Empirical Study on FDI in Nigeria

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Journal of Policy Modeling26 (2004) 627639

Foreign direct investment andgrowth in Nigeria

An empirical investigation

A. Enisan Akinlo ,1

Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria

Received 7 January 2004; accepted 15 April 2004

Available online 25 May 2004

Abstract

Thepaper investigates the impact of foreign direct investment (FDI) on economic growthin Nigeria, for the period 19702001. The ECM results show that both private capital andlagged foreign capital have small, and not a statistically signicant effect, on the economicgrowth. The results seem to support the argument that extractive FDI might not be growthenhancing as much as manufacturing FDI. In addition, the results show that export hasa positive and statistically signicant effect on growth. Financial development measuredas M2/GDP ratio has signicant negative effect on growth, which might be due to highcapital ight it generates. Finally, the results show that labour force and human capitalhave signicant positive effect on growth. These ndings suggest the need for labour force

expansion and education policy to raise the stock of human capital in the country. 2004 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved.

JEL classication: G12; H24

Keywords: FDI; Economic growth; Error correction; Nigeria

1. Introduction

Measuring the effects of foreign direct investment (FDI) on economic growthoccupies a substantial body of economic literature. Many theoretical and empirical

Tel.: + 234 803 370 0756. E-mail address : [email protected] (A.E. Akinlo).1 The author is a Visiting Research Fellow at the Institute of Developing Economies, Jetro, Japan.

0161-8938/$ see front matter 2004 Society for Policy Modeling.doi:10.1016/j.jpolmod.2004.04.011


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628 A.E. Akinlo / Journal of Policy Modeling 26 (2004) 627639

studies have identied several channels through which FDI may positively ornegatively affect economic growth. 2 However, probably due to relatively smalllevel of foreign direct investment to Africa, when compared with other regions, e.g.Latin America and Asia, not many studies have been reported on the effects of FDIon economic growth. Moreover, most existing studies were based on economieswhere large share of FDI is concentrated on the manufacturing industries. Noknown study to our knowledge has been focused on an economy where extractiveindustries take the lion share of inward FDI as in the case of Nigeria. 3

Several factors suggest that the indirect benets of FDI may be less in extractiveespecially oil industries. One, extractive sector (such as oil subsector) is often anenclave sector with little linkages with the other sectors. Two, the transfer of tech-nologybetween foreign rms anddomesticones may be less in extractiveindustrieswhere the technology often embodied is extremely capital intensive production.Moreover, extractive industries are subject to large economies of scale, as such,the presence of multinationals may not spur new entrants than in manufacturing.Finally, backward and forward linkages are less important in extractive FDI, asproduction in the natural resources sector requires fewer inputs of materials andintermediate goods from local suppliers due to its high capital intensive naturecum the fact that sales are foreign market oriented.

Thus, given the pattern of FDI ows to Nigeria (mostly in oil sector) and the ap-prehensions as regards the benets from extractive FDI, it is imperative to examineempirically the situation in Nigeria. This, of course, constitutes the objective of this paper. The paper will complement few empirical works that have been done onthe subject matter in the case of Africa. More importantly, it will provide evidenceon whether or not extractive FDI leads to growth as many empirical studies havedemonstrated in the case of manufacturing FDI.

The remaining discussion is organized into four sections. In Section 2, a brief summary of theoretical and empirical issues on the relationship between FDI andgrowth is provided. The specication of the model is contained in Section 3.Section 4 provides the empirical results. The last section contains the concludingremarks.

2. Theoretical and empirical issues

2.1. Theoretical issues

Several studies have articulated theoretically and empirically the ways in whichinward FDI can contribute to the growth of the host countries economy. Theoreti-

2 For a detailed literature survey, see Akinlo (2003) , Buckley et al. (2002) and de Mello (1997,1999) among others.

3 Over the years, Nigeria and Angola have been two most successful countries in attracting FDIbecause of their comparative location in oil despite their unstable political and economic environment.A large proportion of inward inows to these countries are concentrated in the oil sector.


