Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate

Nya’akunat Elisha-Hosea Batat; Ezekiel Ahmadu

doi:doi:10.11648/j.jim.20211001.13

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Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate

Nya’akunat Elisha-Hosea Batat, Ezekiel Ahmadu

Published in Journal of Investment and Management (Volume 10, Issue 1)

Received: 14 January 2021 Accepted: 6 February 2021 Published: 23 April 2021

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Abstract

Having reviewed previous empirical studies on the relationship between foreign direct investment and economic growth, limited attention was given on the role of exchange rate on the relationship between foreign direct investment and economic growth. Therefore this study investigates the role of exchange rate on the relationship between foreign direct investment and economic growth over the period 1986 to 2018 using annual time series data sourced from the Central Bank of Nigeria Statistical Bulletin. Augmented Dicker-fuller Unit Root Test and ARDL model were used for the analyses. The ARDL Bounds test to cointegration revealed that economic growth, foreign direct investment, export, import and exchange rate do not have long run relationship over the period under study. The results showed that foreign direct investment has positive relationship with economic growth at maximum, average and minimum level of exchange rate but the relationship is only significant at maximum level over the period under study. This means that at maximum level of exchange rate, an increase in foreign direct investment will lead to a risein economic growth. The results also showed that export has significant positive relationship with economic growth meaning that an increase in export will lead to a rise in economic growth while import showed insignificant negative relationship with economic growth. Based on the results, the study recommended that further depreciation of Nigeria’s currency should be encourage so as to allow more inflow of foreign direct investment considering its positive impact on economic growth while the Nigerian Government is encouraged to design and implement policies that will spur export by eliminating stringent excise duties and discouraging import which exerts negative influence on economic growth.

Published in	Journal of Investment and Management (Volume 10, Issue 1)
DOI	10.11648/j.jim.20211001.13
Page(s)	13-21
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

Economic Growth, Exchange Rate, Foreign Direct Investment

References

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APA Style

Nya’akunat Elisha-Hosea Batat, Ezekiel Ahmadu. (2021). Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate. Journal of Investment and Management, 10(1), 13-21. https://doi.org/10.11648/j.jim.20211001.13

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ACS Style

Nya’akunat Elisha-Hosea Batat; Ezekiel Ahmadu. Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate. J. Invest. Manag. 2021, 10(1), 13-21. doi: 10.11648/j.jim.20211001.13

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AMA Style

Nya’akunat Elisha-Hosea Batat, Ezekiel Ahmadu. Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate. J Invest Manag. 2021;10(1):13-21. doi: 10.11648/j.jim.20211001.13

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@article{10.11648/j.jim.20211001.13,
  author = {Nya’akunat Elisha-Hosea Batat and Ezekiel Ahmadu},
  title = {Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate},
  journal = {Journal of Investment and Management},
  volume = {10},
  number = {1},
  pages = {13-21},
  doi = {10.11648/j.jim.20211001.13},
  url = {https://doi.org/10.11648/j.jim.20211001.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20211001.13},
  abstract = {Having reviewed previous empirical studies on the relationship between foreign direct investment and economic growth, limited attention was given on the role of exchange rate on the relationship between foreign direct investment and economic growth. Therefore this study investigates the role of exchange rate on the relationship between foreign direct investment and economic growth over the period 1986 to 2018 using annual time series data sourced from the Central Bank of Nigeria Statistical Bulletin. Augmented Dicker-fuller Unit Root Test and ARDL model were used for the analyses. The ARDL Bounds test to cointegration revealed that economic growth, foreign direct investment, export, import and exchange rate do not have long run relationship over the period under study. The results showed that foreign direct investment has positive relationship with economic growth at maximum, average and minimum level of exchange rate but the relationship is only significant at maximum level over the period under study. This means that at maximum level of exchange rate, an increase in foreign direct investment will lead to a risein economic growth. The results also showed that export has significant positive relationship with economic growth meaning that an increase in export will lead to a rise in economic growth while import showed insignificant negative relationship with economic growth. Based on the results, the study recommended that further depreciation of Nigeria’s currency should be encourage so as to allow more inflow of foreign direct investment considering its positive impact on economic growth while the Nigerian Government is encouraged to design and implement policies that will spur export by eliminating stringent excise duties and discouraging import which exerts negative influence on economic growth.},
 year = {2021}
}

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TY  - JOUR
T1  - Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate
AU  - Nya’akunat Elisha-Hosea Batat
AU  - Ezekiel Ahmadu
Y1  - 2021/04/23
PY  - 2021
N1  - https://doi.org/10.11648/j.jim.20211001.13
DO  - 10.11648/j.jim.20211001.13
T2  - Journal of Investment and Management
JF  - Journal of Investment and Management
JO  - Journal of Investment and Management
SP  - 13
EP  - 21
PB  - Science Publishing Group
SN  - 2328-7721
UR  - https://doi.org/10.11648/j.jim.20211001.13
AB  - Having reviewed previous empirical studies on the relationship between foreign direct investment and economic growth, limited attention was given on the role of exchange rate on the relationship between foreign direct investment and economic growth. Therefore this study investigates the role of exchange rate on the relationship between foreign direct investment and economic growth over the period 1986 to 2018 using annual time series data sourced from the Central Bank of Nigeria Statistical Bulletin. Augmented Dicker-fuller Unit Root Test and ARDL model were used for the analyses. The ARDL Bounds test to cointegration revealed that economic growth, foreign direct investment, export, import and exchange rate do not have long run relationship over the period under study. The results showed that foreign direct investment has positive relationship with economic growth at maximum, average and minimum level of exchange rate but the relationship is only significant at maximum level over the period under study. This means that at maximum level of exchange rate, an increase in foreign direct investment will lead to a risein economic growth. The results also showed that export has significant positive relationship with economic growth meaning that an increase in export will lead to a rise in economic growth while import showed insignificant negative relationship with economic growth. Based on the results, the study recommended that further depreciation of Nigeria’s currency should be encourage so as to allow more inflow of foreign direct investment considering its positive impact on economic growth while the Nigerian Government is encouraged to design and implement policies that will spur export by eliminating stringent excise duties and discouraging import which exerts negative influence on economic growth.
VL  - 10
IS  - 1
ER  -

