FOREIGN DIRECT INVESTMENT INFLOWS AND REGULATION IN NIGERIA: AN EMPIRICAL PERSPECTIVE
FOREIGN DIRECT INVESTMENT INFLOWS AND REGULATION IN NIGERIA: AN EMPIRICAL PERSPECTIVE

Summary/Abstract: The aim of this study is to examine the long run equilibrium relationship between regulationand FDI inflows in Nigeria over the period of 1990 to 2016 which past studies havefailed to explore. Consequently, the study utilized data from UNCTAD, World Bank database,CBN Statistical Bulletin and Cointegration, DOLS and Granger Causality approachwas used to address the objective of this study. However, the major findings inthis study are summarized as follows. Government effectiveness, rule of law and inflationrate have a significant positive relationship with FDI inflows in Nigeria in the long run,apart from regulation quality that is not significant. This implies that regulation is favorableto the inflows of cross border investment in the country. In addition, there is a unidirectionalfeedback relationship which runs from FDI inflows to regulation quality andone way feedback relationship runs from the rule of law to government effectiveness inthe country. Finally, due to the findings that emerged from this study, the following recommendationsare made for the policy makers, investors and future researchers in Nigeriathat when attraction of FDI inflows are the target of the policy makers in the country,improving variables like rule of law, government effectiveness and regulation quality willinduce the inflows of cross border investment accordingly in the long run. Also, the Nigeriangovernment should be committed to the provision of a sound business environmentin the form of good government regulations to ensure rapid inflows of FDI in the country.

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