Journal of Emerging Trends in Economics and Management Sciences: Home

Abstract:
Foreign direct investment (FDI) is real investment interaction of the rest of the world with a domestic economy. Whether these interactions mar or make economic growth depends on the area of strength of each country and usage. The relative increased trend of FDI into the extractive industry especially during the present democracy dispensation compared to the non-extractive sectors pose a question if the quantum add the same way to economic growth in the country. The thrust of this paper examines the sectorial impact of oil and non-oil FDI on Nigeria economic growth. The research relied on OLS technique, using data from 1970 to 2008 to empirically illustrate the impact of the extractive (and compared with other sectors) on economic growth. The extractive FDI (OILFDI) sector and non-extractive (NONOILFDI) sector effect on the Nigerian economy showed substantiates valid and statistically significant values as both probabilities of t and the f statistic are statistically significant and the coefficient of determination (R2) proves 78 percent. However, there was positive autocorrelation of the variables. Findings revealed that NONOILFDI is more statistically significant and has more positive effect on the Nigerian economy on the average compared to OILFDI. Contrary, the extractive sector that has higher FDI in the Nigeria economy has less impact to economic growth. This research work strongly advise government and all stakeholders to encourage FDI into the non-oil sectors that has more economic returns in the form of human capital, employment, local contents that the extractive sector dominated by expatriates. The local content policy should be strengthened more in the extractive industry to annex the gains of that sector to economic growth.

Keywords: foreign direct investment, economic growth, extractive industry, Nigeria

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