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Investment-Driven Economic Growth in Nigeria: The Role of Oil Rent

Yıl 2021, Cilt: 10 Sayı: 1, 1 - 18, 31.03.2021

Öz

Considering the economic confidence currently perceived in smaller economies of the world, the contribution of investment strategies such as the Foreign Direct Investment (FDI) among other investment pathways cannot be immediately ignored. Given this observation, the current study set out to examine the dynamics of FDI inflow, domestic investment and outward foreign investment in Nigeria from 1981 from 2018. The investigation employs the ARDL bound test which revealed that FDI affect economic growth in a positive but weak way and that outward FDI is an anti-economic expansion. Furthermore, oil rent was found to be a key player in the equation of economic expansion in Nigeria. Thus, recommendation was made of the need to woo new foreign investor into the country by provide an investment-friendly environment with incentive such as tax holidays, free license for operation, peaceful economic and political environment. This study further recommends a new paradigm for the Nigeria economy through diversification to forestall future occurrence of recession occasioned by global price shock.

Kaynakça

  • Abbes, S. M., Mostéfa, B., Seghir, G., Zakarya, G. Y. (2015). Causal interactions between FDI, and economic growth: evidence from dynamic panel co-integration. Procedia Economics and Finance, 23, 276-290.
  • Abdouli, M., Hammami, S. (2017). The impact of FDI inflows and environmental quality on economic growth: an empirical study for the mena countries. Journal of the Knowledge Economy, 8(1), 254-278.
  • Asagunla, T. M., Agbede, M. O. (2018). Oil revenue and output growth in Nigeria. International Journal of Economics and Business Management, 4(6), 65-74.
  • Akanni, O. P. (2007). Oil wealth and economic growth in oil exporting African countries.
  • Adams, S. (2009). Foreign direct investment, domestic investment, and economic growth in Sub-Saharan Africa. Journal of Policy Modeling, 31(6), 939-949.
  • Ajide, K. B., Raheem, I. D., Asongu, S. A. (2019). Dollarization and the “Unbundling” of Globalization in sub-Saharan Africa. Research in International Business and Finance, 47, 398-409.
  • Almfraji, M. A., Almsafir, M. K. (2014). Foreign direct investment and economic growth literature review from 1994 to 2012. Procedia-Social and Behavioral Sciences, 129, 206-213.
  • Asongu, S. A., De Moor, L. (2017). Financial globalisation dynamic thresholds for financial development: evidence from Africa. The European Journal of Development Research, 29(1), 192-212.
  • Asongu, S. A., Efobi, U., Tchamyou, V. S. (2018). Globalisation and governance in Africa: a critical contribution to the empirics. International Journal of Development Issues.
  • Asongu, S., Kodila-Tedika, O. (2017). Trade, aid and terror. International Journal of Development Issues.
  • Bakari, S. (2017). The impact of domestic investment on economic growth: New policy analysis from Algeria.
  • Bakari, S., Mabrouki, M. (2017). The impact of domestic investment in the industrial sector on economic growth with partial openness: Evidence from Tunisia.
  • Batuo, M., Mlambo, K., Asongu, S. (2018). Linkages between financial development, financial instability, financial liberalisation and economic growth in Africa. Research in International Business and Finance, 45, 168-179.
  • Bayar, Y. (2014). Effects of foreign direct investment inflows and domestic investment on economic growth: Evidence from Turkey. International Journal of Economics and Finance, 6(4), 69-78.
  • Bezuidenhout, H. (2009). A regional perspective on aid and FDI in Southern Africa. International Advances in Economic Research, 15(3), 310-321.
  • Borensztein, E., De Gregorio, J., Lee, J. W. (1998). How does foreign direct investment affect economic growth? 1. Journal of international Economics, 45(1), 115-135.
  • Bouchoucha, N., Bakari, S. (2019). The impact of domestic and foreign direct investment on economic growth: Fresh evidence from Tunisia.
  • Carike, C., Elsabé, L., Henri, B. (2012). Chinese foreign direct investment in Africa: Making sense of a new economic reality. African Journal of Business Management, 6(47), 11583-11597.
  • Claassen, C., Loots, E., Bezuidenhout, H. (2011). Chinese foreign direct investment in Africa. Economic Research Southern Africa Working Paper, 261.
  • Clark, C., Chan, S. (1996). MNCs and developmentalism: Domestic structures as an explanation for East Asian dynamism. In Foreign Direct Investment in a Changing Global Political Economy (pp. 84-103). Palgrave Macmillan, London.
  • Fakraoui, N., & Bakari, S. (2019). Tie Among Domestic Investment, Exports And Economic Growth: Empirical Analysis From India. Journal of Smart Economic Growth, 4(1), 1-15.
  • Flora, P., Agrawal, G. (2014). Foreign direct investment (FDI) and economic growth relationship among highest FDI recipient Asian economies: A panel data analysis. International Business Management, 8(2), 126-132.
  • Goh, S. K., Sam, C. Y., McNown, R. (2017). Re-examining foreign direct investment, exports, and economic growth in asian economies using a bootstrap ARDL test for cointegration. Journal of Asian Economics, 51, 12-22.
  • Gungor, H., Katircioglu, S. T. (2010). Financial development, FDI and real income growth in Turkey: an empirical investigation from the bounds tests and causality analysis. Actual Problems of Economics, 11(114), 215-225.
