Analyzing the Role of FDI in Economic Growth: A Case Study of Nigeria

This report investigates the relationship between Foreign Direct Investment (FDI) and economic growth, focusing on Nigeria as a case study. The introduction defines FDI and outlines the report's objectives, including identifying the role of FDI in economic growth, its impacts, and the current situation of FDI in Nigeria. The main body provides a literature review, exploring the importance of FDI for economic growth in developing countries, its effects on productivity, employment, and technology transfer, and its influence on competition and corporate governance. The research methodology section details the research design, philosophy, type of investigation, research approach, and data collection methods. The report concludes that FDI is crucial for Nigeria's economic development, contributing to productivity, job creation, and overall growth. The report also cites various books and journals to support the findings.

FDI

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
RESEARCH OBJECTIVE:.............................................................................................................3
LITERATURE REVIEW................................................................................................................3
To identify the role of foreign direct investment in economic growth of developing country. . .3
Identify the impacts of FDI on economic growth........................................................................4
The current situation of FDI in Nigeria.......................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................7
Books and journals......................................................................................................................7

INTRODUCTION
Foreign direct investment can be defined as investment made by the firm or organisation
in the other country into a business (Owutuamor and Arene, 2018). FDI take place when investor
establish a foreign business operation or acquire or foreign business assets in foreign company. it
is a research report which is based on the aim of relationship between foreign direct investment
and economic growth in a developing country. It consist a discussion on research objectives, a
literature review with research methodology.
MAIN BODY
Research aim: “Relationship between foreign direct investment and economic growth in
developing countries” A study on Nigeria
RESEARCH OBJECTIVE:
 To identify the role of foreign direct investment in economic growth of developing
country.
 To identify the impacts of FDI on economic growth.
 To identify the current situation of FDI in Nigeria.
LITERATURE REVIEW
To identify the role of foreign direct investment in economic growth of developing country
According to the point of view of (Jibrilla, 2018), it is necessary to analyse the role of
foreign direct investment for economic growth of developing country that help in increasing
growth in future period of time. It is necessary to have FDI that is necessary for economic
growth in host economy. It imposes direct impact on country during particular phase of time
period. The FDI is significant source of external finance that helps in developing country in

conducting different functions and operation in an appropriate manner. It is differ from different
kind of flow of external private capital that help investor in increasing profit margin as well as
productivity levels during particular phase of time period. The FDI imposes direct impact on
country and it increases productivity level in future period of time. Hence, it is necessary to
analyse the role of FDI in economic growth of improving country. In addition to this, FDI is
important for improving economy & emerging market requires funding that helps in expanding
or boosting sales in international market. The investment in infrastructure, resource, and energy
is important for economy as it assists in increasing jobs opportunities and many more. In addition
to this, it is necessary to make effective FDI in order to contribute towards economic growth. It
is analysed that, FDI is important for the economic growth of host and developing economy. It is
necessary to maintain relationship with foreign country in order to invest money within
developed country that help in providing educated workforce and improve financial market
during particular phase of time period. The process of FDI imposes direct impact on host
economy and that help in completing research in an appropriate manner. Their main purpose is to
make appropriate investment in conducting research in better way. The main focus is on
collecting data, improving financial market and educated workforce that help company in
boosting its growth in future period of time. The foreign investment take too much risk but it
help in increasing the financial market, educated workforce and many more that help in
performing different functions related to research in an appropriate manner. Hence, through FDI
the flow of money from rich country to developing nation help in providing support to individual
person during particular phase of time period. Therefore, the foreign direct investment is helpful
in increasing success or growth of the company during particular phase of time period. Apart
from this, the main focus is to make foreign direct investment that help in increasing growth of
developing country which is useful in increasing productivity level in future period of time. It
imposes direct impact on companies and it is necessary to make foreign direct investment to
increase profitability in future period of time. In addition to this, FDI is important for improving
economy & emerging market requires funding that helps in expanding or boosting sales in
international market. The investment in infrastructure, resource, and energy is important for
economy as it assists in increasing jobs opportunities and many more.

Identify the impacts of FDI on economic growth
According to view point of (Enisan, 2017) Foreign direct investment is essential part of
every economy which play various positive impacts on the functioning of economy and
achievement of goals and objectives in a timely manner. Various studies show that increasing
FDI inflow within the economy health in GDP growth for a longer period of time as well as
improve the functioning of the developing economy such as Nigeria. FDI brings number of
positive impact on the economy. This is because they directly influence trade in an economy.
FDI influence economic growth of an economy by increasing the total factors of productivity and
efficiency of the resources by the use of functions in a host country. In context of developing
nation like Nigeria, help in increasing the capital stocks of the economy and raise the output. The
mean trade-related benefit of FDI is that it contributes to integration of the host country in the
global economy and help in boosting the foreign trade flow the establishment of appropriate
transitional distribution network. Author also stated that FDI also contribute towards building the
human capital in developing countries as significance. This is because it helps in reducing the
unemployment by increasing the employment chances. This is because by the increase in FDI
within the developing countries such as Nigeria it can seem that it provides the higher wages and
working conditions due to higher productivity and explaining a greater technology for using the
new and model working systems and management skills. Is all is helpful in increasing the
productivity of the employees within the market and selling the products in hypermarkets. This
also contributes towards the transfer of technology and management knowledge to one place to
another which increase the competitiveness within the employees and developing countries.
FDI is also significant for influencing the competition level within the developing country.
It can be seen from the example of Nigeria where the present MNS assist the economic
development by stimulating the domestic competition and leading the higher productivity and
innovation within functioning. This is helpful in efficient allocation of resources by the
organisation and managing proper functioning level. FDI also help in acquisition of the local
firms which help in increasing the management level and corporate governance. This is because
foreign direct investment generally imposed its own company policies which are related to
policies followed by multinational organisation. This kind of organisation also includes
international reporting system and principle of information disclosure which help in improving
the business environment and developed the corporate efficiency with the firm. This is also

