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Do fiscal incentives promote investment?: empirical evidence from Nigeria

Author

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  • Babajide Fowowe

    (University of Ibadan, Nigeria)

Abstract

This study conducts an empirical investigation of the effects of fiscal incentives on investment in Nigeria. We constructed two indexes of fiscal incentives which track the different types and stages of incentives embarked upon since the 1970s and these indexes are then included in both private investment and foreign direct investment equations. The empirical results showed a significant negative effect of fiscal incentives on both private investment and foreign direct investment in Nigeria. Rather than focusing on fiscal incentives, the country should concentrate on removing the factors that discourage investors such as infrastructural bottlenecks, poor institutions and good legal framework.

Suggested Citation

  • Babajide Fowowe, 2013. "Do fiscal incentives promote investment?: empirical evidence from Nigeria," Journal of Developing Areas, Tennessee State University, College of Business, vol. 47(2), pages 17-35, July-Dece.
    • Handle: RePEc:jda:journl:vol.47:year:2013:issue2:pp:17-35
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    File URL: http://muse.jhu.edu/journals/journal_of_developing_areas/v047/47.2.fowowe.html
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    Citations

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    Cited by:

    1. Ragimun Abdullah & Haula Rosdiana & Milla Sepliana Setyowati, 2021. "Strengthening of the Coal-Gasification Industry: Evidence from Indonesia," Journal of Economics and Behavioral Studies, AMH International, vol. 13(5), pages 55-62.
    2. Dandume, Muhammad Yusuf & A.C., Dr.Malarvizhi, 2014. "Does Financial Liberalization, Spur Economic Growth and Poverty Reduction in Six Sub-Saharan African Countries; Panel Unit Root and Panel Vector Error Correction Tests," MPRA Paper 52349, University Library of Munich, Germany, revised Aug 2013.
    3. Yinka Mashood Salaudeen & Monsurat Olaide Akano & Tubosun Najim Oladosu, 2023. "Tax Incentives and Growth of Listed Oil and Gas Companies in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(11), pages 540-554, November.
    4. Eric Amankwaah & Nicholas Mensah & Nana Okyir Baidoo, 2022. "The impact of location tax incentives on the growth of rural economy: evidence from Ghana," Future Business Journal, Springer, vol. 8(1), pages 1-19, December.

    More about this item

    Keywords

    fiscal incentives; private investment; foreign direct investment;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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