ADSU International Journal of Applied Economics, Finance and Management

Foreign Direct Investment And Employment Generation In Nigeria

Abstract

This study examined Foreign Direct Investment (FDI) and Employment Generation in Nigeria using time series data sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin for the period of 38years spanning from 1985 to 2023. Foreign Direct Investment into Nigeria and other control variables as Openness to trade, Gross Domestic Product, Exchange Interest Rate and Interest rate collectively stood as the exogenous variables while Employment rate functioned as endogenous or dependent variable. The model of the study followed the Autoregressive Distributive Lag (ARDL) Bound test based on the mixed order of the data in 1(0) and I(1) as indicated by the Augmented Dickey Fuller (ADF). The study found a long run positive relationship between Foreign Direct Investment and Employment Generation in Nigeria. Exchange Rate is positive (0.013501) and statistically insignificant in Employment Generation, FDI is positive (6.29E-10) and statistically significant in employment generation, GDP was negative(-4.04E-06) but statistically significant in Employment Generation in Nigeria, Interest rate was positive ( 0.090283) and statistically significant. OTP was negative (-0.161787) and statistically insignificant in employment generation in Nigeria. The study concludes that foreign direct investment shares long run positive relationship with employment generation in Nigeria. The study therefore suggested that government should invest in infrastructure and security in the country to attract more foreign investors into the country since finding of this study indicates that FDI impact positively on employment generation in Nigeria and also, policy makers should make policies that will promote conducive business environment, stable political and macroeconomic environment that will boost further attraction of FDI into all sectors of the Nigerian economy.