ABSTRACT
This study set out to empirically examine the effect of Foreign Direct Investment (FDI) on the economic growth in Nigeria between 1970 and 2010. The paper makes the proposition that there exists controversies over the effect of FDI on the economic growth of developing nations. However, the results obtained showed that FDI has some positive spillovers on the Nigerian economy hence the need to embark on the policies that would help to bring about greater FDI inflows.
CHAPTER ONE
INTRODUCTION
1.0 Background of the Study
The focus of this project is to study the effects of FDI on the Nigerian economy, identifying factors and conditions that promote or retard development. Developing countries are in a dilemma arising from the desire for foreign capital for internal economic development, yet there is the fear that foreign investors (which are already said to be at commanding heights of some sectors of the economy) may wrest complete control of the international economy and render it an appendage of the western economic hegemony.
However, most of the economic blueprints that have been recommended for developing economics are in agreement on the need for foreign capital. Thus, a developing country may have to determine the actual sectors which have to attract foreign private investment and also determine the optimum level of foreign investment that is necessary in order to supplement its internal resources. Thereby, maintaining a balance between economic development and economic independence. (IMF, 2009).
The impact of foreign direct investment has never been as important as it is now in the early 21stcentury, nations are more linked through trade in goods and services flow of money and investment. Owing to the enormous benefit accrued, most countries strive to attract foreign direct investment (FDI) as it is a proven tool of economic development. African and Nigeria in particular joined the rest of the world in seeking FDI as evidenced by the formation of the New partnership for Africa’s Development (NEPAD), which has the attraction of foreign investment to Africa as a major component (Funke and Nsouli 2003).
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