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Foreign Direct Investment Inflows and Oil Exports in Nigeria: Cointegration and Vector Error Correction Model Approach

Author

Listed:
  • Aderemi Timothy Ayomitunde

    (Olabisi Onabanjo University)

  • Azeez Bankole Amuzat

    (Olabisi Onabanjo University)

  • Elufisan Omowumi Olaronke

    (Bells University of Technology)

  • Awomailo Lanke B

    (Yaba College of Technology)

Abstract

The aim of this paper is to examine the long run relationship between FDI inflows and oil exports in Nigeria. Data was collected from CBN Statistical Bulletin and UNCTAD investment report from 1990 to 2016, and various diagnostic tests such as Unit Roots and Johansen conitegration were estimated. Consequently, Vector Error Correction model was employed to address the objective of this study. It was established from this study that a long-run relationship between FDI inflows, oil exports, exchange rate and inflation existed in Nigeria, while the error correction term submits that about 38% error made in the previous year was corrected in the current year in the country. However, the findings that emerged in this work necessitated the following recommendations for the policy makers, investors and future researcher. The policy makers in Nigeria should see oil exports among others as the backbone behind the inflows of FDI in the country and should be sustained. In addition, the proceeds from oil exports should be diversified and invested in the non-oil sub sector of the economy in order to stimulate a favourable exchange rate which can further encourage further inflows of FDI in the country. Finally, it is needful to ensure that the policy measures are initiated and implemented without a delay for the desired effects to be reflected on time in the country.

Suggested Citation

  • Aderemi Timothy Ayomitunde & Azeez Bankole Amuzat & Elufisan Omowumi Olaronke & Awomailo Lanke B, 2019. "Foreign Direct Investment Inflows and Oil Exports in Nigeria: Cointegration and Vector Error Correction Model Approach," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 15(6), pages 291-301, DECEMBER.
    • Handle: RePEc:dug:actaec:y:2019:i:6:p:291-301
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