Abstract
Abstract : This study empirically explores the relationship between Foreign Direct Investment (FDI), non-oil exports and non-oil real output per worker in Nigeria over the period 1970-2015. In an augmented Solow modelling framework, FDI and non-oil exports are assumed to be two key determinants of total factor productivity (TFP). The dissertation contributes to existing literature, both in terms of its theory-consistent framework and the fact that most studies on Nigeria provide ambiguous evidence regarding the relationship between output growth, FDI and non-oil exports. The study uses the autoregressive distributed lag (ARDL) bounds testing procedure presented by Pesaran, Shin and Smith (2001) to examine whether non-oil exports and FDI are long-run determinants of output per worker. The main results show that all the potential determinants have significant long-run effects on non-oil output per worker in Nigeria over the period 1970-2015. A key result is that FDI as a percentage of GDP has a significant and negative long-run effect on non-oil output per worker, while the non-oil exports ratio has a statistically significant and positive long-run effect on output per worker. The long-run effect of the gross fixed investment ratio is significant and positive, whereas faster population growth reduces output per worker in the long-run. To ensure that FDI positively contributes to output per worker in the Nigerian economy and to raise living standards in general, the study suggests several policy measures. These measures include: diversifying the economy away from oil; creating efficient and well-developed financial institutions; increasing expenditure in infrastructure and physical and human capital; and designing policies to slow down population growth.
M.Phil. (Industrial Policy)