MACRO-ECONOMIC DETERMINANTS AND FOREIGN DIRECT INVESTMENT IN NIGERIA
Abstract
This study examines the impact of key macroeconomic factors on foreign direct investment (FDI) inflows into Nigeria, spanning the period 1986-2020. Using an ex-post facto research design, the study investigates the relationships between FDI and four macroeconomic variables: exchange rate, inflation rate, monetary policy rate, and gross domestic product growth rate. The Autoregressive Distributed Lag (ARDL) technique is employed to account for the mixed order of integration among the variables. The results reveal a significant long-run relationship between the macroeconomic variables and FDI. The short-run coefficients indicate that GDP growth rate and monetary policy rate have a positive and significant impact on FDI inflow, while inflation and exchange rate have a negative and significant effect. In the long run, GDP growth rate and exchange rate exert a positive influence on FDI inflow, whereas monetary policy rate has a negative impact. The study's findings suggest that Nigeria's monetary authorities should prioritize policies that promote GDP growth, exchange rate stability, and effective monetary policy to attract FDI and foster economic development