Security Spending and Foreign Direct Investment Inflows in Nigeria: An Autoregressive Distributed Lag Model Approach
Security Spending and Foreign Direct Investment Inflows in Nigeria: An Autoregressive Distributed Lag Model Approach

Summary/Abstract: The aim of this study is to study is to examine the relationship between security spending and FDI inflows between 1994 and 2017 in Nigeria. In Nigeria, security of life and properties have been volatile in the last one decade. This has been reflected in the inability of the country to equip and maintain effective security forces that are formidable enough to defend her territorial integrity against internal and external aggressions. In view of the above, data were collected from the CBN Statistical Bulletin and UNCTAD investment reports simultaneously. Consequently, the objective of the study was addressed within the framework of Bound Test and ARDL approach. The findings in the study could be summarized as follows; past FDI inflows have a significant positive impact on current FDI inflows in Nigeria. Defence expenditure and FDI inflows have a significant positive relationship. Meanwhile, internal security spending and FDI inflows have an insignificant positive relationship in the country. Also, inflation rate and FDI inflows have a positive relationship but the relationship is not significant. As a result of these findings, this study makes the following recommendations for the policy makers in the country; there is a very urgent need to pay a critical attention to the internal security spending and mobilization of adequate resources towards this sector in order to combat the internal security challenges negatively affecting investment climate in the country.

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