An Examination of the Interrelationship Among Remittance Inflows, Foreign Direct Investment and Economic Growth in Nigeria

The globalization of the world economy, coupled with the recent rise of anti-globalization sentiments in some regions, has made it challenging for underdeveloped nations like Nigeria to fully understand the drivers of economic growth. After gaining independence, Nigeria, like many other growing economies in sub-Saharan Africa, has been striving to achieve and sustain long-term economic growth. The recent downturn in FDI can be attributed to recurring political instability, sluggish economic growth, and a weak global economy, leading to dwindling investment in manufacturing and related sectors. Consequently, examining the long-term relationship between remittances, FDI, and economic growth is crucial for policymakers and government advisers. The present study sought to appraise the relationship among remittance inflow, foreign direct investment (FDI), and economic growth in Nigeria. Time series data, which spanned the period of 1986-2022, was utilized. The vector error correction model was employed for the estimation. From the study, remittance was found to have a negative and non-significant relationship with economic growth. A bi-directional causation was established between FDI and economic growth. Lastly, remittance had no significant relationship with foreign direct investment. The study hence recommends that policymakers should draw up sufficient FDI inflow strategies that would translate to economic growth. This could be done through building confidence in the domestic economy through political stability and cooperation with relevant stakeholders.