Impact of Inward Foreign Direct Investment in Developing Countries: A case study of Nigeria

By

ACKNOWLEDGEMENT

I would like to thank my supervisor for supporting me throughout my project and giving his valuable suggestions. Finally thanks to all my friends and family for their utmost support and inspiration.

DECLARATION

I, (Your name), would like to declare that all contents included in this dissertation stand for my individual work without any aid, & this dissertation has not been submitted for any examination at academic as well as professional level previously. It also represents my own views & not essentially the ones associated with university.

Signed __________________ Date _________________

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

CHAPTER 1: INTRODUCTION1

Background of the Study1

Problem Statement2

Aims of the Study2

Objectives of the Study3

Purpose of the Study3

Significance of the Study4

Rationale of the Study4

Research Questions5

CHAPTER 2: LITERATURE REVIEW6

Theoretical Framework6

FDI definition6

Theories Explaining Location of FDI to Developing Countries7

Analysis of Determinants8

Existing Literature8

Theoretical Approach of Foreign Direct Investment9

Reasons of Firms Investing Abroad9

Theories Explaining Location of FDI to Developing Countries11

CHAPTER 3: METHODOLOGY15

Introduction15

Methodological Approach15

Research Approach16

Research design17

Research Methodology18

Justification of Research Method19

Rationale for a Quantitative Research19

Rationale for a Qualitative Study20

Data Collection21

Scope of the study21

Research Classification21

Data Analysis Technique22

Limitations of the Research Study23

Critical Appraisal tool23

Ethical Considerations23

CHAPTER 4: ANALYSIS26

Data Analysis26

Regression Analysis28

Descriptive Statistics28

Model Summary29

Coefficients of the Regression Model30

Regression Equation30

Coefficient of Correlation31

Discussion on Past Studies32

Economic Growth32

Fiscal Policy33

Factors Affecting Economic Growth in Developing Countries34

CHAPTER 5: CONCLUSION36

Economic Growth36

Recommendations37

Further Areas for Research37

REFERENCES39

CHAPTER 1: INTRODUCTION

Background of the Study

The study has been carried out on “the impact of inward Foreign Direct Investment on the economic growth of the developing countries, the case study of Nigeria. An analysis of the growth performance of Nigeria indicates that overall, economic growth has been relatively slow during the last two decades. Between 1967 and 1970, the growth of Nigeria's real gross domestic product (GDP) averaged around 5.5 percent per year, in spite of the disruption of economic activity that the civil war caused during this period. Performance continued to improve in the early 1970s, with the GDP growth rate reaching 12.1 percent in 1974, an impressive, and somewhat above average performance by international standards.

However, on the basis of the macroeconomic indicators, there was a slowdown in growth immediately after 1974, with negative growth in some of the ensuing years. From 1974 to 1996, the years on which this studies particularly focuses, average real GDP grew by only 2.8 percent, while real per capita GDP declined by about 0.01 percent per year.

Dunning (1993), explains a general overview of the motives for FDI, which depend on the industrial sector and the characteristics of the given firm. These are: Natural Resource Seeking, related to physical resources, labour, technological or management capacity limited to a location; Market seeking, referring to the size of markets for goods and services; Efficiency seeking to exploit differences in factor endowments, cultures, market structures and institutional arrangements; and Strategic Asset Seeking, merging to face strong competitors and access to distribution channels.

Economic growth occurs whenever there is an increase in the goods and services produced over successive periods in an economy. All such goods and services (aggregate output) are ...