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A.E. Akinlo / Journal of Policy Modeling 26 (2004) 627639 629

cally, some identied channels include increased capital accumulation in the recip-ient economy, improved efciency of locally owned host country rms via contractand demonstration effects, and their exposure to erce competition, technologicalchange, and human capital augmentation and increased exports. 4

However, the extent to which FDI contributes to growth depends on the eco-nomic and social condition or in short, the quality of environment of the recipientcountry (Buckley, Clegg, Wang, & Cross, 2002 ). This quality of environment re-lates to the rate of savings in the host country, the degree of openness and the levelof technological development. Host countries with high rate of savings, open traderegime and high technological product would benet from increase FDI to theireconomies. In addition, FDI may have negative effect on the growth prospect of the recipient economy if they give rise to a substantial reverse ows in the formof remittances of prots, and dividends and/or if the transnational corporations(TNCs) obtain substantial or other concessions from the host country. 5

2.2. Empirical evidence

Many empirical works have been provided on the causal relationship betweenFDI and growth. At the rm level, several studies provided evidence of technolog-ical spillover and improved plant productivity. 6 At the macro level, FDI inows indeveloping countries tend to crowd in other investment and are associated withan overall increase in total investment. 7 Most studies found that FDI inows ledto higher per capita GDP, increase economic growth rate and higher productivitygrowth. Other channels identied in empirical works through which FDI bolsteredgrowth include higher export in host country and increased backward as well asforward linkages with afliates to multinationals ( Markusen & Venables, 1999 ).

However, the productivity of foreign capital is dependent on initial condi-tions of host country. These conditions include introduction of advanced tech-nology and the degree of absorptive capacity in the host country; sufciently highlevel of human capital in a recipient economy and some degree of complimen-tarity between domestic investment and FDI; high savings rate and open traderegimes.

Essentially, what the above reviewed empirical studies suggest is that ways inwhich FDI affect growth depends on the economic and technological conditionsof the host country. However, in general most of the existing studies were focusedmainly on economies with high manufacturing FDI. Whether the same ndings

4 Evidence of this is provided in the works of Aitken, Hanson, and Harrison (1997) and Blomstrom

and Kokko (1997, 1998) .5 Details of this negative effect could be found in Ramirez (2000) .6 These studies include the works of Aitken and Harrison (1999) and Weinhold and Klasen (1991)

among others.7 Some case studies and related discussions are reported in UNCTAD, World Investment Report

(1992) .


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are true of extractive FDI is an empirical issue which this study attempts to exploreusing Nigeria as a case study.

3. The model

We begin by specifying a production function in which foreign direct investmentis explicitly incorporated as a factor of production: 8

Y t = A f {( L), K p, } = A t( L) K p , 1 , where = H z (1)

Y t is real output, K p is private capital stock, L is raw labour input, is the level of human capital, H is the measure of educational level, z is the return to educationrelative to raw labour input, A is the efciency of production, E is the externalitygenerated by additions to the stock of FDI, and are the private capital andlabour shares, respectively. It is assumed that and are less than one, such thatthere are diminishing returns to the labour and capital inputs.

The externality, , can be represented by a CobbDouglas function of the form:

= { ( L), K p , K f } (2)

where and are, respectively, the marginal and the intertemporal elasticitiesof substitution between private and foreign capital. Let > 0, such that a largerstock of FDI yields a positive externality to the economy. If > 0, intertemporalcomplimentarity prevails and, if < 0, additions to the FDI stock crowd out privatecapital over time and diminish the growth potential of the host country. 9

If we combine Eqs. (1) and (2), we obtain:

Y t = A t( L) K p [{( L), K p , K f } }]1 (3)

If we factor out Eq. (3), we obtain:

Y t = A t( L)+ (1 ) K + (1 )p K

(1 )f (4)

Substituting = H z and taking logarithms and time derivatives of Eq. (4) wegenerate the following dynamic production function:

y = A + z[ + (1 )] H + [ + (1 )] L+ [ + (1 )] K p + [ (1 )] K f (5)

where is the growth rate of i = Y , A, L, H , K p and K f . Eq. (5) says that given and>0and z is also positive, additions to stock of FDI will augment the elasticities of

output with respect to raw labour, capital and human capital by factor (1 ).

8 A variant of this model has been used by previous researchers such as de Mello (1997) andRamirez (2000) . However, unlike most previous ones that used only raw labour, we introduced humancapital in our model to ascertain its impact on growth. This is considered because in most cases FDIrequires high-level manpower to work with in host country.

