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Factors Determining FDI in Nigeria: Role of Emerging Economies

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  • Dinda, Soumyananda

Abstract

This paper investigates the determinants of FDI in Nigeria, which is poor in terms of income but rich in natural resources. This study is an extension of our earlier work (Dinda 2012). Incorporating emerging trade partners of Nigeria in VECM this paper re-examine the factors determining FDI inflow to Nigeria in this globalized era. The economic activity of the emerging trade partners may be good proxy for exogenous factors to Nigerian economic activity. Considering per capita income of trading partners as proxy for their economic activities are incorporated as exogenous variables in this study. Findings clearly ensure that FDI inflow to Nigeria is resource-seeking FDI and market size has no role that contradicts our earlier result and also the existing literature. Short run dynamics as well as causal linkage are also completely different from our earlier paper. China is emerging as a strong trade partner of Nigeria and significantly influences its natural resource outflow while South Africa raises its competitiveness.

Suggested Citation

  • Dinda, Soumyananda, 2012. "Factors Determining FDI in Nigeria: Role of Emerging Economies," MPRA Paper 40192, University Library of Munich, Germany, revised 20 Jul 2012.
    • Handle: RePEc:pra:mprapa:40192
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    References listed on IDEAS

    as
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    4. Dinda, Soumyananda, 2008. "Factors Determining FDI to Nigeria: An Empirical Investigation," MPRA Paper 28097, University Library of Munich, Germany, revised Nov 2010.
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    More about this item

    Keywords

    FDI; Natural resource export; exchange rate; openness; inflation rate; VECM; Emerging economy; Nigeria; China; South Africa;
    All these keywords.

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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