Impact of Inward and Outward Foreign Direct Investment on Economic Growth in Nigeria

Abstract

The study examines the impact of foreign direct investment on economic growth in Nigeria spanning from 1984 to 2022. The study utilized a secondary data source and adapted numerous econometrics techniques for model estimation including the Augmented Dickey-Fuller Unit Root Test, the Granger causality technique, and the Autoregressive Distributed Lag model which is robust to heteroscedasticity and autocorrelation. The study divided foreign direct investment into inward foreign direct investment and outward foreign direct investment. Findings indicated that inward foreign direct investment was significant and positively influenced economic growth in Nigeria. However, outward foreign direct investment had a significant and negative impact on economic growth in Nigeria. The study is unique in the sense that it checked the influence of both inward and outward foreign direct investment on the Nigerian economy. Therefore, the study recommended that the Nigerian government should formulate and implement policies that can attract more foreign direct investment and policies that would discourage the outflow of foreign direct investment.