The primary of objectives of this study is to examine the impact of foreign private investment on Nigerian economy.
Furthermore, the favourables used to
test the impact of foreign private investment on Nigerian economy shows
that the role play by the foreign private investment is very minimal and
it is hoped that the policy recommended will enable the authorities and
the parties concerned re-assess the issues in the overall interest on
the whole populate of Nigeria for our concern is with economic
arrangements for continued existence and not that of unstable economic.
Foreign private investment, which
includes private direct inventory and foreign private portfolio
investment is an important component of aggregate investment especially
in developing countries. In a country like Nigeria where domestic saving
is low, increase in foreign increasing in macro significant sequence of
private foreign investment resulting from increase in domestic saving
and acceleration of foreign capital flows
TABLE OF CONTENTS
1.1 Background of the Study
1.2 Statement of the Problems
1.3 Aim and Objectives of the Study
1.4 Significant of the Study
1.5 Research Questions
1.6 Research Hypothesis
1.7 Scope and Delimitation of the Study
1.8 Definition of the Terms
1.9 Organization of the Study
CHAPTER TWO: LITERATURE REVIEW
2.2 Need/Importance of Private Foreign
Investment in Nigeria
2.3 Problems of Private Foreign Investment 16 in Nigeria
2.4 Incentives Government for Foreign Investment
2.5 Private Foreign Investment and Nigerian Economic Development
2.6 Investment Climate in Nigeria
2.7 Review of Nigeria's Foreign Investment Policies and Strategies
2.7.1 The First Republic
2.7.2 The First Military Dictatorship
2.7.3 The Second Republic
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Research Design
3.3 Simple and Sampling Technique
3.4 Instrumentation of Data Analysis
3.5 Method of Data Collection
3.6 Method of Data Analysis
CHAPTER FOUR: DATA ANALYSIS PRESENTATION AND
INTERPRETATION OF RESULTS
4.1 Model Specification
4.2 Model Estimation and Interpretations
4.3 Interpretation of Results
SUMMARY, CONCLUSION AND RECOMMENDATIONS
1.1 BACKGROUND OF THE STUDY
Foreign private investment, which includes private direct inventory
and foreign private portfolio investment, is an important component of
aggregate investment especially in developing countries. In a country
like Nigeria where domestic saving is low, increase in foreign
increasing in macro significant sequence of private foreign investment
resulting from increase in domestic saving and acceleration of foreign
Like the Nigeria economy, which up to the late 1970's enjoyed
considerable boom result of its oil wealth, as form 1981, thrown into an
unprecedented economic recession. Private investment is an important
channel for aggregate investment. That is to say progress economic
adjustment is expected to trigger.
The cause of this had ironically been the oil itself. By 1981, the
global prices of oil fall an all-time low have about $12.00 a barrel, as
against us $40.00 per barrel in foreign previous year. This leads to
significant fall in the foreign exchange earning acid serious
distribution of the economic development process. It because difficult
for government to implement already approved national projects the
foreign exchange problem could not be every by the exports from the
Agricultural sector has suffered major neglect in the years of the oil
boom. Consequently, productivity declined in the industries,
unemployment increased as factories produced below capacities or were
shut down. Also the rate of inflation increased because of shortages
industrial output and the restriction in the effort to conserve foreign
exchange. Attempt to resolve the economy was done by virus regimes -
Shagari, Babangida, Buhari (SAP), in the 80' s by 1987, it was clear to
the government that the oil boom years were gone for good. The
development as may be noted was further aggravated by the failure to
raise funds for investment domestically and the decline in the flow of
foreign capital into the country.
Hence, the emphasis of the Babangida administration on the need for
new foreign investments into the economy. The government had in this
context strongly upheld the several benefits assumed to accrue to the
host country from foreign investment help to reduce the shortage of
domestic saving and increase the supply of foreign exchange thereby
permitting rapid expansion in real income. It is assumed that direct
foreign investment could result in higher direct taxes to be paid by
However, G.L. REUBER et al have expressed some reservation on this
since the amount of benefits here would be conditioned by the
substantial subsidies, which the host countries have to provide. It is
envisaged that direct foreign investment may lead to lower product
prices especially when investment are cost producing foreign investment
is assumed to be associated with certain external economics. Apart from
bringing physical capital to the host country, they also in their own
way bring technological knowledge, market information, managerial and
supervision, personal organizational experience and innovation in
products all that are in short supply in many developing countries. In
this connection foreign investment may be vital to the portion of
private technical assistance and the demonstrative efforts that could be
beneficial elsewhere in the economy, new techniques accompany the
inflow of private capital by promoting the diffusion of technological
advancement in the economy.
It is further envisaged that foreign investment In Nigeria encouraged
domestic investment through the reduction of cost in other industries;
profits could rise and result in the expansion other industries.
Moreover, initial foreign investment in Nigeria has contributed to the
creation of external investment incentives by raising the demand for the
output of other industries.