  • Güngör, H., Ringim, S. H. (2017). Linkage between foreign direct investment, domestic investment and economic growth: Evidence from Nigeria. International Journal of Economics and Financial Issues, 7(3), 97-104.
  • Güngör, H., Katircioglu, S., Mercan, M. (2014). Revisiting the nexus between financial development, FDI, and growth: New evidence from second generation econometric procedures in the Turkish context. Acta Oeconomica, 64(1), 73-89.
  • Iyke, B. N., Ho, S. Y. (2017). The real exchange rate, the Ghanaian trade balance, and the J-curve. Journal of African Business, 18(3), 380-392.
  • 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., Rotimi, M. E., Sarkodie, S. A. (2020). Global FDI Inflow and its implication across economic income groups. Journal of Risk and Financial Management, 13(11), 291.
  • Joshua, U. (2020). Accounting for the determinants of FDI inflow in Nigeria amidst Global Oil Price Shock and economic recession. Academic Journal of Economic Studies, 6(3), 30-38.
  • Kalai, M., Zghidi, N. (2019). Foreign direct investment, trade, and economic growth in MENA countries: empirical analysis using ARDL bounds testing approach. Journal of the Knowledge Economy, 10(1), 397-421.
  • Khobai, H., Hamman, N., Mkhombo, T., Mhaka, S., Mavikela, N., & Phiri, A. (2018). The FDI-growth nexus in South Africa: A re-examination using quantile regression approach. Studia Universitatis Babes-Bolyai Oeconomica, 63(3), 33-55.
  • Kumar, N., Pradhan, J. P. (2002). FDI, externalities and economic growth in developing countries: Some empirical explorations and implications for WTO negotiations on investment. RIS Discussion Paper, (27). Lee, J. W. (2013). The contribution of foreign direct investment to clean energy use, carbon emissions and economic growth. Energy Policy, 55, 483-489.
  • Liu, X., Buck, T., Shu, C. (2005). Chinese economic development, the next stage: outward FDI?. International Business Review, 14(1), 97-115.
  • Mah, J. S. (2010). Foreign direct investment inflows and economic growth of China. Journal of Policy Modeling, 32(1), 155-158.
  • Mehic, E., Silajdzic, S., Babic-Hodovic, V. (2013). The impact of FDI on economic growth: Some evidence from southeast Europe. Emerging Markets Finance and Trade, 49(sup1), 5-20.
  • Mehrara, M., Haghnejad, A., Dehnavi, J., & Meybodi, F. J. (2014). Dynamic causal relationships among GDP, exports, and foreign direct investment (FDI) in the developing countries. International Letters of Social and Humanistic Sciences, 14(3), 1-19.
  • Nistor, P. (2014). FDI and economic growth, the case of Romania. Procedia Economics and Finance, 15, 577-582.
  • Nunnenkamp, P., & Spatz, J. (2003). Foreign direct investment and economic growth in developing countries: how relevant are host-country and industry characteristics? (No. 1176). Kiel working paper.
  • Nyasha, S., Odhiambo, N. M. (2017). Banks, stock market development and economic growth in Kenya: An empirical investigation. Journal of African Business, 18(1), 1-23.
  • Oladipo, O. S. (2010). Foreign direct investment (FDI): determinants and growth effects in a small open economy. The International Journal of Business and Finance Research, 4(4), 75-88.
  • Omri and Kahoulib, (2013). Causal relationships between energy consumption, foreign direct investment and economic growth: Fresh evidence from dynamic simultaneous-equations models, 67(2014) 913-922.
  • Pandya, V., Sisombat, S. (2017). Impacts of foreign direct investment on economic growth: Empirical evidence from Australian economy. International Journal of Economics and Finance, 9(5), 121.
  • Pradhan, R. P., Arvin, M. B., Hall, J. H. (2019). The nexus between economic growth, stock market depth, trade openness, and foreign direct investment: The case of ASEAN countries. The Singapore Economic Review, 64(03), 461-493.
  • Sarkodie, S. A., Strezov, V. (2019). Effect of foreign direct investments, economic development and energy consumption on greenhouse gas emissions in developing countries. Science of the Total Environment, 646, 862-871.
  • Shahbaz, M., Rahman, M. M. (2012). The dynamic of financial development, imports, foreign direct investment and economic growth: cointegration and causality analysis in Pakistan. Global Business Review, 13(2), 201-219.
  • Singh, H., Jun, K. W. (1999). Some new evidence on determinants of foreign direct investment in developing countries. The World Bank.
  • Singhania, M., Gupta, A. (2011). Determinants of foreign direct investment in India. Journal of International Trade Law and policy, 10(1), 64-82.
  • Sokhanvar, A. (2019). Does foreign direct investment accelerate tourism and economic growth within Europe?. Tourism Management Perspectives, 29, 86-96.
  • Srinivasan, P., Kalaivani, M., Ibrahim, P. (2011). An empirical investigation of foreign direct investment and economic growth in SAARC nations. Journal of Asia Business Studies, 5(2), 232-248.
  • Sunde, T. (2017). Foreign direct investment, exports and economic growth: ADRL and causality analysis for South Africa. Research in International Business and Finance, 41, 434-444.
  • Tshepo, M. (2014). The impact of foreign direct investment on economic growth and employment in South Africa: A time series analysis. Mediterranean Journal of Social Sciences, 5(25), 18.
  • Zandile, Z., & Phiri, A. (2019). FDI as a contributing factor to economic growth in Burkina Faso: How true is this?. Global Economy Journal, 19(01), 1950004.

