FDI, private investment and public investment in Nigeria: An unravelled dynamic relation

Ditimi Amassoma and Ogbuagu Matthew I.
Additional contact information
Ogbuagu Matthew I.: Graduate Assistant, Department of Economics and Development Studies, Faculty of Humanities and Social Studies, Federal University Oye-Ekiti, Ekiti State, Nigeria

Journal of Economic and Financial Studies (JEFS), 2015, vol. 3, issue 5, 10-18

Abstract: For decades, scholars have continually emphasized the importance of FDI in the less developed countries. Some believe that FDI can fill investment gaps, either private or public and mobilizes savings (Lee and Suruga, 2005; Todaro and Smith, 2003; Hayami, 2001). This study seeks to verify the interactions and transmission mechanism between FDI, private direct investment and public direct investment in Nigeria. Furthermore, these variables were examined to ascertain their direction of causality and whether or not they have long run linear relationship. Also, the impulse responses of these variables to shocks in the extraneous variables were verified; using the Multiple-Equation VAR models with time series data ranging from 1970-2012. The co-integration result indicates that there is no long run relationship between these variables. In addition, the variance decomposition result shows that 46 percent of innovations in FDI were explained by its own past values, while 21 percent of the innovations were due to shocks, to private domestic investment with 31 percent due to public investment. The response of public and private investment to shocks in FDI is positive and significant in the short run and so is consistent with the findings of Jansen (1995), Misun and Tomsik (2002). Efficient infrastructure in terms of public investment in basic infrastructure cannot be overemphasized amongst others.

Keywords: Endogeneity; FDI; Impulse response; VAR Model; Variance Decomposition; Nigeria. (search for similar items in EconPapers)
JEL-codes: B41 C13 C32 E62 N77 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://journalofeconomics.org/index.php/site/article/view/164/111 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lrc:lareco:v:3:y:2015:i:5:p:10-18

Access Statistics for this article

More articles in Journal of Economic and Financial Studies (JEFS) from LAR Center Press
Bibliographic data for series maintained by S Marjan ( this e-mail address is bad, please contact ).