Impact of Foreign Direct Investment (FDI) on Economic Growth in Nigeria: 1999 - 2022

This study examined the influence of foreign direct investment (FDI) on the economic growth of Nigeria by utilizing secondary data spanning the period from 1990 to 2022. The data were obtained from the World Development Indicator publications of 2022. The variables under investigation include the gross domestic product growth rate (GDPGR), foreign direct investment (FDI), foreign portfolio investment (FPI), exchange rate (EXCHR), and inflation (INF). The Augmented Dickey-Fuller (ADF) test was employed to assess the stationarity of the variables. The result revealed that economic growth and foreign portfolio investment (FPI) were stationary at level, while the other variables became stationary after the first difference. The model was estimated using the Autoregressive Distributed Lag (ARDL) approach. The results from ARDL indicate that both foreign direct investment and foreign portfolio investment have positive but statistically insignificant effects on economic growth, whereas exchange rate and inflation have negative and statistically significant impacts on economic growth. The study recommends that policymakers should develop strategies to attract and retain foreign investments by creating favourable regulatory environments for both FDI and foreign portfolio investment. Furthermore, implementing measures to effectively manage and stabilise exchange rates and control inflation can significantly contribute to promoting sustainable economic growth.