NAME:

MATRIC NUMBER:

BALOGUN TAIWO TOLUWALASE

1504022089

LAGOS STATE POLYTECHNIC IKORODU CAMPUS SCHOOL OF

MANAGEMENT AND BUSINESS STUDIES BANKING AND FINANCE

DEPARTMENT|:

HND II

SEMINAR TOPIC:

1. THE EFFECT OF FOREIGN DIRECT INVESTMENT ON THE

NIGERIAN ECONOMIC GROWTH

2. THE EFFECT OF MOTIVATION ON DEPOSITE MONEY BANKS

EMPLOYEE PERFORMANCE IN NIGERIA.

PART 1
ABSTRACT
The study investigates the empirical relationship between foreign direct investment
and economic growth in Nigeria. The work covered a period of 1981-2009 using
an annual data from central bank in Nigeria statistical bulletin. A growth model via
the ordinary least square method was used to ascertain the relationship between
FDI and economic growth in Nigeria.
The study also added across fixed capital formation with a view to capture the
effect of domestic investment on the growth of the economy for the period under
review. Interest rate and exchange rate were also added as capital variables in the
model.

INTRODUCTION
Foreign direct investment (FDI) is a direct investment into production or business
in a country by an individual or company of another country, either by buying a
company in the target country or by expanding operations of an existing business
in that country FDI is needed to reduce the difference between the desired gross
domestic investment and domestic savings (ERAV WOKE & ESHAMAKE, 2012).
In addition the impact of foreign direct investment on economic growth is more
contentious in empirical than theorical studies, finally, there is an increasing
resistance to further liberalization within the economy this limits the options
available to the government to source funds for development purpose and makes
the option of seeking foreign direct investment more critical.
STATEMENT OF THE PROBLEM
One of the major economic problem in less developed country (LCD)
It is low capital formation to finance the necessary investment for economic
growth
Capital was one regarded by most economist as the principal obstacle to
economic development and this is let attentions were paid to capital
formation.
However in the literature GDI is found to be related to export growth while human
capacity building is found to be related to FDI flee

RESEARCH OBJECTIVE

1. To find out whether or not FDI has a significant impact on the growth of the
Nigeria economy
2. To determine the nature and magnitude of the impact of FDI on economic
growth in Nigeria.
RESEARCH QUESTION

PART II
LITERATURE REVIEW
Foreign direct investment had been seen as parasitic and retarding the
development of domestic industries for export promotion until recently. This is
meant to relax both the foreign exchange and savings constrant on the rate of
growth of output in the recipient country. Foreign direct investment include
external resources including technology, managerial and marketing expertise and
capital. However, recent empirical works have been influenced by mankiw et al.
(1992) pioneering research which adds education to the standard growth equation
as a proxy for human capital.

Theoretical Framework
Theories of Investment
Keynesian Theory of Investment

In Kenyesian terminology, investment refer to real investment which adds to

capital equipment. It leads to increase in level income and production and purchase
of capital goods. Investment thus includes new plant and equipment, construction
of public works like roads, dams, buildings, e.t.tc in the words of John Robinson,
by investments, is meant an addition to capital, such as addition to capital, such as
occurs when a new house is being built or a new factory is built. Investment means
making an addition to the stock of goods in existence.

Types of Investment

Induced investment: induced investment is profit or income motivated. Factors like

prices, wages and interest changes which affect profits influence induced
investment. Similarly demand also influences it. When income increases,
consumption demand also increases and to meet this investment also increases.
Autonomous investment: this investment is independent of the level of income and
is thus income inelastic. It is influenced by exogenous factors like innovations,
inventions, growth of population and labour force, etc. but it is not influenced by
changes in demand, rather, it influences the demand.

PART III CONCLUSION AND RECOMMENDATION

The study analyzed the impact of foreign direct investment models (both single
and simultaneous equation models) provide evidence that suggest that there is a bidirectional relationship between economic growth and for inflows to Nigeria.
However, it means that economic growth is directly related to inflow of foreign
direct investment and the level of exchange rate. Government should provide
enabling environment that will be conducive for doing business in Nigeria so as to
attract the inflow of FDI

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