Investment-Driven Economic Growth in Nigeria: The Role of Oil Rent

Yıl 2021, Cilt: 10 Sayı: 1, 1 - 18, 31.03.2021

Öz

Considering the economic confidence currently perceived in smaller economies of the world, the contribution of investment strategies such as the Foreign Direct Investment (FDI) among other investment pathways cannot be immediately ignored. Given this observation, the current study set out to examine the dynamics of FDI inflow, domestic investment and outward foreign investment in Nigeria from 1981 from 2018. The investigation employs the ARDL bound test which revealed that FDI affect economic growth in a positive but weak way and that outward FDI is an anti-economic expansion. Furthermore, oil rent was found to be a key player in the equation of economic expansion in Nigeria. Thus, recommendation was made of the need to woo new foreign investor into the country by provide an investment-friendly environment with incentive such as tax holidays, free license for operation, peaceful economic and political environment. This study further recommends a new paradigm for the Nigeria economy through diversification to forestall future occurrence of recession occasioned by global price shock.

Kaynakça

  • Abbes, S. M., Mostéfa, B., Seghir, G., Zakarya, G. Y. (2015). Causal interactions between FDI, and economic growth: evidence from dynamic panel co-integration. Procedia Economics and Finance, 23, 276-290.
  • Abdouli, M., Hammami, S. (2017). The impact of FDI inflows and environmental quality on economic growth: an empirical study for the mena countries. Journal of the Knowledge Economy, 8(1), 254-278.
  • Asagunla, T. M., Agbede, M. O. (2018). Oil revenue and output growth in Nigeria. International Journal of Economics and Business Management, 4(6), 65-74.
  • Akanni, O. P. (2007). Oil wealth and economic growth in oil exporting African countries.
  • Adams, S. (2009). Foreign direct investment, domestic investment, and economic growth in Sub-Saharan Africa. Journal of Policy Modeling, 31(6), 939-949.
  • Ajide, K. B., Raheem, I. D., Asongu, S. A. (2019). Dollarization and the “Unbundling” of Globalization in sub-Saharan Africa. Research in International Business and Finance, 47, 398-409.
  • Almfraji, M. A., Almsafir, M. K. (2014). Foreign direct investment and economic growth literature review from 1994 to 2012. Procedia-Social and Behavioral Sciences, 129, 206-213.
  • Asongu, S. A., De Moor, L. (2017). Financial globalisation dynamic thresholds for financial development: evidence from Africa. The European Journal of Development Research, 29(1), 192-212.
  • Asongu, S. A., Efobi, U., Tchamyou, V. S. (2018). Globalisation and governance in Africa: a critical contribution to the empirics. International Journal of Development Issues.
  • Asongu, S., Kodila-Tedika, O. (2017). Trade, aid and terror. International Journal of Development Issues.
  • Bakari, S. (2017). The impact of domestic investment on economic growth: New policy analysis from Algeria.
  • Bakari, S., Mabrouki, M. (2017). The impact of domestic investment in the industrial sector on economic growth with partial openness: Evidence from Tunisia.
  • Batuo, M., Mlambo, K., Asongu, S. (2018). Linkages between financial development, financial instability, financial liberalisation and economic growth in Africa. Research in International Business and Finance, 45, 168-179.
  • Bayar, Y. (2014). Effects of foreign direct investment inflows and domestic investment on economic growth: Evidence from Turkey. International Journal of Economics and Finance, 6(4), 69-78.
  • Bezuidenhout, H. (2009). A regional perspective on aid and FDI in Southern Africa. International Advances in Economic Research, 15(3), 310-321.
