Foreign Direct Investment and Poverty Reduction: Evidence from Nigeria
Keywords:
Foreign Direct Investment, Unemployment, Poverty Reduction, Households' Final Consumption Expenditure, FMOLS, CCR, QREG, Granger CasualityAbstract
This study empirically assessed the nexus among foreign direct investment, unemployment and poverty reduction in Nigeria from 1990 to 2023. Secondary time series data were extracted from the Central Bank of Nigeria Statistical Bulletin, and World Bank Database, 2023 publications. The study adopted Augmented Dickey-Fuller Breakpoint tests to check for maximum order of integration of the variables used, and all the variables were integrated at order I(0) and I(1). The ARDL Bounds test for cointegration analysis showed evidence of long run relationship among the variables. Findings from the Multidimensional approaches of FMOLS, CCR, and QREG revealed that foreign direct investment inflows contribution to GDP (FDI_GDPr) is positive and statistically significant (P(t)= 0.0028, 0.0020, & 0.0070<0.05) in determining the final consumption expenditure of households, and hence poverty level in the long run, whereas unemployment rate (UNEMPLr) exhibited a negative relationship with final consumption expenditure of households in the long run. The Granger causality result showed evidence of no causality relationship between FDI_GDPr, UNEMPLr, GFCF, GDPPCa and HFCE, but a unidirectional causality (HFCE→CPI) between household consumption expenditure and consumer price index in Nigeria within the period under review. The study recommends that the government should provide an enabling environment in the aspect of single-digit and investment friendly interest rate scheme for the attraction of more foreign direct investment inflows into the Nigerian economy so as to improve the lives of the ordinary citizens.
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