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Institutional Quality and Foreign Direct Investment Nexus: The Nigerian Scenario


Author: Abdulsalam S. Ademola*, Fabiyi.O. Tanimola, Lawal Wasiu. O.
Published Date: 2024-06-11
Keywords: Foreign Direct Investment (FDI), Institutions, Institutional Quality and Investment. JEL Classifications: EO2, O43.
Abstract:
The flow of FDI has largely been undermined in the country, this could largely be due to some underpinning factors among which could be the quality of institutions. It is for this reason that this study tries to examines the nexus between institutional quality and Foreign Direct Investment (FDI) in Nigeria, data were sourced from the acknowledged issues of Central Bank of Nigeria (CBN) statistical bulletin (2022), National Bureau of Statistics (NBS,2022) and World Development Indicator. Government Effectiveness (GOEF), Quality of Service Delivery (QSDE) and Political Risk Stability (PRSK) were all used to proxy quality of institutions, while Foreign Direct Investment (FDI) serve as dependent variable. The ARDL model was used as techniques of analysis and after establishing the mix order of integration that is I(0) and I(1). The findings revealed that institutional variables are positively related to (FDI) and statistically significant at 1% in both period, which implies that quality of institution matters if the nation must attract foreign direct investment. Specifically, in long run, a percentage change in quality of services delivery and political stability will lead to 9% and 17% change on FDI respectively and they are all significant at 1%. It is recommended that institutions should be enhanced by away of enforcing discipline into civil service, ensure rule of law take its course and create investment conducive environment in order to attract more foreign investment in Nigeria.

Journal: ISAR Journal of Economics and Business Management
ISSN(Online): 2584-0169
Publisher: ISAR Publisher
Frequency: Monthly
Language: English

Institutional Quality and Foreign Direct Investment Nexus: The Nigerian Scenario
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