  • Borensztein, E., De Gregorio, J., Lee, J. W. (1998). How does foreign direct investment affect economic growth? 1. Journal of international Economics, 45(1), 115-135.
  • Bouchoucha, N., Bakari, S. (2019). The impact of domestic and foreign direct investment on economic growth: Fresh evidence from Tunisia.
  • Carike, C., Elsabé, L., Henri, B. (2012). Chinese foreign direct investment in Africa: Making sense of a new economic reality. African Journal of Business Management, 6(47), 11583-11597.
  • Claassen, C., Loots, E., Bezuidenhout, H. (2011). Chinese foreign direct investment in Africa. Economic Research Southern Africa Working Paper, 261.
  • Clark, C., Chan, S. (1996). MNCs and developmentalism: Domestic structures as an explanation for East Asian dynamism. In Foreign Direct Investment in a Changing Global Political Economy (pp. 84-103). Palgrave Macmillan, London.
  • Fakraoui, N., & Bakari, S. (2019). Tie Among Domestic Investment, Exports And Economic Growth: Empirical Analysis From India. Journal of Smart Economic Growth, 4(1), 1-15.
  • Flora, P., Agrawal, G. (2014). Foreign direct investment (FDI) and economic growth relationship among highest FDI recipient Asian economies: A panel data analysis. International Business Management, 8(2), 126-132.
  • Goh, S. K., Sam, C. Y., McNown, R. (2017). Re-examining foreign direct investment, exports, and economic growth in asian economies using a bootstrap ARDL test for cointegration. Journal of Asian Economics, 51, 12-22.
  • Gungor, H., Katircioglu, S. T. (2010). Financial development, FDI and real income growth in Turkey: an empirical investigation from the bounds tests and causality analysis. Actual Problems of Economics, 11(114), 215-225.
  • Güngör, H., Ringim, S. H. (2017). Linkage between foreign direct investment, domestic investment and economic growth: Evidence from Nigeria. International Journal of Economics and Financial Issues, 7(3), 97-104.
  • Güngör, H., Katircioglu, S., Mercan, M. (2014). Revisiting the nexus between financial development, FDI, and growth: New evidence from second generation econometric procedures in the Turkish context. Acta Oeconomica, 64(1), 73-89.
  • Iyke, B. N., Ho, S. Y. (2017). The real exchange rate, the Ghanaian trade balance, and the J-curve. Journal of African Business, 18(3), 380-392.
  • 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., Rotimi, M. E., Sarkodie, S. A. (2020). Global FDI Inflow and its implication across economic income groups. Journal of Risk and Financial Management, 13(11), 291.
  • Joshua, U. (2020). Accounting for the determinants of FDI inflow in Nigeria amidst Global Oil Price Shock and economic recession. Academic Journal of Economic Studies, 6(3), 30-38.
  • Kalai, M., Zghidi, N. (2019). Foreign direct investment, trade, and economic growth in MENA countries: empirical analysis using ARDL bounds testing approach. Journal of the Knowledge Economy, 10(1), 397-421.
  • Khobai, H., Hamman, N., Mkhombo, T., Mhaka, S., Mavikela, N., & Phiri, A. (2018). The FDI-growth nexus in South Africa: A re-examination using quantile regression approach. Studia Universitatis Babes-Bolyai Oeconomica, 63(3), 33-55.
  • Kumar, N., Pradhan, J. P. (2002). FDI, externalities and economic growth in developing countries: Some empirical explorations and implications for WTO negotiations on investment. RIS Discussion Paper, (27). Lee, J. W. (2013). The contribution of foreign direct investment to clean energy use, carbon emissions and economic growth. Energy Policy, 55, 483-489.
  • Liu, X., Buck, T., Shu, C. (2005). Chinese economic development, the next stage: outward FDI?. International Business Review, 14(1), 97-115.
  • Mah, J. S. (2010). Foreign direct investment inflows and economic growth of China. Journal of Policy Modeling, 32(1), 155-158.