9 The same argument have noted in the work of Borsworth and Collins (1999) and Ramirez (2000) .


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Hence derived from Eq. (5) above, the equation estimated in our case takes theform:

y = d 0 + d 1 l + d 2 k p + d 3 k f + d 4 h + d 5 x + d 6 c g+ d 7 B g + d 8 Fn + d 9D + d 10T + (6)

Lower case letters denote natural logarithms, and is the difference operator; y is the natural log of real GDP; l is the labour, k p and k f are stock of privateand foreign capital respectively; cg is real government consumption, x is realexport, h is human capital proxied by the share of university, polytechnics andcolleges of education students in the population, D is the adjustment dummy, 1for adjustment period 19862001 and 0 otherwise, Fn stands nancial depth mea-sured as ratio of money supply broadly dened to GDP, B

g is budget balance over

GDP. T is the time trend to capture secular trend in output during the period of study.

We have included few other variables to determine their impacts on the growthof the economy. We anticipate that d 1 , d 2 , d 4 , d 5 and d 7 will be positive; d 3 isindeterminate. If accretions of foreign capital stock complement private capitalformation, it will have positive sign, otherwise negative. d 6 is also indeterminatedepending on whether or not government expenditurecrowdsout private consump-tion. If government expenditure crowds out private consumption expenditures, d 6will be negative. However, where government consumption compliments privateconsumption d 6 will be positive. d 8 is also indeterminate, depending on whethernancial development reduces or increases capital ight. If it increases capitalight, it will have negative sign. If it reduces capital ight, it will have positivevalue. d 9 is also indeterminate, depending on the way the adjustment works. Whereadjustment enhances efciency, as it should, the sign should be positive. However,where it fails, as in the case of Nigeria, it could be negative. d 10 can be positiveor negative depending on whether annual growth rate in the country increased ordecreased over the period under consideration.

4. Empirical results

4.1. The estimation techniques and presentation of estimation

In order to do any meaningful policy analysis with the results, it is important todistinguish between correlation that arises from a share trend and one associatedwith an underlying causal relationship. To achieve this, our data were tested fora unit root (nonstationarity) by using the Augmented DickeyFuller test (ADF)(Dickey & Fuller, 1981 ) with a constant and a deterministic trend. The results of the ADF test are as presented below 1.

The results in Table 1 show that all the variables are integrated of order one, I(1).Having established that thevariables areI(1),wethen applied the JohansenJuselius(1990) technique to determine whether there is at least one linear combination of


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Table 1

Variables Levels First difference Critical value (5%) Critical value (1%)

Panel (A): Nigeria: unit root tests forstationaritywith constant andtime trend,sampleperiod 19702001 y 1.84 3.27a 3.58 4.29l 3.50a 4.97 3.58 4.29h 1.08 3.41a 3.58 4.29k p 2.54 3.97 3.58 4.29k f 1.78 3.33a 3.58 4.29 x 2.61 3.99 3.58 4.29bg 2.54 4.29 3.58 4.29fn 0.38 4.24 3.58 4.29cg 2.61 3.97 3.58 4.29

Panel (B): Nigeria: unit root tests for stationarity with constant only, sample period 19702001 y 0.65 3.07 2.97 3.68l 2.95 4.80 2.97 3.68h 2.62 3.12 2.97 3.68k p 0.30 3.99 2.97 3.68k f 0.58 3.40 2.97 3.68 x 2.43 4.08 2.97 3.68bg 2.39 4.38 2.97 3.68fn 0.70 4.33 2.97 3.68cg 1.77 3.87 2.97 3.68

Notes. Mackinon critical values for rejection of hypothesis of a unit root.a

Variable is stationary at the 10% level.Denotes signicance at the 5% levelDenotes signicance at 1% level.

these variables that is I(0). 10 The results of the -max and the trace tests are asshowninpanelAof Table2 . Theco-integrating equation (normalizedon thegrowthvariable) is as shown in panel B of Table 2 . The results in panel A of Table 2 showsthat the null hypothesis of no co-integration i.e. 0 can be rejected either using

-max or the trace tests statistics. They are both greater than their critical values.The co-integrating equation (normalized on growth variable) shown in panel Bof Table 2 indicates that raw labour and private capital have negative sign whileforeign capital and human capital are positive (the sign are reversed because of thenormalization process). The coefcients are all signicant as shown by the t -ratiosindicated in parentheses. 11

10 Given that a co-integrating relationship is present among the selected variables in level, an error

correction (EC) model can be estimated that is, a model that combines both the short-run properties of the economic relationships in the rst difference form as in Eq. (6), as well as the long-run informationprovided by the data in level form.

