Political risk and foreign direct investment in Nigeria: New empirical evidence

Abstract

The positive effect of globalization has continued to impact FDI inflow to developing countries during the last decade except for the rising influence of political risk in host locations. Mixed outcomes have trailed the findings related to the studies on FDI and political risk relationship and in particular on African countries like Nigeria. This paper investigated the effect of political risk on FDI inflow to Nigeria using secondary data from 2000 to 2014 using simple linear regression. The study combined from select variables, the institutional factors with location determinants peculiar to Nigeria's risk environment. It is found that political risk holds a positive and significant association with FDI to Nigeria but not close enough to inhibit the inflow of foreign investment to the country. However, the findings provide a strong basis for policy shift in relation to security, country promotion and rebranding as well strengthening of institutions.Growing Science Ltd. All rights reserved. 7

The Short and Long Run Determinants of Foreign Direct Investment in Nigeria

“…In the same vein, the direction of causality between determinants of foreign direct investment and foreign direct inflow was not established. Finally, this study advance on previous studies by extending the study period to 2018 as majority of the studies stopped at different period latest being 2016 (Etim, et al, 2014;Ojong, et al, 2015;Koko, et al, 2017;Ebire, Onmonya & Ini, 2018). In the recent period Nigeria has experienced different economic situations such as high insecurity, political instability, recession, exchange rate fluctuation, and financial sector turmoil among others.…”

“…Such advantage includes stable and easy macroeconomic policies and suitable investment environment (Soderstern, 2006;Dunning, 2009). However, the model for the study followed the model of Etim, et al, (2014); Ojong, et al, (2015); Koko, et al, (2017) with little modification to include important variables like government capital expenditure and exchange rate. Thus, the model for the study is given as: FDI = (GCE, GDP, EXR, INFR, TOP)…”

“…Foreign direct investment serves as one of the major tools of development to most emerging and transition nations due to diverse opportunities it offers to the host countries. Iffiong and Atsu (2014); Koko, Aminurraasyid and Tapiwa (2017) opined that it serves as source of infrastructure, employment generation, resource utilization and access to international markets as well as managerial and technological transfers.…”

“…In Nigeria, majority of studies conducted largely focused on the effect of foreign direct investment on economic growth. Few studies conducted on the determinants of foreign direct investment in Nigeria were based on long run by employing Ordinary Least Square techniques (Oba & Onuoha, 2013;Etim, et al, 2014;Ojong, et al, 2015;Koko, et al, 2017). Most of the studies established diverse results.…”

Catalyzing International Climate Finance: Tackling Energy Poverty in Nigeria

“…In 2019, investment flows to Nigeria totaled USD $3.3 billion, which was a 48.5% decrease compared to the previous year (United Nations Conference on Trade and Development, 2020, p. 29). There are various obstacles to foreign direct investments (FDI) in Nigeria, including a federal government that is heavily plagued by ethnic tensions and conflicts, perpetual political instability, and increasing violence and lack of security due to the extremist Boko Haram terrorist group operating in the North East region of the country (Koko et al, 2017). Coincidentally, this region is also the most energy poor in all of Nigeria (Ashagidigbi et al, 2020).…”