Sectoral Foreign Direct Investment and Economic Growth in Nigeria

This study investigates the effects of sectoral foreign direct investment on economic growth in Nigeria from 1985-2022. The Augmented Dickey Fuller (ADF) and Autoregressive Distributed Lag (ARDL) tests were utilised as the analytical methodologies. The ARDL analysis showed that over a prolonged period, foreign direct investment (FDI) in the agricultural and service sectors has a beneficial impact on economic growth, although this effect is not statistically substantial. FDI in the transport and communications sector has a beneficial and substantial impact on economic progress. Nevertheless, FDI in the industrial sector has a detrimental and substantial impact on economic growth. FDI in agricultural and service sectors had favourable but statistically negligible benefits on economic growth in the near term. FDI in the industrial, transport, and communications sectors had a detrimental and substantial impact on economic growth. Therefore, it was determined that there is a clear correlation between FDI and economic growth in Nigeria. The government should provide a more conducive climate to stimulate an increase in FDIs across different industries. In order to do this, the government should eliminate all barriers to foreign productive investments in Nigeria. The process comprises the resolution of infrastructure deficiencies by tackling matters related to effective government, corruption, and insecurity.