11 The reported results here are without constant. However, as an additional exercise, we includeda constant term in the procedure and carried out the entire analysis, the results obtained were notsignicantly different.


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Table 2Co-integration results (with a linear trend) where r is the number of co-integrating vectors

Panel (A): Estimates of -max and trace tests

Null Alternative r -max Critical value(95%) Trace Critical value (95%)0 1 48.84 33.46 96.17 68.52

1 2 28.41 27.07 52.34 47.21 2 3 16.68 20.97 23.93 29.68 3 4 7.13 14.07 7.25 15.41 4 5 0.12 3.76 0.12 3.76

Panel (B): Estimates of co-integrating vector y l h k p k f

1.000 0.764 (6.32) 0.104 ( 9.56) 0.019 (1.96) 0.134 ( 6.20)

Note. t ratios are in parentheses.

Next we use the information provided by the L.R. tests to generate a set of EC models that capture the short- and long-run behaviour of the output relation-ship. The changes in the relevant variables represent short-run elasticities, whilethe coefcients on the EC term represents the speed of adjustment back to thelong-run relationship among variables. Table 3 provides the results for the outputgrowth relationship for the period 19702001. The results show that foreign capitalonly has positive impact on growth in Nigeria after a considerable lag and it is not

signicant.12

This result seems to support our argument that extractive FDI mightnot be growth inducing as much as manufacturing FDI. This result should notcome as surprise because the oil sector where the lion share of FDI is concentratedin Nigeria is highly disconnected from the economy. 13 Contemporaneous privatecapital has positive effect but not signicant. The insignicance of private capitalmight be due to small nature of private investment in the economy. Over the years,the economy has been dominated by the government sector.

This was a result of the discovery of oil in large quantities in 1970s. Governmentrealized a lot of revenue from oil and as such dabbled into almost all the activities

that are better provided by the private business actors thereby crowding out privateinvestment. 14 Growth rate of real export has signicant positive effect on growth. 15

The results show tha t labour and human capital have signicant positive effectson economic growth. 16 The results seem to demonstrate the importance of labour

12 In fact, the contemporaneous and the rst lag of foreign capital have negative sign.13 Several other studies have noted the enclave nature of the Nigeria oil sector (see Iwayemi, 1995 ).14 Government attempt at reversing the situation was put in place in 1986 with the implementation

of the structural adjustment programme, which incorporated such policies as nancial liberalization,stabilization and privatization.

15 Empirical studies by previous researchers equally indicated positive relationship between exportand growth (see the work of Feder, 1983; Moschos, 1989 and Ram, 1987 among others).

16 The large literature on growth stemming from the works of Barro (1991, 1997) and Gemmel(1996) have consistently found some measure of human capital signicant in determining growth. Itmust however, be pointed out that Bils and Klenov (2000) and Easterly and Levine (2000) amongothers have argued that factor accumulation is not the key to growth.


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Table 3

Nigeria: Error Correction Model (dependent variable ln Y t )OLS regressions

Variables 1 2 3 4

Constant 0.21 (2.50) 0.22 (1.84) 0.24 (3.48) 0.24 (3.92) ln Lt 0.11 (1.59) 0.13 (2.13) 0.14 (2.16) ln H t 0.05 (2.13) 0.02 (1.54) 0.07 (2.87) 0.07 (2.76) ln K p 0.008 (0.62) 0.004 (0.40) 0.01 (0.43)ln K f t 3 0.01 (0.007) 0.01 (0.41) 0.03 (0.43)ln K f t 4 0.001 (0.06)

ln K f t 5 ln X 0.05 (0.97) 0.10 (1.51)ln C gt 1 0.005 (0.08) Fn 0.03 ( 4.71) 0.03 ( 3.23) 0.03 ( 5.44)

D 0.004 ( 0.058) Bg 0.001 (0.71)

T 0.007 (3.82) 0.005 (2.15) 0.01 (4.74) E ct 1 0.32 (3.74) 0.28 (2.07) 0.33 ( 3.99) 0.32 ( 4.52) R 2 0.60 0.59 0.58 0.60 S.E. 0.008 0.009 0.01 0.008 D.W. 1.70 1.70 1.75 1.70

AR (1) 0.18 0.43 0.11

Note. t statistics in parentheses. All variables are as dened earlier.