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Author Information

Nya’akunat Elisha-Hosea Batat

Department of Economics, Kaduna State University, Kaduna, Nigeria
Ezekiel Ahmadu

Department of Economics, Kaduna State University, Kaduna, Nigeria

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APA Style

Nya’akunat Elisha-Hosea Batat, Ezekiel Ahmadu. (2021). Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate. Journal of Investment and Management, 10(1), 13-21. https://doi.org/10.11648/j.jim.20211001.13

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ACS Style

Nya’akunat Elisha-Hosea Batat; Ezekiel Ahmadu. Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate. J. Invest. Manag. 2021, 10(1), 13-21. doi: 10.11648/j.jim.20211001.13

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AMA Style

Nya’akunat Elisha-Hosea Batat, Ezekiel Ahmadu. Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate. J Invest Manag. 2021;10(1):13-21. doi: 10.11648/j.jim.20211001.13

Copy | Download

@article{10.11648/j.jim.20211001.13,
  author = {Nya’akunat Elisha-Hosea Batat and Ezekiel Ahmadu},
  title = {Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate},
  journal = {Journal of Investment and Management},
  volume = {10},
  number = {1},
  pages = {13-21},
  doi = {10.11648/j.jim.20211001.13},
  url = {https://doi.org/10.11648/j.jim.20211001.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20211001.13},
  abstract = {Having reviewed previous empirical studies on the relationship between foreign direct investment and economic growth, limited attention was given on the role of exchange rate on the relationship between foreign direct investment and economic growth. Therefore this study investigates the role of exchange rate on the relationship between foreign direct investment and economic growth over the period 1986 to 2018 using annual time series data sourced from the Central Bank of Nigeria Statistical Bulletin. Augmented Dicker-fuller Unit Root Test and ARDL model were used for the analyses. The ARDL Bounds test to cointegration revealed that economic growth, foreign direct investment, export, import and exchange rate do not have long run relationship over the period under study. The results showed that foreign direct investment has positive relationship with economic growth at maximum, average and minimum level of exchange rate but the relationship is only significant at maximum level over the period under study. This means that at maximum level of exchange rate, an increase in foreign direct investment will lead to a risein economic growth. The results also showed that export has significant positive relationship with economic growth meaning that an increase in export will lead to a rise in economic growth while import showed insignificant negative relationship with economic growth. Based on the results, the study recommended that further depreciation of Nigeria’s currency should be encourage so as to allow more inflow of foreign direct investment considering its positive impact on economic growth while the Nigerian Government is encouraged to design and implement policies that will spur export by eliminating stringent excise duties and discouraging import which exerts negative influence on economic growth.},
 year = {2021}
}

Copy | Download

TY  - JOUR
T1  - Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate
AU  - Nya’akunat Elisha-Hosea Batat
AU  - Ezekiel Ahmadu
Y1  - 2021/04/23
PY  - 2021
N1  - https://doi.org/10.11648/j.jim.20211001.13
DO  - 10.11648/j.jim.20211001.13
T2  - Journal of Investment and Management
JF  - Journal of Investment and Management
JO  - Journal of Investment and Management
SP  - 13
EP  - 21
PB  - Science Publishing Group
SN  - 2328-7721
UR  - https://doi.org/10.11648/j.jim.20211001.13
AB  - Having reviewed previous empirical studies on the relationship between foreign direct investment and economic growth, limited attention was given on the role of exchange rate on the relationship between foreign direct investment and economic growth. Therefore this study investigates the role of exchange rate on the relationship between foreign direct investment and economic growth over the period 1986 to 2018 using annual time series data sourced from the Central Bank of Nigeria Statistical Bulletin. Augmented Dicker-fuller Unit Root Test and ARDL model were used for the analyses. The ARDL Bounds test to cointegration revealed that economic growth, foreign direct investment, export, import and exchange rate do not have long run relationship over the period under study. The results showed that foreign direct investment has positive relationship with economic growth at maximum, average and minimum level of exchange rate but the relationship is only significant at maximum level over the period under study. This means that at maximum level of exchange rate, an increase in foreign direct investment will lead to a risein economic growth. The results also showed that export has significant positive relationship with economic growth meaning that an increase in export will lead to a rise in economic growth while import showed insignificant negative relationship with economic growth. Based on the results, the study recommended that further depreciation of Nigeria’s currency should be encourage so as to allow more inflow of foreign direct investment considering its positive impact on economic growth while the Nigerian Government is encouraged to design and implement policies that will spur export by eliminating stringent excise duties and discouraging import which exerts negative influence on economic growth.
VL  - 10
IS  - 1
ER  -

Copy | Download