FOREIGN DIRECT INVESTMENT FLOW AND MANUFACTURING SECTOR PERFORMANCE IN NIGERIA

Abstract

This study assesses the impact of foreign direct investment flow on the performance of the manufacturing firms in Nigeria. Using manufacturing value added (MVA) for the performance of manufacturing firms, time series data was compiled from World Bank and Central Bank of Nigeria Statistical Bulletin spanning for a period of 40 years. The researcher used an OLS estimate with FDI modeled as a quadratic function to account for its turning point and the VECM to ascertain both the long run and the short run causalities running from the explanatory variables to dependent variable. The results obtained suggest the need for Government actions to be geared towards strategically maintaining and sustaining policies that will help encourage FDI inflows especially in the long run since a positive effect on the manufacturing value added was only feasible in the long run as well as promoting an efficient and enabling macroeconomic environment on which manufacturing firms can thrive. Also the need to embark on domestic investment as well as improve human capital skill was buttressed.