TABLE OF CONTENTS

TITLE PAGE……………………………………………………………………………. ………………………………………

DECLARATION………………………………………………………………. i

CERTIFICATION…………………………………………………………….. ii

DEDICATION……………………………………………………………….. iii

ACKNOWLEDGEMENTS………………………………………………………. iv

TABLE OF CONTENTS………………………………………………………… v

LIST OF TABLES……………………………………………………………. ix

ABSTRACT…………………………………………………………………… x

CHAPTER ONE         INTRODUCTION……………………………………….. 1

• Background of the study……………………………………….. 1
  • Statement of the problem……………………………………… 2
  • Research Questions……………………………………………. 4
  • Objectives of the study……………………………………….. 4
  • Justification of the Study……………………………………… 4
  • Scope of the study……………………………………………. 5
  • Plan of the study……………………………………………… 6

CHAPTER TWO LITERATURE REVIEW AND THEORETICAL FRAMEWORK

• Literature review…………………………………………………… 7
  • Empirical Review……………………………………………….. 10
  • Conceptual Framework……………………………………….. 17
    • Analysis of FDI inflow into Nigeria by Sectors………………. 17
    • Concentration of FDI………………………………………… 20
    • FDI and Capital Formation……………………………………. 21
    • The FDI-Growth Linkage………………………………………. 21
    • FDI and Poverty Reduction……………………………………. 22
    • FDI and Productivity growth…………………………………… 23
    • Employment Effects of FDI…………………………………….. 24
    • Potential negative Impacts of FDI……………………………… 25

CHAPTER THREE      THEORETICAL FRAMEWORK RESEARCH METHODOLOGY

• Theoretical framework………………………………………….. 27
  • Assumptions……………………………………………………. 28
    • Short run implications………………………………………….. 29
    • Long run implications…………………………………………… 29
  • Model Specification…………………………………………….. 32
  • Estimation Techniques………………………………………….. 34
    • Augmented Dickey-fuller Tests………………………………….. 37

3.4.1.2 Phillips-Perron (PP) test………………………………………. 37

• Co-integration and Error Correction Model (ECM)…………….. 37
  • Co-integration test…………………………………………….. 38
  • Error Correction System……………………………………… 38
  • Evaluation Procedure………………………………………….. 38
    • Economic Test (A Priori Expectation)………………………….. 42
    • Statistical (First Order) Test…………………………………… 42
      • F-Test…………………………………………………… 42
      • Student t-Test………………………………………………….. 42
      • R²-Coefficient of Determination………………………… 42
    • Diagnostics test (Econometric Test)……………………………. 42
      • Test of Autocorrelation…………………………………. 42
      • Test of Normality…………………………………………. 42
      • Test of Heteroscedasticity………………………………. 43
  • Data Types and Sources…………………………………………. 43

CHAPTER FOUR       DATA PRESENTATION AND INTERPRETATION OF RESULTS

• Descriptive statistics……………………………………………….. 44
  • Unit Root Test……………………………………………………….. 45
  • Diagnostic Tests……………………………………………………… 50
    • Breusch-Godfrey Serial Correlation LM Test……………………….. 51
    • Heteroskedasticity Test………………………………………….. 51

CHAPTER FIVE           SUMMARY, RECOMMENDATION AND CONCLUSION

• summary and finding………………………………………………………. 53
  • conclusion…………………………………………………………………. 54
  • policy Recommendations………………………………………………….. 55
  • Limitations of study………………………………………………………… 57

