Empirical Analysis of Macroeconomic Instability and Foreign : Current School News

Empirical Analysis of Macroeconomic Instability and Foreign Direct Investment Inflow in Nigeria

Filed in Current Projects, Economics Project Topic by on September 11, 2020

HURRY NOW! APPLY NOW FOR USA JOBS WITH FREE VISA!


 

Empirical Analysis of Macroeconomic Instability and Foreign Direct Investment Inflow in Nigeria.

Abstract

Most economic rationale for granting special incentives for attracting Foreign Direct Investment (FDI) is based on the belief that FDI bridges the ‘idea gaps’ between rich and the poor nations in addition to the generation of technological transfers and spillovers.

This study seeks to carry out an empirical investigation of the impact of macroeconomic instability on FDI inflow in Nigeria covering the period 1970 to 2013.

The linear regression analysis was applied and it was revealed that macroeconomic instability has negative and significant impact on FDI inflow in Nigeria for the period under analysis.

The result also shows that there exists a long-run relationship between FDI and macroeconomic instability variables in Nigeria.

it is therefore the recommendation of this paper that the Central Bank of Nigeria (CBN) should cooperate with the fiscal branch of the economy to ensure that macroeconomic stability is ensured through the application of fiscal and monetary tools.

Table Of Contents

TITLE PAGE  i

APPROVAL PAGE   ii

CERTIFICATION  iii

DEDICATION   iv

ACKNOWLEDGEMENTS  v

TABLE OF CONTENTS  vi

ABSTRACT vii

CHAPTER ONE: INTRODUCTION

  • Background of Study 1
  • Statement of Problem 6
  • Research Objective 8
  • Research Hypothesis 8
  • Significance of Study 9
  • Scope of Study 9

CHAPTER TWO

  • Macroeconomic Policy Reform in Nigeria Economy to Attract FDI 10
  • Pattern of Macroeconomic Policy Evaluation in Nigeria 11

CHAPTER THREE: LITERATURE REVIEW

  • Conceptual Framework 14
  • Macro and Micro-Economic Theories of FDI 19
  • Theories of Macroeconomic Instability 26
  • Empirical Literature 26
  • Limitations of Previous Studies 32

CHAPTER FOUR: METHODOLOGY

  • Methodological Framework 34
  • Model Specification 36
  • Data Sources and Software Used 44

CHAPTER FIVE: PRESENTATION AND ANALYSIS OF RESULTS

  • Empirical Results 45
  • Unit Root test Results 45
  • Cointegration Test (Engel-Grangel Method) 46
  • Error Correction Mechanism (ECM) [Short-Run Dynamics] 47
  • Regression Analysis 48
  • Variance Decomposition Analysis 49
  • Vector Autoregression 50
  • Impulse Response Function Analysis 52
  • Test of Hypothesis 52
  • Discussion of Findings 53

CHAPTER SIX: SUMMARY, CONCLUSION, AND RECOMMENDATION

  • Summary of findings 54
  • Policy Implications of Findings
  • Conclusion of Study 54
  • Recommendation 55

REFERENCES          56

APPENDIX I              66

APPENDIX II          73

Introduction

Background Of Study

Historical antecedents indicate that until the First World War, capital to developing countries came directly from countries to their colonies.

By 1950’s the United States of America (USA), other industrial nations and multinational agencies started official assistance to less developing countries (LDCs).

Currently, the number of claimants to foreign assistance has increased going by World Development Report, WDR, (1990).

Regardless of the above scenario capital flow whether in form of foreign assistance or Foreign Direct Investment (FDI) has generated various debates. Such debates offer reasons for the failure of past efforts.

The role of FDI in LDCs is a controversial issue. Dependency thinkers argue that FDI is a conduct for neo-imperialist exploitation of developing countries by the wealthy countries while some other theorists see FDI as a source of value, practices and economic goods that would help the developing countries to break into the modern world practically and economically (Reserick, 2003).

FDI can be beneficial to the investors and the host country. To investor free flow of capital across national boarder allows capital to seek out the highest rate of return, reduce risk faced by owners of capital, creates new market for investment, among others.

While to the host country, FDI creates job for the populace, possibility of technology transfer, improvement in labour skills and management skills, better wages for workers, provision of scholarship, among others, as suggested by Sjoholm, (1999); Ohwona (2001, 2004); Otakpa (2004).

References

Abidun, O.F., & Tokunbo, S.O. (2006). Monetary Policy and Macroeconomic Instability in Nigeria: A Rational Expectation Approach. Journal of Social Sciences, 12, 93– 100.

Addison, D. and Quentin, W. (2007). Macroeconomic Volatility, Private Investment, Growth and Poverty in Nigeria. World Bank Working Paper. Washington D.C.

Akanji B. (1992). The Changes in the Structure of Export Crops and Food Crop Production under the Structural Adjustment Programme: The case of Coca and Yam. NISER Monograph Series.

Alaba, O.B. (2003). Exchange Rate Uncertainty and Foreign Direct Investment in Nigeria. Trade Policy Research and Training Programe (TPRTP).

Aliber, R. Z. (1970) “A Theory of Foreign Direct Investment.” In The International Corporation: A Symposium, ed. Charles P. Kindleberger, 17–34. Cambridge, MA, and London: MIT Press, Fourth Printing.

Aligu S.U. (1994). Critique of Vent for Surplus Thesis and the Development of Cash Crops in Nigeria under the Structural Programme. Unpublished M.sc Thesis, University of Ibadan.

    Hey You!

    Join Over 5 Million Subscribers Today!


    => FOLLOW US ON INSTAGRAM | FACEBOOK & TWITTER FOR LATEST UPDATE

    Tags: , , , , , , ,

    Comments are closed.

    %d bloggers like this: