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Re-examining the Casuality between Capital Flight and Foreign Direct Investmen in Nigeria

Author

Listed:
  • Abdullahi I. Bello

    (University of Ilorin)

  • Olaniyi A. Taiwo

    (Fountain University)

  • Adekunle O. Ahmed

    (Fountain University)

Abstract

The relationship between capital flight and Foreign Direct Investment (FDI) has generated continuous debate in literature. This study aims at providing quantitative analysis of cointegration and causality between capital flight and FDI in Nigeria from 1985 to 2015. The study employed secondary data which was obtained from Statistical bulletin of Central Bank of Nigeria and data base of World Bank.The data obtained were subjected to Units root test, Co-integration test and Pair–Wise test of Granger Causality. The findings of co-integration revealed that the estimated equation and the series are co-integrated. The Granger-Causality test shows that there is no bi-directional causality between FDI and Capital Flight in Nigeria.The study concludes that the success to curtail capital flight in Nigeria is to improve level of infrastructural facilities in the country which can facilitate increase in domestic investment and also attract FDI. It is recommended that enhancing investment environment by minimizing the obstacles to doing economic activities, and increasing the effort against international financial crime will help reduce capital flight and improve FDI in Nigeria.

Suggested Citation

  • Abdullahi I. Bello & Olaniyi A. Taiwo & Adekunle O. Ahmed, 2018. "Re-examining the Casuality between Capital Flight and Foreign Direct Investmen in Nigeria," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 14(4), pages 115-127, AUGUST.
    • Handle: RePEc:dug:actaec:y:2018:i:4:p:115-127
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    References listed on IDEAS

    as
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