Asymmetric Effect of Foreign Direct Investment on Manufacturing Sector Performance in Nigeria

Oluwakorede Olusanya

MPRA Paper from University Library of Munich, Germany

Abstract: In this study, after the use of the Non-linear ARDL method to investigate cointegration between foreign direct investment and manufacturing sector growth and error correction specification combined with annual data from various sources, the study showed that changes to FDI have a short and long run asymmetric effect on the Nigerian manufacturing sector growth. The estimated Non-linear ARDL model further affirmed the presence of asymmetries in the foreign direct investment changes to the manufacturing sector growth. Positive foreign direct investment was found to improve the manufacturing sector growth increasing it by 0.25 percent for every one percent increase to FDI in the short run. The narrative was however different in the long run as positive FDI had a negative impact on the manufacturing sector in the long run indicating that growth in the manufacturing sector reduces by 0.11 for every one percent increase to FDI. The negative FDI on the other hand had a positive statistically insignificant relationship in the short run and a negative statistically significant relationship in the long run with the manufacturing sector.

Keywords: Manufacturing sector; Foreign Direct Investment; Economic Growth; Non-linear ARDL Model. (search for similar items in EconPapers)
JEL-codes: L00 L60 L69 O30 (search for similar items in EconPapers)
Date: 2020-01-20
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:113029

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