helpful in managing the investment accordingly and improving the economic conditions were
contributing towards the taxation system GDP growth as well as increasing the other atical
governance practices. Number of mncs who bring foreign direct investment to the country like
Nigeria where is the corporate transparency and assess the fight against corruption system within
the country. Is it provide resources to developing Nations such as capital technology managerial
skills and entrepreneurship opportunity and brand value help in boosting the industrialisation
process and create number of jobs. This is helpful in managing the poverty and increasing
country level to compete with different economies at developing level.
The current situation of FDI in Nigeria
According to the viewpoint of (John, 2016) Nigeria third host country which attract FDI in
African continent. It is behind Egypt and Ethiopia and attracting FDI on African continent.
Author also state set country is among the most promising rules for growing in Africa and
attracts number of investors towards the economy and the sector. It covers hydrocarbon energy
building and many other sectors. Father also state that according to the report published in 2020
by UNCTAD 2020 world investment report, the flow of FDI in Nigeria is amounted to total of
USD 3.3 billion in 2019 which is showing that 48% decline in comparison to the previous year.
It is also seen that the total stock of FDI in Nigeria is estimated around USD 98.6 billion in 2019.
RESEARCH METHODOLOGY
Research methodology is considered as a source that helps in accomplishing positive
results in future time period. It is determined as a research that offers an idea in respect of
procedure and techniques used for implementing investigation. The research methodology
involves design of research, research philosophy as well as many more that helps in coordinating
various activities that is connected to research by assessing strategy that is appropriate. The
technique used in present investigation of research that is given below:
Research Design it is considered as a more significant element that is adopted for
conducting research in better way that help in achieving positive results in future time period of
time. There are different or various types of resources like descriptive, experimental and
exploratory. In present research, there is a proper research conducted for accomplishing
favourable outcome in upcoming time period (Joshua, 2019).

Research philosophy there is various kinds of philosophy used by researcher for
conducting research. These are positivism and interpretivism research. Herein, in present
research interpretivism philosophy is used for conducting research that helps in achieving
positive results in upcoming time period (Udemba, 2019)
Type of Investigation there is different kinds of Investigation that is used by
investigator such as quantitative and qualitative. There are various methods which are used for
conducting research in an appropriate manner. It assists researcher to organise research that help
in achieving favourable outcome in upcoming time period.
Research approach there are various kind of approach that is related or connected to
research that is Inductive and deductive. In present report, the deductive research help in
analysing information that is totally depend on figure, statistical data that help in achieving
favourable outcomes in future period of time.
Data collection it is determined as a method that is used in collecting data or information
in better way. In addition to this, in current research, the secondary data is used for collecting
information that helps in conducting research in an appropriate manner. There are various
sources of secondary data such as books, papers, articles that help in conducting research in an
appropriate manner (Ogunjimi and Amune, 2017).
CONCLUSION
It can be concluded from the above mentioned information that FDI is important for our
country in relation to managing its functions and achieving the objectives. This can be seen that
FDI is helpful in increasing the productivity and plane positive impact and role within the
developing economy to achieve its objectives and fulfil the requirement.
REFERENCES
Books and journals
Enisan, A.A., 2017. Determinants of foreign direct investment in Nigeria: A Markov regime-
switching approach. Review of Innovation and Competitiveness: A Journal of Economic
and Social Research, 3(1), pp.21-48.

Jibrilla, A., 2018. Forecasting FDI Inflows from the United States (USA) to Nigeria over Ten
Years Period. INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL
MANAGEMENT, 3(3), pp.51-58.
John, E.I., 2016. Effect of foreign direct investment on economic growth in Nigeria. European
Business & Management, 2(2), pp.40-46.
Joshua, U., 2019. An ARDL approach to the government expenditure and economic growth
nexus in Nigeria. Academic Journal of Economic Studies, 5(3), pp.152-160.
Ogunjimi, J. and Amune, B., 2017. Impact of Infrastructure on Foreign Direct Investment in
Nigeria: An Autoregressive Distirbuted Lag (ARDL) Approach.
Owutuamor, Z.B. and Arene, C.J., 2018. The impact of foreign direct investment (FDI) on
agricultural growth in Nigeria (1979-2014). Review of Agricultural and Applied
Economics (RAAE), 21(1340-2018-5169), pp.40-54.
Udemba, E.N., 2019. The triangular nexus causality among economic growth, trade, FDI and Oil
Price: time series analyses of Nigeria. OPEC Energy Review, 43(4), pp.470-491.