Original Research

The FDI-growth hypothesis: A VAR model for Nigeria

PA Olomola
South African Journal of Economic and Management Sciences | Vol 7, No 1 | a1435 | DOI: https://doi.org/10.4102/sajems.v7i1.1435 | © 2004 PA Olomola | This work is licensed under CC Attribution 4.0
Submitted: 09 July 2004 | Published: 23 July 2004

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PA Olomola, Obafemi Awolowo University, Nigeria

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Abstract

The objective of this study was to examine the causal relationship between foreign direct investment and economic growth in Nigeria using annual data covering the period 1970 to 2002. The study employed the Granger causality procedure to test the direction of causality between foreign direct investment and economic growth for the Nigerian economy. The endogenous production function was derived to accommodate foreign investment and other domestic policies that could influence growth and foreign investment. The study found a one-way causality between from foreign direct investment to economic growth. The implication arising from this study is that Nigeria should adopt policy whereby FDI is attracted to promote economic growth.

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