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Asymmetric Effect of Foreign Direct Investment on Manufacturing Sector Performance in Nigeria

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  • Olusanya, Oluwakorede

Abstract

In this study, after the use of the Non-linear ARDL method to investigate cointegration between foreign direct investment and manufacturing sector growth and error correction specification combined with annual data from various sources, the study showed that changes to FDI have a short and long run asymmetric effect on the Nigerian manufacturing sector growth. The estimated Non-linear ARDL model further affirmed the presence of asymmetries in the foreign direct investment changes to the manufacturing sector growth. Positive foreign direct investment was found to improve the manufacturing sector growth increasing it by 0.25 percent for every one percent increase to FDI in the short run. The narrative was however different in the long run as positive FDI had a negative impact on the manufacturing sector in the long run indicating that growth in the manufacturing sector reduces by 0.11 for every one percent increase to FDI. The negative FDI on the other hand had a positive statistically insignificant relationship in the short run and a negative statistically significant relationship in the long run with the manufacturing sector.

Suggested Citation

  • Olusanya, Oluwakorede, 2020. "Asymmetric Effect of Foreign Direct Investment on Manufacturing Sector Performance in Nigeria," MPRA Paper 113029, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:113029
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    More about this item

    Keywords

    Manufacturing sector; Foreign Direct Investment; Economic Growth; Non-linear ARDL Model.;
    All these keywords.

    JEL classification:

    • L00 - Industrial Organization - - General - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L69 - Industrial Organization - - Industry Studies: Manufacturing - - - Other
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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