  • Mehic, E., Silajdzic, S., Babic-Hodovic, V. (2013). The impact of FDI on economic growth: Some evidence from southeast Europe. Emerging Markets Finance and Trade, 49(sup1), 5-20.
  • Mehrara, M., Haghnejad, A., Dehnavi, J., & Meybodi, F. J. (2014). Dynamic causal relationships among GDP, exports, and foreign direct investment (FDI) in the developing countries. International Letters of Social and Humanistic Sciences, 14(3), 1-19.
  • Nistor, P. (2014). FDI and economic growth, the case of Romania. Procedia Economics and Finance, 15, 577-582.
  • Nunnenkamp, P., & Spatz, J. (2003). Foreign direct investment and economic growth in developing countries: how relevant are host-country and industry characteristics? (No. 1176). Kiel working paper.
  • Nyasha, S., Odhiambo, N. M. (2017). Banks, stock market development and economic growth in Kenya: An empirical investigation. Journal of African Business, 18(1), 1-23.
  • Oladipo, O. S. (2010). Foreign direct investment (FDI): determinants and growth effects in a small open economy. The International Journal of Business and Finance Research, 4(4), 75-88.
  • Omri and Kahoulib, (2013). Causal relationships between energy consumption, foreign direct investment and economic growth: Fresh evidence from dynamic simultaneous-equations models, 67(2014) 913-922.
  • Pandya, V., Sisombat, S. (2017). Impacts of foreign direct investment on economic growth: Empirical evidence from Australian economy. International Journal of Economics and Finance, 9(5), 121.
  • Pradhan, R. P., Arvin, M. B., Hall, J. H. (2019). The nexus between economic growth, stock market depth, trade openness, and foreign direct investment: The case of ASEAN countries. The Singapore Economic Review, 64(03), 461-493.
  • Sarkodie, S. A., Strezov, V. (2019). Effect of foreign direct investments, economic development and energy consumption on greenhouse gas emissions in developing countries. Science of the Total Environment, 646, 862-871.
  • Shahbaz, M., Rahman, M. M. (2012). The dynamic of financial development, imports, foreign direct investment and economic growth: cointegration and causality analysis in Pakistan. Global Business Review, 13(2), 201-219.
  • Singh, H., Jun, K. W. (1999). Some new evidence on determinants of foreign direct investment in developing countries. The World Bank.
  • Singhania, M., Gupta, A. (2011). Determinants of foreign direct investment in India. Journal of International Trade Law and policy, 10(1), 64-82.
  • Sokhanvar, A. (2019). Does foreign direct investment accelerate tourism and economic growth within Europe?. Tourism Management Perspectives, 29, 86-96.
  • Srinivasan, P., Kalaivani, M., Ibrahim, P. (2011). An empirical investigation of foreign direct investment and economic growth in SAARC nations. Journal of Asia Business Studies, 5(2), 232-248.
  • Sunde, T. (2017). Foreign direct investment, exports and economic growth: ADRL and causality analysis for South Africa. Research in International Business and Finance, 41, 434-444.
  • Tshepo, M. (2014). The impact of foreign direct investment on economic growth and employment in South Africa: A time series analysis. Mediterranean Journal of Social Sciences, 5(25), 18.
  • Zandile, Z., & Phiri, A. (2019). FDI as a contributing factor to economic growth in Burkina Faso: How true is this?. Global Economy Journal, 19(01), 1950004.
Toplam 53 adet kaynakça vardır.

Ayrıntılar

Birincil Dil İngilizce
Bölüm Makaleler
Yazarlar

Udi Joshua 0000-0002-7862-0547

Audu Ismaila Ameh Bu kişi benim

Andrew Adewale Alola

Yayımlanma Tarihi 31 Mart 2021
Yayımlandığı Sayı Yıl 2021 Cilt: 10 Sayı: 1

Kaynak Göster

APA Joshua, U., Ameh, A. I., & Alola, A. A. (2021). Investment-Driven Economic Growth in Nigeria: The Role of Oil Rent. Kırklareli Üniversitesi İktisadi Ve İdari Bilimler Fakültesi Dergisi, 10(1), 1-18.