Manufacturing Output and Foreign Direct Investment in Nigeria: A New Evidence

Abstract

The study examined the impact of foreign direct investment on the Nigerian manufacturing sector over the period of 1970 to 2010. In evaluating the objectives, the study employed the classical linear regression model and discovered that within the period under review, FDI impacted negatively on the manufacturing sector. Although the paper found FDI to be negatively related to manufacturing output in Nigeria, this unhealthy relationship can be reversed if the country receives increased FDI inflows into critical sectors that support the necessary inputs and raw materials needed by the local industries. The study therefore recommends that competitive policies should be enacted by the government that will ensure proper functioning of the markets necessary to attract well targeted foreign investors in Nigeria. Also, foreign companies that kill local productive and manufacturing efforts should not be allowed to operate in Nigeria’s local business environment.