•  
  •  
 

Economic and Financial Review

Publisher

Central Bank of Nigeria

Keywords

Foreign Direct Investment, Trade, Structral breaks, Oil Investments, Non-oil investments, Casuality

Abstract

In this paper, three innovations are introduced to the literature on the Foreign Direct Investment (FDI)-trade nexus: identification and consideration of structural breaks in the underlying time series data; use of disaggregated data set that captures the oil and non-oil dichotomy of the Nigerian economy; and introduction of identified break in the short-run model. We found the existence of a co-integrating relationship between the variables amidst observed breaks in 1980 and 1992. Thus, considering structural breaks in estimations cannot be downplayed as ignoring this may yield biased and inconsistent estimates. Findings revealed a one-way causal linkage between non-oil imports and oil exports to oil FDI with no reverse causality observed, while non-oil FDI was found to Granger cause non-oil exports. The results made a case for further diversification of trade in a bid to dampen the effects of exogenous shocks as well as gearing more efforts towards the provision of an enabling environment, particularly in the non-oil sector to spur direct investments.

Issue

45

Volume

4

Recommended Citation

Mohammed, S. & Ekundayo, B. I. (2014). Foreign Direct Investment-Trade Nexus in Nigeria: Do Structural Breaks Matter? Economic and Financial Review, 52(1), 1-26

Share

COinS
 
 

To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.