REFERENCES………………………………………………………… 58

APPENDIX………………………………………………………….. 63

LIST OF TABLES

Table 1: A priori expectations…………………………………………………. 31

Table 2: Descriptive statistic table…………………………………………….. 36

Table 3: AugmentedDickey Fuller ADF test and Philip-Perron (PP) result…….. 37

Table 4: Summary of the unit root test results………………………………… 37

Table 5: Bound test Cointegration result……………………………………… 38

Table 6:  Short run result……………………………………………………… 39

Table 7 Breusch-Godfrey Serial Correlation LM Test………………………… 40

Table 8: Heteroskedasticity Test…………………………………………….. 40

ABSTRACT

The purpose of this study is to examine the effect of sectoral Foreign Direct Investment on economic growth in Nigeria making use of time series data for the period 1981-2018. An Auto-regressive Distributed Lag (ARDL) technique (with emphasis on short run estimates) is used to examine the relationship for series that are I(0) and I(1). The study considers  five  FDI  sectors  which  includes:  Telecommunication  infrastructures,  oil, Agriculture, Manufacturing, Services  and other infrastructures sectors as its variables representing sectoral foreign direct investment while Gross Domestic Product (GDP) is employed as a proxy for economic growth.

The study observes no long run relationship between sectoral FDI and economic growth. Hence, short run estimation without accounting for adjustment mechanism is estimated. The results shows that Telecommunication infrastructures FDI, Services FDI and other infrastructures    FDI    are    significant    to    economic    growth.    However,    only Telecommunication infrastructures FDI spurs economic growth while Services FDI and other infrastructures FDI drag economic growth in Nigeria.

Conclusively,   this   study   recommends   that   government   should   ensure   stable macroeconomic policies as a stabilization tool to prompt the attraction of more FDI into Nigeria and dependency on foreign direct investment should remain limited.

CHAPTER ONE INTRODUCTION

• Background to the Study

Over the previous insufficient year, the role of Foreign Direct investment (FDI hereafter) has been recognized as a growth-enhancing factor in the developing countries. FDI is recognized  as  a  substance  for  output  growth,  capital  accretion,  and  technological progress seems to be a less contentious hypothesis in theory than in practice. (Campos and Kinoshita, 2002) The effect of Foreign Direct Investment (FDI) on economic growth seems to have acquired position of formalized fact in the international economics literature. The effects of FDI in the host economy are normally believed to be increase in the  employment,  increase  in  productivity,  and  increase  in  exports  and,  of  course, increased pace of transfer of technology.

Foreign Direct investment (FDI) helps fill the domestic revenue-generation gap in a developing  economy,  given  that  in  most  developing  countries,  governments  do  not seem to be able to generate sufficient revenue to meet their expenditure needs’ is said to be a vehicle for transfer of technology – both the technology embodied in goods, services,  people,  organizational  arrangements,  and  those  embodied  in  blueprints, designs, technical documents, and in the content of innumerable types of training.

Total streams of Foreign Direct Investment (FDI) to Nigeria, drop into diverse classified divisions of the economy. FDI includes a noteworthy effect on yield of the economy but that the development effects of FDI contrast over segments. As sound as the discoveries of such ponders show up, the development impacts that FDI streams make

on each division of the economy are, be that as it may, veiled (Sunday et al., 2007). Foreign Direct Investment inflows have been developing massively over the course of the final decade: from USD1.14 billion in 2001 and USD2.1 billion in 2004, Nigeria’s FDI come  to  USD11  billion  in  2009  concurring  to  UNCTAD,  making  the  country  the nineteenth  most  prominent  beneficiary  of  FDI  within  the  world.  Nigeria’s  most imperative sources of FDI have customarily been connected with the oil segment. During the past two decades, Foreign Direct Investment (FDI) has risen as the foremost imperative source of external asset streams to most nations particularly creating nations over a long time and has ended up as significant part of capital formation in these countries. The part of the Foreign Direct Investment (FDI) has been broadly recognized as a growth-enhancing calculate in the creating nations (Khan, 2007).

The effect of FDI within the have economy are regularly believed to be; increment within the work level, increase within the productivity, boosting trades and increased pace of exchange of innovation. The potential focal points of the FDI on the have economy are: it  encourages  the  utilization  and  misuse  of  neighborhood  crude  materials,  presents present day strategies of administration and promoting, facilitates the get to modern innovations, foreign inflows can be used for financing current account shortfalls, back streams in frame of FDI don’t produce reimbursement of vital and interface (as contradicted to outside obligation) and increments the stock of human capital by means of on the work preparing.

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