Foreign Direct Investment and Economic Growth in Nigeria Revisited: A Sector Level Analysis

Akinyemi Ajibola, Muideen Isiaka, Olusogo Ogunleye, Oluwaseun Adeyemi


Given the conflicting nature of empirical findings on the impact of foreign direct investment on economic growth in developing economies to date, this research explored the growth impact of sectoral flow of FDI in Nigeria an aspect largely neglected in the existing literature. The study examined the sectorial impact of FDI in manufacturing, mining, oil and the telecommunications sectors on economic growth in Nigeria based on a theoretical framework founded on the standard growth accounting theory, the detailed analysis of the sectorial FDI (which is only available for over the period 1986-2009) was carried out. This involved the use of descriptive analysis, unit roots test, Johansen co-integration test, error correction mechanism, and fully modified least squares technique. The correlation analysis of aggregate FDI on sectorial GDP growth indicates that only the oil sector GDP has a significant positive correlation with aggregate FDI over the period 1981 and 2017. While the sectorial analysis revealed that only the flow of FDI into the communication sector has a positive and statistically significant impact on economic growth for the period considered. Given the positive significant growth impact for FDI in the telecommunication sector, and the negative significant growth impact of FDI in the manufacturing sector, the strategy for attracting and managing FDI in Nigeria must be sector specific and the National Bureau of Statistics must maintain a database of FDI on sectoral basis.


Sectorial FDI; Manufacturing FDI; Mining FDI; Oil FDI; Telecommunication FDI

Full Text:



Adelegan J. O. (2000) “Foreign Direct Investment and Economic Growth in Nigeria: A seemingly unrelated model” African Review of Money, Finance and Banking, Supplementary issue of “Savings and Development” 2000, 5 – 25. Millan, Italy.

Akindele, O.A. (2011). “Effect of Private Investment on Economic Growth in Nigeria”. Bells University, Nigeria. (Unpublished undergraduate project).

Akinlo A. E. (2004) “Foreign Direct Investment and Growth in Nigeria: An empirical investigation”. Journal of Policy Modelling, 26; 627 – 639.

Alfaro, L. (2003). “Foreign Direct Investment and Growth: Does the Sector Matter?” USA: Harvard Business School. 2-3.

Anyanwu J. C. (2011) “Determinants of Foreign Direct Investment Inflows to Africa (1980 – 2007). African Development Bank Group, Working Paper, 136, 1 – 32

Asiedu E. (2001) “Ownership Structure in Foreign Direct Investment Projects”. The Review of Economics and Statistics, 83 (4); 647-662

Athukorala P. (2003) “Foreign Direct Investment in Crises and Recovery: Lessons from the 1997 – 1998 Asian crisis”. Australian Economic History Review, 43 (2); 197 – 213.

Ayanwale B. A (2007) “FDI and Economic Growth: Evidence from Nigeria”. AERC Research Paper 165, African Economic Research Consortium. Nairobi.

Ayanwale, B.A. and Bamire A. S. (2001). The Influence of FDI on Firm-Level Productivity of Nigeria’s Agro/Agro-Allied Sector. Final report presented to the African Economic Research Consortium, Nairobi

Bello A. and Adeniyi O. (2010) “FDI and the Environment in Developing Economies: Evidence from Nigeria”. Environmental Research Journal, 4 (4); 291 – 297

Chakraborty C. and Nunnenkamp P. (2008) “Economic Reforms, FDI and Economic Growth in India: A sector-level Analysis. World Development, 36 (7); 1192 – 1212

Cobb C. W. and Douglas P. H. (1928) “A Theory of Production” The American Economic Review, 18 (1); 139 – 165

Ehimare, O.A. (2011). “Foreign Direct Investment and its Effect on the Nigerian Economy”. Business Intelligence Journal, 4(2): 254.

Ekperiware, C.M. (2011). “Oil and Non-Oil FDI and Economic Growth in Nigeria”. Journal of Emerging Trends in Economics and Management Sciences, 2(4): 333-340.

Ekpo A. H. (1995) “Foreign Direct Investment in Nigeria: Evidence from time series data” CBN Economic and Financial Review, 35 (1); 59 – 78

Elkomy, S., Ingham, H. and Read, R. (2018) Heterogeneous sectoral growth effects of FDI in Egypt. Lancaster University Management School, Economics Working Paper Series, 009, 1-27.

Fofana, K. H., Xia, E., and Traore, M. B. (2018) Dynamic relationship between Chinese FDI, agricultural and economic growth in West African: an application of the pool mean group model. Journal of Physics: Conf. Series, 1060, 1-8.

Imoudu, E.C. (2012). “The Impact of Foreign Direct Investment on Nigeria’s Economic Growth: Evidence from the Johansen’s Cointegration Approach”. International Journal of Business and Social Science, 3(6): 122-134.

Kareem, D.S. (2012). “Foreign Direct Investment into Oil Sector and Economic Growth in Nigeria”. The International Journal of Applied Economics and Finance, 6(4): 128.

