International Journal of Humanities and Social Science Research

International Journal of Humanities and Social Science Research


International Journal of Humanities and Social Science Research
International Journal of Humanities and Social Science Research
Vol. 6, Issue 6 (2020)

Foreign capital inflows and economic development in Nigeria: An autoregressive distributed lag approach


Augustine A Anaele, Clement Korgbeelo

Due to the poor performance of the Nigerian economy over the years, the country has been experiencing high and rising unemployment levels, high inflation rates dwindling economic growth among others. Capital is therefore needed to put the Economy on the path of sustainable growth and development. However, due to the general prevalence of low income and consequently, low savings, it will be difficult to accumulate large enough capital required for reasonable rates of growth and development from the domestic economy foreign, capital is therefore needed to complement domestic capital for sustainable growth and development. This study therefore examines the impact of foreign capital inflows on the development of the Nigerian economy. This study therefore examines the impact of foreign capital inflows on the development of the Nigerian economy. Specifically, the study examines the impact of foreign direct investment (FDI), foreign portfolio investment (FPI) and migrant workers’ remittances (RMT) on two indicators of development, namely, economic growth (proxied by the growth rate of per capital real gross domestic product) and economic misery. Annual time-series data from 1981 to 2018 were used. The autoregressive distributed lag (ARDL) approach was used to estimate the data. The result of the data estimation showed that, in the long-run, foreign direct investment and foreign portfolio investment have strong positive impact on economic growth while remittances have weak negative impact on economic growth in Nigeria. Also, FDI has weak positive impact on economic misery. In the short-run, FDI and FPI have insignificant positive impact on economic growth while remittances have weak negative impact on economic growth. Also, FDI and FPI have weak positive relationship with economic misery while remittances has weak negative impact on economic misery. It is recommended, inter alia, that there should be a general improvement in the country’s macroeconomic environment so as to attract the inflow of more foreign capital and to stabilize them for improved performance on the economy.
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How to cite this article:
Augustine A Anaele, Clement Korgbeelo. Foreign capital inflows and economic development in Nigeria: An autoregressive distributed lag approach. International Journal of Humanities and Social Science Research, Volume 6, Issue 6, 2020, Pages 113-122
International Journal of Humanities and Social Science Research