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Rivers State University, Port Harcourt.
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| Title: | International Capital Inflows and Nigeria Economic Growth |
| Author(s): | ISUKUL A. C. & DANIEL Ime Patience |
| Abstract: | The capital growth nexus has continued to gain popularity in international economics literature and economic development debate in recent times. This study contributed to this ongoing debate by examining the dynamic effects of international capital flows on the Nigerian economic growth. The specific objectives were to ascertain how foreign direct investment, foreign portfolio investment and external debt contributed to economic growth in Nigeria. Time series data were sourced from Central Bank of Nigeria Statistical Bulletin from 1986 to 2019. This study employed descriptive statistics and error correction mechanism alongside unit root and cointegration tests as techniques for the data analysis. The unit root test results showed that all the variables are integrated of order one. The Johansen test results for cointegration showed that the variables have long run relationship. The ECM results showed that foreign direct investment has a positive effect on economic growth. This finding highlighted the important role played by foreign direct investment in boosting the growth of the Nigerian economy. However, the results showed that foreign portfolio investment and external debt have negative relationship with economic growth during the study period. The from the error correction coefficient (0.5807) revealed the model can adjusts to long run equilibrium position at a speed of 58.07 percent. This finding authenticated the evidence of long term dynamic relationship among the variables in the model. Given the findings, the study recommended that policymakers should create an enabling financial environment by providing adequate regulation of the financial system, guide against sharp practices in the financial system, review and amend the prudential guideline for business operation to accelerate further inflows of foreign capital and, in turn, boost economic growth in Nigeria. |
| Keywords: | Capital inflows, economic growth, direct investments, portfolio investments and external debt. |
| Journal: | Journal of Contemporary Research in Economics and Development Studies (JCREDS) |
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