Sectoral inflow of foreign direct investment and economic growth in nigeria: a co-integration analysis

The paper examined the sectoral inflow of FDI and economic growth in Nigeria. The objective of the study is to determine the impact of FDI on economic growth in terms of selected sectors of the Nigerian economy because most other studies examined the aggregate impact of FDI on economic growth in Nigeria. A growth model was estimated via a multiple regression technique to establish the relationship between inflow of FDI to manufacturing sector, telecommunication sector, oil sector and economic growth (GDP). The variables were tested for stationarity and Johansen co-integration method was used for the analysis. The study found that continuous inflow of foreign direct investment in manufacturing, telecommunication and oil sectors have a robust impact on Nigeria’s economic growth. Thus, the alternative hypothesis that there is a long run relationship between gross domestic product (GDP) and sectoral inflow of FDI was accepted. Meaning that continuous inflow of foreign direct in manufacturing, telecommunication and oil sectors has the tendency to induced Nigeria economic growth. Based on the aforementioned findings from the study, the paper recommend that since foreign direct investments in manufacturing, telecommunication, and oil sectors have the potentials to induce economic growth in Nigeria, there is therefore the need to properly channel and integrate them into the mainstream of the economy.