DETERMINANTS OF FOREIGN DIRECT INVESTMENT AND ECONOMIC SITUATIONS IN NIGERIA
ABSTRACT
Generally, policies and strategies of Nigerian government towards foreign direct investments are shaped by two principal objectives of desire for economic independence and the demand for economic development. Multinational corporations are expected to bring into the country foreign capital in the form of technical skills, entrepreneurship, and technology and investment fund to boost economic activities thereby, raising the standard of living in Nigeria. The main issues in this paper relate to understanding those factors that determine foreign direct investment in Nigeria as well as our ability to attract adequate amounts sufficient enough to accelerate the pace of our economic growth and development. Foreign direct investment (FDI) is assumed to benefit a developing country like Nigeria, not only by supplementing domestic investment, but also in terms of employment creation, transfer of technology, increased domestic competition and other positive externalities. This work tried to answer the question; what are the FDI determinants in Nigeria and how do they affect the Nigerian economy? Secondary data were collected for the period 1999-2013. In order to analyze the data, both econometric and statistical methods were used. Tables were produced in order to create a visual impression of the dependence of the Nigerian economy on that of donor countries such as Western Europe and North America. The economic regression model of ordinary least square was applied in evaluating the extent to which foreign direct investment affect major economic indicators such as gross domestic product, inflation and exchange rate. The model revealed little impact of foreign direct investment on each of these variables, foreign direct investment has not contributed much to the growth and development of Nigeria. This is evident in reality of enormous repatriation of profits, dividends, contract fees, and interest payments on foreign loans. The study, thus, suggests that in order to further improve the economic climate for foreign direct investment in Nigeria; the government must appreciate the fact that the basic element in any successful development strategy should be the encouragement of domestic investors first before going after foreign investors.