Investment-Driven Economic Growth in Nigeria: The Role of Oil Rent

Abstract

Considering the economic confidence currently perceived in smaller economies of the world, the contribution of investment strategies such as the Foreign Direct Investment (FDI) among other investment pathways cannot be immediately ignored. Given this observation, the current study set out to examine the dynamics of FDI inflow, domestic investment and outward foreign investment in Nigeria from 1981 from 2018. The investigation employs the ARDL bound test which revealed that FDI affect economic growth in a positive but weak way and that outward FDI is an anti-economic expansion. Furthermore, oil rent was found to be a key player in the equation of economic expansion in Nigeria. Thus, recommendation was made of the need to woo new foreign investor into the country by provide an investment-friendly environment with incentive such as tax holidays, free license for operation, peaceful economic and political environment. This study further recommends a new paradigm for the Nigeria economy through diversification to forestall future occurrence of recession occasioned by global price shock.