Does foreign direct investment matter for industrialisation in Nigeria?

Nnadozie, Obianuju O, Emediegwu, Lotanna ORCID: https://orcid.org/0000-0001-7844-0397 and Monye-Emina, Anthony (2018) Does foreign direct investment matter for industrialisation in Nigeria? Zambia Social Science Journal, 7 (1). pp. 31-52. ISSN 2079-5521

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Abstract

This paper employs cointegration and error correction techniques to provide empirical evidence on the dynamic relationship between foreign direct investment (FDI) and industrialisation in Nigeria for the period 1981-2015. Our findings show that FDI does not have a significant effect on industrialisation in Nigeria either in the short run or the long run. Also, the empirical results reveal that trade significantly harms industrialisation in Nigeria both in the short run and the long run. Our empirical results are, however, not surprising given that FDI inflows into Nigeria have largely been resource-seeking, that is, mainly targeted at the oil sector with the concomitant adverse impact on the non-oil sectors, particularly the manufacturing sector. We therefore recommend that policy makers should aim at selectively attracting FDI to other strategic sectors which will be supportive of industrialisation.