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VOL. 12, ISSUE 1 (2026)
Oil production and foreign direct investment in Nigeria
Authors
Eromosele, Harrison Ogbeide, Kunemoemi, Zacchaeus
Abstract
This study investigates the impact of oil
production on foreign direct investment in Nigeria over the period 1990 to 2025.
Oil production is proxied by crude oil production, crude oil price, and crude
oil export, while Foreign Direct Investment inflow serves as the dependent
variable. Exchange rate is incorporated as a control variable to account for
macroeconomic influences. The study utilizes secondary data sourced from the
World Bank’s World Development Indicators (WDI) and the Central Bank of Nigeria
(CBN) Statistical Bulletin (2025). Employing the Augmented Dickey-Fuller (ADF)
unit root test and the Auto-Regressive Distributed Lag (ARDL) technique, the
analysis establishes the stationarity properties of the variables and examines
both short-run and long-run dynamics. The findings reveal the existence of a
long-run relationship between oil production indicators and Foreign Direct Investment
in Nigeria. Specifically, crude oil production exerts a positive and
statistically significant effect on Foreign Direct Investment, indicating that
increased production enhances Nigeria’s attractiveness to foreign investors. In
contrast, crude oil price shows a negative and statistically significant
relationship with Foreign Direct Investment, suggesting that price volatility
and associated macroeconomic instability may deter investment inflows. Crude
oil export, although negative, is statistically insignificant, reflecting weak
linkages between export activities and investment attraction. Similarly,
exchange rate demonstrates a positive but insignificant influence on Foreign Direct
Investment. The study concludes that while Nigeria’s oil production capacity
remains a critical driver of Foreign Direct Investment, structural
inefficiencies and macroeconomic instability pose significant constraints. It
recommends that the Nigerian National Petroleum Company Limited and the
Ministry of Petroleum Resources strengthen oil production through sustained
upstream investment, technological advancement, and improved security to
enhance investor confidence.
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Pages:472-481
How to cite this article:
Eromosele, Harrison Ogbeide, Kunemoemi, Zacchaeus "Oil production and foreign direct investment in Nigeria". International Journal of Humanities and Social Science Research, Vol 12, Issue 1, 2026, Pages 472-481
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