Acta Universitatis Danubius. Œconomica, Vol 16, No 3 (2020)

The Determinants of Foreign Direct Investment Inflows in Nigeria: An Empirical Investigation

Aderemi Timothy Ayomitunde, Adeniran Busari Ganiyu, Gbenro Matthew Sokunbi, Bako Yusuf Adebola


This research work aims at investigating the critical macroeconomic variables that determine
the inflows of FDI in Nigeria over the period of 1990 to 2017 which past studies have not fully explored.
Consequently, the study utilized data from UNCTAD, World Bank database and CBN Statistical
Bulletin and the Autoregressive Distributed Lag (ARDL) model was used to address the objective of
this study. The study came up with following findings as summarized thus; the principal determinants
of FDI inflows in Nigeria are the past FDI inflows, market size, exchange rate and growth rate. These
macroeconomic variables have a positive and significant impact in driving FDI inflows in Nigeria.
However, the inflation rate discourages FDI inflows in the country. Moreover, based on these findings,
it is important for this paper to make the following recommendations for both the policy makers and
the investors in Nigeria. The policy makers in the country should be committed towards policy measures
that will ensure the continuous expansion of the country’s market size, double digits growth rate and
exchange rate stability. In the same vein, the policy measures that would address inflation rate problem
on FDI inflows in the country should be put in place by the policy makers in Nigeria.


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