Department of Economics, Joseph Ayo Babalola University, Ikeji-Arakeji, Osun State, Nigeria; Department of Economics, Lagos State University, Ojo - Lagos, Lagos State, Nigeria
Benjamin Badeji, O., Department of Economics, Joseph Ayo Babalola University, Ikeji-Arakeji, Osun State, Nigeria; Olufunsho Abayomi, O., Department of Economics, Lagos State University, Ojo - Lagos, Lagos State, Nigeria
The paper examines the impact of foreign direct investment (FDI) on economic growth in Nigeria. It also examines the locational choice of foreign investors and the viability of FDI to Nigeria using a two Stage-Least squares method of simultaneous equations. The result reveals that there exists a negative relationship between economic growth, proxied by real GDP; and FDI in Nigeria. Size of exports, exchange rate and political stability were found to be very relevant in the locational choice of foreign investment in Nigeria. To attract more FDI to Nigeria therefore, government should encourage more domestic investment, ensure political stability and make guided openness of the economy the watchword in this era of global liberalization to trade and FDI policies in order to make FDI growth enhancing in Nigeria. © EuroJournals Publishing, Inc. 2011.