Lund, T.M. (2010). “Foreign Direct Investment: Catalyst of Economic Growth?”. USA: The University of Utah Graduate School. 78-79.

Mankiw N. G., Romer D. and Weil D. N. (1992) “A Contribution to the Empirics of Economic Growth”. Quarterly Journal of Economics, 107 (2); 407 – 432

Masanja, C. R. (2018) The extent to which Foreign Direct Investment (FDI) contribute to the growth of host economies: evidence from Tanzania, Business Management Review, 21(1), pp.1-22.

Nwankwo, A. (2006). “The Determinants of Foreign Direct Investment Inflows (FDI) in Nigeria”. Proceedings of the 6th Global Conference on Business & Economics.

Obwona M. B. (2001) “Determinants of FDI and their Impacts on Economic Growth in Uganda”. African Development Review. 13 (1); 46 – 81

Obwona M. B. (2004) “Foreign Direct Investment in Africa. in financing Pro-Poor Growth” AERC Senior Policy Seminar VI, Kampala Uganda, 2 – 4 March 2004 – Seminar Papers, 6- - 95, Nairobi.

Odozi V. A. (1995) “An Overview of Foreign Investment in Nigeria (1960 – 1995)” Occasional Paper No. 11. Research Department, Central Bank of Nigeria

Odularu, O.G. (2008). “Crude Oil and the Nigerian Economic Performance”. Nigeria: Oil and Gas Business. 16-19.

Ogiogio G. O. (1995) “Planning Horizon, Government Expenditure and Economic Growth in Nigeria”. In A. Ariyo, ed., Economic Reform and Macroeconomic Management in Nigeria. Ibadan. The Centre for Public-Private Cooperation.

Ogundipe M. A. and Aworinde O. B. (2011) “An Analysis of Causality between Economic Growth and Foreign Direct Investment in Pre and Post deregulated Nigerian Economy (1970 – 2007)”. European Journal of Scientific Research, 53, 317 – 325

Ogunmuyiwa, S.M. & Ogunleye, O.J. (2011). “Measuring the Impact of FDI on Economic growth in Nigeria”. A paper proceeding from the 2011 New Orleans International Academic Conference, USA.

Okon, J.U., Augustine, O.J. & Chuku, A.C. (2012). “Foreign Direct Investment and Economic Growth in Nigeria: An Analysis of the Endogenous Effects”. Current Research Journal of Economic Theory, 4(3): 53-60.

Olagbaju, I. O. and Akinlo, A. E. (2018) FDI and economic growth relationship in sub- Saharan Africa: is the domestic financial system a significant intermediator? Archives of Business Research, 6(5), 90-112.

Onakoya, A.B. (2012). “Foreign Direct Investments and Economic Growth in Nigeria: A disaggregated Sector Analysis”. Journal of Economics and Sustainable Development, 3(10): 66-68.

Onu, A.J.C. (2012). “Impact of Foreign Direct Investment on Economic Growth in Nigeria”. Interdisciplinary Journal of Contemporary Research in Business, 4(5): 66-67.

Onyemaechi, J.O. (2012). “Economic Implications of Petroleum Policies in Nigeria: An overview”. American International Journal of Contemporary Research, 2(5): 62.

Oseghale B. D. and Amonkhienan E. E. (1987) “Foreign Debt, Oil Export, and Direct Foreign Investment (1960 – 1984)”. The Nigerian Journal of Economic and Social Studies, 29 (3); 359 – 380

Oyatoye E. O., Arogundade K. K., Adebisi S. O., and Oluwakayode E. F. (2011) “Foreign Direct Investment, Export and Economic Growth in Nigeria” European Journal of Humanities and Social Sciences, 2 (1); 67.

Oyinlola O. (1995) “External Capital and Economic Development in Nigeria (1970 – 1991)”. The Nigerian Journal of Economic and Social Studies. 32 (2&3), 205-222

Salisu A. A. (2002) “The Determinants and Impact of Foreign Direct Investment of Economic Growth in Developing Countries: A study of Nigeria. Indian Journal of Economics, 333 – 342

Solow R. M. (1956) “A Contribution to the Theory of Economic Growth”. Journal of Economics, 70 (1); 65 – 94

Steinbock D. (2013) “Nigeria’s huge FDI flow: Is this benefiting Nigerians?” Online available at http://business –this-benefitting-nigerians/ Retrieved on October 19, 2018.

UNCTAD (2003) “World Investment Report Geneva, United Nations Conference on Trade and Development.

Uwubanmwen, E.A. & Ajao, G.M. (2012). “The Determinants and Impacts of Foreign Direct Investment in Nigeria”. International Journal of Business and Management, 7(24): 68-69. Nigeria:

Uzoka, C.I. (2012). “The Impact of Foreign Direct Investment on Nigeria Economic growth”. Caritas University, Nigeria.

Wattanakul, T. (2018) Analysis of the relationship between GDP and FDI on the economic growth of Laos. Economics World, Vol. 6, No. 4, 295-302.



  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.