Foreign Direct Investment and Poverty Reduction in Nigeria: Implication for Sustainable Development

Abstract

The study examined the impact of Foreign Direct Investment on poverty reduction with implication on Sustainable development in Nigeria using Autoregressive Distributed Lag (ARDL) model technique on times series data collected from 1985 to 2020. Unit root test using Augmented Dickey-Fuller (ADF) found that Poverty Head Count Ratio (PHCR), Gross fixed capital formation (GFCF) and Real Exchange rate (REXR) are integrated of order 1(1) while Foreign Direct Investment (FDI) is integrated of order 1(0). The results show that FDI has a negative impact on poverty reduction in Nigeria and ARDL Bounds test result shows that there is a long run relationship among all the variables. Finally, lag value result indicates that gross fixed capital formation has a significant impact on poverty head count ratio in Nigeria. In view of these findings, the study concluded and recommended that FDI policies must be checked closely in order to make FDI growth enhancing in Nigeria so as to achieve Sustainable Development Goals (SDGs) one. Government should also encourage gross fixed capital formation to reduce poverty in Nigeria.