IMPACT OF FOREIGN CAPITAL INFLOW ON ECONOMIC GROWTH IN NIGERIA

Abstract

This study examined the impact of foreign capital inflows on economic growth in Nigeria from 1986-2022. Specifically, the study focused on the impact foreign direct investment, foreign portfolio investment and official development assistance on economic growth in Nigeria. The study adopted ex-post factor design, sourcing data from the central bank of Nigeria statistical bulletin, National Bureau of Statistics, World Bank data base, the Global Economy database and UN comtrade data base. The study employed the Vector Error Correction Model (VECM) for it estimation. The findings revealed that both foreign direct investment (FDI) and official development assistance (ODA), has positive and significant impact on real gross domestic product (RGDP). Conversely, foreign portfolio investment (FPI) has negative and insignificant impact on RGDP in Nigeria during the period under review. From the findings, the study concluded that foreign capital inflows are a veritable mechanism for attracting investments to developing economies like Nigeria for enhancement of economic growth. The study therefore, recommended that; for there to be sustained inflow of foreign capital in Nigeria government should pay attention on creating an environment that is conducive to attracting and facilitating foreign investors.