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Foreign Direct Investment (FDI) and standard of living in Nigeria

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  • Sunday Ojo Akinmulegun

Abstract

The subject of interrelationship that exists between foreign direct investment (FDI) and standard of living has been an issue of both theoretical and empirical investigations. This study, thus examined the relationship between foreign direct investment and standard of living measured by per capita income (PCI) in Nigeria over 1986 – 2009 period using time series data. The study employed Vector Auto regression (VAR) model because of the fact that the variables are integrated of different orders in their Unit Root Tests. Test involving Impulse Response Analysis and Variance Decomposition reveal that the relationship between FDI and standard of living is insignificant. Thus, the past values of FDI could be used to predict the future behavior of standard of living in Nigeria only to a lesser extent. Thus, the policy implications underscore the need for institutional and macroeconomic policy framework that would redirect steps in making FDI to contribute positively to the standard of living in Nigeria by channeling the available FDI into industrial, productive sector of the economy.

Suggested Citation

  • Sunday Ojo Akinmulegun, 2012. "Foreign Direct Investment (FDI) and standard of living in Nigeria," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 2(3), pages 1-11.
    • Handle: RePEc:spt:apfiba:v:2:y:2012:i:3:f:2_3_11
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    Citations

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    Cited by:

    1. Iwegbu, Onyebuchi & Nwaogwugwu, Isaac Chiawolam, 2019. "Effect of Exchange Rate Shock on Key Sectors of the Nigerian Economy," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 507-533.
    2. Marwa Lazreg & Ezzeddine Zouari, 2018. "The relationship between FDI, poverty reduction and environmental sustainability in Tunisia," Working Papers hal-01756733, HAL.
    3. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    4. Magombeyi, Mercy Tsitsi & Odhiambo, Nicholas Mbaya, 2017. "Dynamic impact of FDI inflows on poverty reduction:Empirical evidence from South Africa," Working Papers 22006, University of South Africa, Department of Economics.
    5. James Temitope Dada & Taiwo Akinlo, 2021. "Foreign direct investment and poverty reduction in sub-Saharan Africa: does environmental degradation matter?," Future Business Journal, Springer, vol. 7(1), pages 1-10, December.
    6. Mohamed Isse Ibrahim & Zahir Mohamed Omar & Ali Yassin Sheikh Ali3, 2017. "The Determinants of Foreign Direct Investment in Somalia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 713-720.
    7. M. T. Magombeyi & N. M. Odhiambo, 2018. "FDI inflows and poverty reduction in Botswana: an empirical investigation," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1480302-148, January.
    8. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    9. Emeka Nkoro & Aham Kelvin Uko, 2023. "Foreign Direct Investment in the Quest for Poverty Reduction in Nigeria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 109-125.
    10. Magombeyi, Mercy T & Odhiambo, Nicholas M, 2017. "Does foreign investment reduce poverty? Empirical evidence from Tanzania," Working Papers 22562, University of South Africa, Department of Economics.
    11. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    12. M. T. Magombeyi & N. M. Odhiambo, 2017. "Does Foreign Direct Investment Reduce Poverty? Empirical Evidence From Tanzania," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 67(2), pages 101-116, April-Jun.
    13. Taiwo Akinlo & James Temitope Dada, 2021. "The moderating effect of foreign direct investment on environmental degradation-poverty reduction nexus: evidence from sub-Saharan African countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(11), pages 15764-15784, November.
    14. Magombeyi Mercy. T. & Odhiambo Nicholas M., 2017. "Foreign Direct Investment And Poverty Reduction," Comparative Economic Research, Sciendo, vol. 20(2), pages 73-89, June.
    15. MT Musakwa & N.M. Odhiambo, 2021. "The Impact of Foreign Capital Inflows on Poverty in Vietnam: An Empirical Investigation," Working Papers AESRI-2021-10, African Economic and Social Research Institute (AESRI), revised Oct 2021.
    16. Fagbemi, Fisayo & Olufolahan, Toyin, 2019. "Capital inflows, financial development and poverty reduction in Nigeria," MPRA Paper 112784, University Library of Munich, Germany, revised 04 Apr 2019.

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