılar

Birincil Dil İngilizce
Bölüm Araştırma Makalesi
Yazarlar

Udi Joshua 0000-0002-7862-0547

Yayımlanma Tarihi 31 Ağustos 2020
Yayımlandığı Sayı Yıl 2020 Cilt: 4 Sayı: 6

Kaynak Göster

APA Joshua, U. (2020). RE-VISITING THE DETERMINANTS OF FDI INFLOW IN NIGERIA IN THE FACE OF GLOBAL OIL PRICE CRISES. EUropean Journal of Managerial Research (EUJMR), 4(6), 11-25.

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