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Table 4Nigeria: Forecast Evaluation for Error correction Models

Equation 3 4 7

Sample: 19702001Root mean square error (RMS) 0.1044 0.0899 0.0966Mean absolute error (MAE) 0.0866 0.0736 0.0776Theil inequality coefcient (TIC) 0.0042 0.0036 0.0039Bias proportion (BP) 0.0001 0.0013 0.0010Variance proportion (VP) 0.1207 0.0870 0.0645Covariance proportion (CP) 0.8773 0.9116 0.9344

Sample : 19701996RMS 0.1042 0.0909 0.0970MAE 0.0851 0.0743 0.0771TIC 0.0044 0.0038 0.0040BP 0.0229 0.0195 0.0218VP 0.0181 0.0092 0.0006CP 0.9588 0.9711 0.9774

Sample : 19802001RMS 0.1266 0.1004 0.1089MAE 0.1126 0.0878 0.0944TIC 0.0049 0.0039 0.0042BP 0.1407 0.0525 0.0312VP 0.2209 0.1657 0.1406

CP 0.6383 0.7816 0.8281 Note. Forecast evaluation estimates generated with EVIEWS 4.0.

and education on the growth prospect of the Nigerian economy. It might be that inNigeria, the efciency with which the stock of technical knowledge is translatedinto technologies in the market, via the higher education system has increased par-ticularly with the reforms. Also, it could be that the personnel management systemsin rms and enterprises allow well-educated employees to contribute meaningfully

to the enterprises.17

Lagged government consumption has negative sign suggestingthat government expenditure crowds out private consumption however, rm state-ment cannot be made on this as the coefcient is not signicant. Our measure of nancial development has signicant negative sign in all the reported regressions.This suggests that nancial development adversely affected growth during theperiod under consideration. It could be that nancial deepening encourages capi-tal ight by facilitating international capital transfers. Since the nancial marketshave been liberalized and the international market deregulated, the domestic cap-ital might have moved abroad where risk-adjustment returns are higher. 18 Budget

17 It must be pointed out that the introduction of export variable counterbalanced labour variable.The two are largely offsetting with the result the coefcient of labour becomes insignicant.

18 The study by Lensink, Hermes, and Maurinde (1998) actually found a negative and signicanteffect ofdemanddeposit on capital ight.However, Collier,Hoefer, and Pattillo (2001) usingM2/GDPratio as a measure of nancial deepening nd that it has no statistically signicant effect.


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balance over GDP has positive sign but not signicant. It is possible that improvedscal performance especially with introduction of reforms in mid 1980s allowedthe real exchange rate to converge towards its equilibrium path and this policy mixby accelerating output growth generated an endogenous improvement in the bud-get balance. 19 This is suggestive as the coefcient is not signicant. The time trendhas signicant positive trend. This possibly reects the slight growth experiencedduring the period under consideration. The dummy variable has negative sign butnot signicant.

The relative t and efciency of EC regression is averagely alright, and as thetheory predicts, the EC terms are negative and signicant in most of the reportedequation in Table 3 . Using regression formulation 6, the EC shows that a deviationfrom long-run growth this period is corrected by about 38% in the next year. Weconducted stability tests to determine whether the null hypothesis of no structuralbreak could be rejected at 5%. The Chow breakpoint tests suggested that thehypotheses could not be rejected for signicant year 1983 ( P = .114), 1986(P = .0126), and 1992 ( P = .1146).

The EC models were equally used to track the historical data on economicgrowth in Nigeria. Theil inequality coefcient obtained from historical simulationof the growth Eqs. (2), (4) and (6) are as shown in Table 4 . The results showthe forecasting power of the models is relatively good as the Theil inequalitycoefcients are less than 0.3. 20 Moreover other statistics as shown in Table 4exhibit good performance as are close to their ideal values.

5. Concluding remarks

The links between FDI and growth has been examined. FDI in Nigeria only has apositiveeffect on growthaftera considerable lag. Theresults suggest that extractiveFDI especially oil might not be growth enhancing as much as manufacturing FDI.

Also, it is found that export, labour and human capital are positively related togrowth. In addition, the results show that private capital has insignicant positiveeffect on growth. The question, then, is what are the policy implications of thesendings for the Nigerian economy?

