An Impact Assessment of Foreign Direct Investment and Government Expenditure Empirical Evidence on Nigerian economy 1970 to 2021
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Abstract
This study examines the effect of Foreign Direct Investment (FDI) and Government Expenditure (GEXP) on economic growth in Nigeria. Data used for this research were sourced from the statistical bulletin of the Central Bank Nigeria (CBN). The scope covered a period of 49 years (1970-2019). Stationarity test (ADF and PP test), Johansen cointegration test, VAR estimates, and Granger causality test were all used. The Johenson co-integration test indicates that there exist two (2) cointegration equations using both trace statistics and the maximum eigenvalue test. The result of VAR estimates indicates that GDP and GEXP were positive and statistically significant and FDI is negative and statistically insignificant. The Granger causality test shows that GDP granger causes FDI in Nigeria. Therefore, policies such as job creation, tax concession, and a good enabling environment should be created for FDI to come into the country.
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