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Research Paper | Business Management | Saudi Arabia | Volume 7 Issue 8, August 2018

Foreign Direct Investment and the Nigerian Manufacturing Sector (2008 - 2015)

Torty Chinenye Kalu-Ulu

Abstract: This research study deals with the effect of Foreign Direct Investment on the Nigeria manufacturing sector and the countrys economic growth over the period 2008-2015. The study empirically examined if the following growth determining variables in the economy, Exchange rate, Ease of Doing Business, Gross Fixed Capital Formation and Government expenditure in addition to Foreign Direct Investment have any effect on the manufacturing sector performance for the period. The quantitative study looked at the effect of Foreign Direct Investment on the manufacturing sector through the dependent variables of Manufacturing Sector Gross Domestic Product, Manufacturing Sector Output Growth and the Manufacturing Sector Capacity Utilization. Econometric models were developed to investigate the relationships between the variables. Based on the data analyses using Ordinary Least Square Regression approach, it was discovered that Foreign Direct Investment has positive impact on all the dependent variables. The analyses also revealed that Foreign Direct Investment has statistically significant impact on the Manufacturing Gross Domestic Product and Manufacturing Output Growth but has no significance on the capacity utilization. Therefore, the study recommends that for Nigeria to attract and sustain the desired level of Foreign Direct Investment that would hugely impact the manufacturing sector, it must develop and implement sound economic policies that would encourage domestic capital formation, improve ease of doing business in a stable polity. Nigerian government must develop and manage state-of-the-art infrastructures that would lower cost of doing business, thereby making the environment investor friendly.

Keywords: FDI, Nigeria, Economy Manufacturing, Capacity Utilization, Economic Growth

Edition: Volume 7 Issue 8, August 2018,

Pages: 87 - 98

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