One, the results show that the growth would be enhanced if FDI inows arechanneled into sectors other than the oil sector. Government needs to provide ap-propriate environment to attract manufacturing FDI. Such measures as relaxationor elimination of restrictions on prots and capital remittances, opening of for-merly priority sectors to investors and provision of adequate security among

19 In addition, where reduction in the budget decit facilitates private sectors access to bank crediteconomic activity could be stimulated.

20 In general, the forecasting power of a model is adjudged to be relatively good if the coefcient isbelow .3 (Theil, 1966 ).


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others should be put in place. However, efforts should be made to ensure thatthe positive spillover effects associated with FDI offset the short term costs as-sociated with the implementation of these incentives. Once the reverse ows of prots and capital are deducted from the gross inows of FDI into the country, thecontribution of FDI to the nancing of private capital formulation may be highly jeopardized.

It should be emphasized that the country could benet from increased FDIinows into the oil sector if the sector is integrated into the economy. A majorpolicy in this direction is the liberalization of the oil sector. This will lead toincreased private participation, higher employment with possible multiplier ef-fects on the economy as a whole. As a matter of fact, the results suggest reduc-tion in government size in the economy. This is better achieved through priva-tization of most government owned enterprises in the country. It will engendercompetition and greater efciency. All the same, caution should be exercisedto ensure that the necessary conditions for privatization are in place so as toavoid the failure experienced during the rst privatization exercise in 1988. Gov-ernment needs to provide the legal and administrative framework for effectiveprivatization. More importantly, there is the need to ensure transparency in theexercise.

Theresults equally suggest theneed to increase export forgreater growthperfor-mance. Undoubtedly, development policies that aimed at ensuring greater private(domestic and foreign) participation in the economy will lead to increase in ex-ports. This tends to buttress the argument that the economy needs to be openedup through increased private participation. For example, foreign investors partic-ipating in the debt conversion programme could be encouraged to direct theirinvestments to projects that signicantly increased production capacity, incor-porate new technologies in the export sector, and improve the countrys infras-tructure.

Finally, the negative sign of M2/GDP ratio possibly suggests the need to stemthe problem of capital ight in the country. Steps to level the legal and admin-istrative playing eld for domestic investors and to promote a stable macroeco-nomic environment could contribute to stemming capital ight. The country mustendeavor to keep legitimate private capital at home by encouraging domestic in-vestment. However, much more than this, policies to encourage private holdersof external assets to repatriate their capital should be implemented. These possi-bly might include tax amnesties and raising the domestic interest rate. It needsbe pointed out, however, that these policies could have adverse effects on alreadyweak private sector in the economy. The ndings on human capital point to theneed for Nigeria to follow an educational policy to raise stock of human capital.In sum, policies that facilitate closer integration of the oil sector to the economy,greater openness, and increased private participation will no doubt lead to higherexports, greater spillover from FDI inows and higher economic growth in thecountry.


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Appendix A

A.1. Sources of data

Source (a) International Monetary Fund, International Financial StatisticsYearbook (various years)

Source (b) World Bank, World Development Indicators (various years)Source (c) Central Bank of Nigeria (CBN), Nigerias Principal Economic

and Financial Indicators (various years)Source (d) African Development Bank, Selected Statistics on African

Countries (2000)

A.2. Description and measurements of variablesY Real output (measured as real GDP)K p Private capital stock (private investment)K f Stock of foreign investment. The estimates of K p and K f were generated

using standard perpetual inventory model of the form: K t = K t 1 + I t K t 1, where K t 1 is the stock of capital at time t 1. I t is the ow of

gross investment during period t , and is the rate at which private andforeign capital depreciates in period t 1. In this work, the initial stocks of private and foreign capital were estimated by aggregating over 10 years of gross investment 19611970. We adopted 10 years initial stock in view of the political crisis that engulfed the country between 1965 and 1970, whichactually made investment almost zero during the period. However, apartfrom 5% rate of depreciation, we used 10, the results were not signicantlydifferent.

H Human capital measured as share of university, polytechnics and collegesof education students in the population

L Economically active labour force X Real export Bg Government budget balance over GDPC g Real government consumptionT Time trendFn Financial development variable measured as ratio of money supply broadly

dened over GDP (M2/GDP). M2 is narrow money (M1) gures added toquasi-money. All real variables were obtained by deating nominal valuesby CPI.

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Documents

Empirical Study on FDI in Nigeria