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The moderating effect of institutions in foreign direct investment led growth hypothesis in Nigeria

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  • James Temitope Dada

    (Obafemi Awolowo University)

  • Ezekiel Olamide Abanikanda

    (Obafemi Awolowo University)

Abstract

This paper investigates the moderating role institutional quality plays in foreign direct investment led growth hypothesis in Nigeria from 1984 to 2018 using autoregressive distributed lag estimation technique. Specifically, the study contributes to the literature by using seven different institutional indicators to moderate the effect of foreign direct investment on economic growth. The findings reveal that foreign direct investment has no direct (positive) effect on economic growth in Nigeria. However, the interactive effect of institutional indicators with foreign direct investment has significant impact on economic growth in most of the models. This implies that institutions serve as important absorptive capacity that needs to be strengthened for the country to benefit maximally from the growth effect of foreign direct investment. This study therefore concludes that good institutional quality matters for foreign direct investment and growth in Nigeria.

Suggested Citation

  • James Temitope Dada & Ezekiel Olamide Abanikanda, 2022. "The moderating effect of institutions in foreign direct investment led growth hypothesis in Nigeria," Economic Change and Restructuring, Springer, vol. 55(2), pages 903-929, May.
    • Handle: RePEc:kap:ecopln:v:55:y:2022:i:2:d:10.1007_s10644-021-09332-w
    DOI: 10.1007/s10644-021-09332-w
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    Cited by:

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