Econometric Modelling and Forecasting Foreign Direct Investment Inflows in Nigeria: ARIMA Model Approach

Ayodele Idowu

MPRA Paper from University Library of Munich, Germany

Abstract: This study examined econometric modelling and forecasting foreign direct investment inflows in Nigeria over the next decade using Box-Jenkins ARIMA model approach. The scope of the study is from 1970 to 2020. The correlogram show that the net foreign direct investment inflow in Nigeria is integrated of the first order. Based on the number of significant coefficients, highest adjusted R-squared, lowest volatility and the lowest SBIC and the AIC, the study estimated and presents the ARIMA (1, 1, 3) model. The diagnostic test also shows that the estimated model is not only consistent but good for forecasting the net foreign direct investment inflows in Nigeria and it also explains the dynamics around it. The result of the study shows that net foreign direct investment inflows in Nigeria are likely for exhibit very slow upward trend between 2.80 billion USD and 3.26 billion USD in the next decade which is not significantly different from values of FDI inflows in Nigeria in the recent years. The study also provide policy recommendations so as to assist policy makers and the Nigerian government on better ways to accelerate and maintain higher level of net foreign direct investment inflows in Nigeria.

Keywords: ARIMA; Foreign Direct Investment Inflows; Forecasting; Box-Jenkins; Nigeria. (search for similar items in EconPapers)
JEL-codes: E2 F1 F17 F4 F47 (search for similar items in EconPapers)
Date: 2021-04-29, Revised 2021-04-30
New Economics Papers: this item is included in nep-cwa, nep-fdg, nep-for and nep-mac
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