Foreign Direct Investment and Employment Creation in Nigeria

Abstract

This study investigated the impact of foreign direct investment on employment creation in Nigeria for the period of 35years (1985-2019). The study used five regressors (foreign direct investment, trade openness, government expenditure, infrastructural development, and exchange rate) and one explained variable (employment rate). The data were culled from the World Bank Development Indicators and analysis was carried out using unit root test, ordinary least square and granger causality test. The findings revealed that there is negative and insignificant relationship between trade openness, government expenditure, infrastructures and employment rate. However, positive relationship exists between foreign direct investment, exchange rate and employment but statistically insignificant at 5% level of significance. Based on the f-statistic result, the study concluded that foreign direct investment played a crucial role in creating employment for the citizens of Nigeria. It was therefore recommended among others that government should improve the state of infrastructures and security in the country as the present economy is characterized by terrorisms, kidnapping and robbery and this may drive out the investors in the country and discourage the potential ones.