Foreign Direct Investment and Economic Growth- An Empirical Analysis from Nigeria

The study examined the relationship between foreign direct investment (FDI) and economic growth in Nigeria. A yearly Time-series data was adopted for this study from 2011 to 2023 was sourced from Central Bank of Nigeria (CBN), Nigeria stock exchange and Securities Exchange Commission (SEC). Data was subjected to linear regression analysis which was used to estimate the parameters of the model. The findings revealed that the coefficient for foreign direct investment (FDI) indicates a positive relationship between FDI and economic growth. This means that a one-unit increase in FDI is associated with increase in economic growth, holding all other variables constant. The coefficient for the real effective exchange rate (ER) indicates a weak positive association with economic growth, For the trade balance (TB), the coefficient suggesting a positive relationship with economic growth. The coefficient for gross fixed capital formation (GFCF) is also indicating a positive but small effect on economic growth. This result aligns with economic theory, as investment in physical capital like infrastructure and machinery typically drives productivity and growth The study therefore recommended that Targeted policies should be implemented to attract and retain FDI, particularly in sectors with high growth potential such as manufacturing, infrastructure, and ICT. This includes offering investment incentives, streamlining bureaucratic procedures, ensuring policy consistency, and improving investor protection laws which in turn foster sustainable growth.