ABSTRACT

This study examined the effects of Foreign Direct Investment (FDI) on the Manufacturing Sector of Nigeria. The objective of this work is to determine the effects of Foreign Direct Investment (FDI) on the Manufacturing Sector of Nigeria. Specifically, this study evaluated the long run and short run effects of foreign direct investments on the manufacturing sector contribution to GDP of Nigeria and its effects on manufacturing capacity. The study adopted ex postfacto research design. A time series data from 1982 to 2016 was used for the econometric analysis. The econometric analyses used for this study are Johansen Co-integration Test, Vector Error correction model, and Wald test. The Econometrics Views (E-view) version 8.0 statistical Package was used for the analysis. The result revealed that there was a significant long term effect of foreign direct investment of manufacturing to gross domestic product in Nigeria. Secondly, there was a significant short run effect of foreign direct investment of manufacturing to gross domestic product in Nigeria. Thirdly, there was a significant long term effect of foreign direct investment on manufacturing capacity in Nigeria. Finally, there was a significant short run effect of foreign direct investment on manufacturing capacity in Nigeria. Conclusively, the study indicated that there is a long and short run effects from foreign direct investment and its determinants to the performance of manufacturing sector of Nigeria. The study recommended among other things that peaceful and healthy business environment be created to retain and attract more foreign direct investment to increase the long run increase in manufacturing output sector.