Foreign Direct Investment and Economic Growth in Nigeria: An Empirical Reassessment [1991-2019]

Bamigbade D. Zainab, Omoyemi A. Ruth, Aderibigbe J. Sanmi and Biaoku D. Oluwaleke
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Bamigbade D. Zainab: Department of Economics, University of Ibadan, Oyo State
Omoyemi A. Ruth: Department of Economics, Tai Solarin University of Education
Aderibigbe J. Sanmi: Department of Economics Joseph Ayo Babalola University
Biaoku D. Oluwaleke: Department of Extension Research and Liason service; Nigeria Institute for Oceanography and Marine Research, Victoria Island, Lagos

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 15, 1470-1483

Abstract: This paper empirically interrogates the relationship between Foreign Direct Investment and economic growth in Nigeria from 1991 to 2019. Despite a string of policies designed to lure multinational capital, national output has seldom responded as policymakers hoped. Data for the experiment were drawn from the Central Bank of Nigeria and the World Development Indicators; the analysis itself is framed within the Autoregressive Distributed Lag bounds-testing strategy, which illuminates both short-run wiggles and long-run yawns. Estimation results are at odds with popular intuition: FDI shows a negative but statistically mute influence on Gross Domestic Product whether one is looking at quarterly snapshots or annual summaries. In contrast, homegrown investment and the prevailing interest rate step forward as loud negatives, each landing well inside conventional confidence brackets. A starving error-correction term reveals that about 64.3 percent of any wiggle away from the long-run track is pulled back into line each year. Routine health checks on the specification-serial correlation, heteroskedasticity, structural breaks-all come back clean. Stability plots stay neatly within their approval bands, further bolstering confidence in the findings. Recent research indicates that Foreign Direct Investment in Nigeria has yet to deliver marked economic expansion. Heavy reliance on oil services, unreliable power systems, and cumbersome regulation chains have kept inflows parked in low-value industries. Scholars urge Abuja to revamp port logistics and steer new deals toward agriculture and manufacturing, where the growth ripple would be widest.

Date: 2025
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