Chinese foreign direct investment inflows and the impact of institutional quality on infrastructure developments in Nigeria.

This thesis complements current studies by focusing on Chinese foreign directinvestment inflows to Nigeria’s infrastructure sector. China in recent time, has become amajor source of OFDI, through its Belt and Road Initiative. The current study empiricallytested the impact of Chinese FDI inflows to Nigeria’s infrastructure both in the short and longrun. The current study also compared FDI inflow from three major trading and investingpartners with Nigeria, which are the United States, the United Kingdom and in recent timeChina, while also interacting these variables with the variable of effective institution, this isto test the effect of quality intuition on FDI inflows to Nigeria’s infrastructure. The currentstudy also used the Toda-yamamotor casualty to test for direction of causality amongvariable.The empirical findings indicate that Chinese FDI has had a minimal effect oninfrastructure development over both short-term and long-term periods. The study’s empiricalfindings also indicate substantial variation in how FDI affects infrastructure, contingent uponthe source country and the quality of institutions. The study underscores the pivotal role ofinstitutional quality in shaping the effectiveness of FDI, in promoting infrastructuredevelopment in Nigeria. Also based on the findings of the study, which explored directionalrelationships between various factors and the logistics performance index as a proxy forinfrastructural development, several conclusions were drawn. One of which is that, ChineseForeign Direct Investment (FDI) and infrastructural development demonstrated bidirectionalcausality, indicating a mutually reinforcing relationship. However, the current level ofinstitutional quality, represented by government effectiveness, did not significantly influenceinfrastructure investments. To enhance infrastructure development in Nigeria, severalactionable recommendations were proposed. Firstly, it is important to diversify ChineseForeign Direct Investment (FDI) from primarily extractive industries to sustainableinfrastructure projects. This shift can be facilitated through the implementation of targetedpolicy incentives that attract investment into critical sectors such as transportation, energy,and telecommunications. Also, among other conclusions, enhancing governance structures iscrucial for improving the effectiveness of FDI. This can be achieved by strengtheningtransparency and regulatory frameworks.