Effect of unfavourable environmental factors on Foreign Direct Investments Inflow (FDII) and Nigeria’s economic growth

Abstract

The main objective of the study is to examine the effect of unfavourable environmental factors on FDIs inflow and Nigeria’s economic growth. The study is motivated as a result of continued fall in the nation’s percentage of FDIs to net GDP ratio. This is as a result of some unfavourable external business environmental factor such as political instability, corrupt practices, weak institutional/legal framework and over reliance on Oil/Gas rather than other critical sectors (i.e manufacturing and construction). Annual Secondary data spanning 30year period (1988-2018) is used for the study. Endogenous model is employed to perform multiple regression analysis using e-view statistical package (version, 10). Findings revealed that the unfavourable external business environment examined, has negative and significant effect on Foreign Direct Investment inflow and Nigeria’s economic growth. The study recommended that the federal government should strengthen its fiscal policies on business regulatory agencies. This can be achieved by ensuring that these regulatory agencies are proactive in carrying out their statutory mandate without fear or favour to enhance sustainable friendly business environment for economic prosperity. The study concluded that unfavourable environmental factors have negative effect on FDIs inflow, hence the need for the federal government to tackle them head-on for an enhanced Nigeria economic growth.