1.2 STATEMENT OF THE PROBLEM
The private foreign investment is described to help reduce the
shortage of domestic saving and increase the supply of foreign exchange
thereby permitting rapid expansion in real income. It is assumed that
direct foreign investment could result in higher direct states to be
paid by substantial subside which the host countries have to provide.
Similarly, it is envisaged that direct foreign investment may lead to
large employment of labour force. Beyond this, foreign investment was
seen to be associated with external economics.
The critical questions are on the magnitude of the inflow given the political and social economic arrangements of the country.
The external relation of the country and the economic, situation in
the developed countries and their incentives to investor's significant
The inflow of the private foreign investment had also tended to be dictated by changing political and economic situation of a country.
Their situation may either improve or moved the potential growth of
foreign private investment and the benefits of foreign private
investment to Nigeria economy.
1.3 AIM AND OBJECTIVES OF THE STUDY
Foreign investments have contributed substantial solution to the
fundamental problems In Nigeria's economic recession and growth. Also
the stimulation of private foreign.
1. To examine the contribution of private foreign investment to the Gross Domestic Product of the Nigeria economy.
ii. To show the growth and development rate by private foreign investments in the economy.
iii. To highlight to the government that either sector of the
economy could be developed very well with the participation of foreign
investment into the country without depending solely on the oil sector
of the economy.
iv. To determine the cover all performance of private foreign investments in Nigeria from 1980 - 2002.
v. To exploit the various areas of private foreign investment
say the usual economic sectors, mining and quarrying, manufacturing and
processing, agriculture, forestry, fishing, transportation and
communication. Others are construction building, trading and business,
services and miscellaneous.
vi. To examine the prospects for increasing participation of foreign private investment into Nigeria over the years.
1.4 SIGNIFICANCE THE STUDY
The study is significance for following reasons. The study will
examine the contribution of foreign private investment to the Nigeria
economy, (negatively or positively) as regard to some sector of the
Furthermore, the study will also serve as source of information for
an individual governments and investors etc. on various effect of
foreign private investment to the economy.
Hence, serve as a basis for decision making and policy development.
Conclusively, the study is also significant panting out the fact that
foreign private investment could serve as a means of stability i.e.
taking aggregate problems, unemployment, inflation, balance of payment
1.5 RESEARCH QUESTIONS
The following are the research questions in the course of this study.
They are meant in order to find out solution to the problem the
confront foreign private investment in carrying out their contribution
(5) to the devolvement of the economy they include:
1. What is the impact of foreign private investment on the G.D.P?
2. How does foreign private investment affect employment in Nigeria?
3. What is the effect of foreign private investment on balance of payment?
4. What is the effect of foreign private- investment the development of technology in Nigeria?
1.6 RESEARCH HYPOTHESIS
The following hypothesis was formulated to be stated In the course of the study.
Ho:- Foreign private investment has no significant effect on Gross Domestic Product in Nigeria.
HA:- Foreign private investment has significant effect on Gross Domestic Product in Nigeria.
Ho:- Foreign private investment does not create employment opportunities in Nigeria.
HA:- Foreign private investment create employment opportunities in Nigeria.
Ho:- Foreign private investment has no significant effect on balance of payment in Nigeria.
HA:- Foreign private investment has significant effect on balance of payment in Nigeria.
1.7 SCOPE AND DELIMITATION OF STUDY
This research study will cover only the rate of foreign private investment in the Nigeria economic growth.
However, reference would made in the contribution of foreign private investment could have on the economy of the host country.
The scope of the study shall cover foreign private investment policy
during first military dictatorship down to the present's democratic era
1.8 DEFINITION OF TERMS
INVESTMENT: Is. the act of producing goods that IS not for immediate consumption.
FOREIGN DIRECT INVESTMENT:- Non- resided investment
in the form of a takeover or capital investment in a domestic branch
plant or subsidiary has voting control.
GROSS DOMESTIC PRODUCT:-The value of total product output actually produced in the whole economy over some period, usually a year.
ECONOMIC DEVELOPMENT: The positive trend in most of the macro economic variables over the long run.
ECONOMIC GROWTH:- The positive trend in the nation’s total output over the long term.
RECESSION:- A sustained drop in the level of economic activity.
BOOM:- Period of high output and high employment.
PEAK: A level of highest economic activity.
PER CAPITAL INCOME:- The average income of an individual in an economy. G.D.P divided by population member.
PORT FOLIO INVESTMENT:- Investment in bonds and other debt instruments that not establish legal control.
FOREIGN EXCHANGE:- Foreign ardencies and claims to them in such forms bank deposits, cheques, promissory not payable in the currently.
1.9 ORGANIZATION OF THE STUDY
The project study plan is fashioned in the following ways:
Chapter one focused on the background of
the study, statement of the problem, aim and objectives of the study,
justification of the study research hypothesis, research methodology,
and organization of the study. Chapter two deals with the literature
review of the study. Chapter three comprises of the foreign aid and
development. Chapter four consists of the research methodology and
empirical analysis and the interpretation of the results. Chapter five
consists of the summary, conclusion and recommendations followed by the