Foreign Direct Investment and Resources Utilisation: Implications for Nigeria’s Economic Development

Abstract

The paper focuses on the effects of resources used by foreign investors and its implications on the economic development of Nigeria from 1980-2012. The annual time series data on foreign direct investment, average manufacturing capacity utilisation, unemployment rate and real gross domestic product were investigated for stationarity using Augmented Dickey-Fuller test. A Johansen Co-integration test revealed one co-integrating relationship. Vector Error correction model was employed to analyse the formulated equations. Findings show that unemployment is indeed growth retarding. Impressively, foreign direct investment including all other variables impacted significantly on economic development.  On the innovation accounting, variations in RGDP are explained more by unemployment in the longer period of about 21%. This implies that economic development is accelerated by creating jobs for the teaming populace. On that basis, we made the following recommendations, among others: Security of life and property must be resolved once and for all; crime rate must be seriously and sincerely addressed by the Federal Government; cost of doing business should be drastically minimised to encourage both domestic and foreign investors; and the power sector has to be practically tackled.