Impact of Foreign Direct Investment and Interest Rates on Nigerian Economic Growth

Abstract

Despite numerous efforts by the government to attract foreign direct investment (FDI) into the 
economy, the flow of FDI still remains abysmal in Nigeria. This paper investigates the impact 
of foreign direct investment inflows and interest rates on the economic growth of Nigeria for 
the period 1978–2019. The study employed secondary data extracted from the World Bank 
Development Indicator. The auto-regressive distributed lag (ARDL) technique was used to 
examine both the short-run and long-run relationships between the variables.The results 
indicated that FDI has no positive impact on the growth of the Nigerian economy, while gross 
fixed capital formation has a positive and significant impact. However, interest rates and 
inflation rates have a negative but insignificant influence on economic growth. The study 
recommends that there is a need for a thorough analysis of the institutional and economic
factors that enable the beneficial influence of FDI inflows on developing nations, and efforts 
should be made to strengthen these factors.