An Empirical Analysis of the Determinants and Growth Trend of Foreign Direct Investment (Fdi) in Nigeria: 1970 – 2008

AN EMPIRICAL ANALYSIS OF THE DETERMINANTS AND GROWTH TREND OF FOREIGN DIRECT INVESTMENT (FDI) IN NIGERIA: 1970 – 2008 BY IGUDIA, PATRICK PhD RESEARCH STUDENT IN MANAGEMENT, UNIVERSITY OF ABERDEEN, AB24 1WU ABERDEEN MOBILE: 07423820801 EMAIL: [email protected] com AN EMPIRICAL ANALYSIS OF THE DETERMINANTS AND GROWTH TREND OF FOREIGN DIRECT INVESTMENT (FDI) IN NIGERIA: 1970 – 2008 Abstract International capital flows have increased dramatically in recent years particularly to the sub-Saharan Africa, but their impact on Nigeria has not been so clear.

Consequently, this study investigates the economic indicators that are responsible for or can influence the inflows of FDI into Nigeria as it is believed to have the capacity to lead to industrialisation and economic growth of any nation. Employing the OLS regression methodology, our results showed an impressive FDI inflow to Nigeria with occasional variability. It further revealed that there was a positive relationship between GDP, BOP, democratic government, and government expenditure and FDI while on the other hand there exists an inverse relationship between inflation, and government policies and FDI.

The study proffers some recipes such as the need to improve existing political climate; reinvigorating the non-oil export activities; and the need to introduce greater depth and comprehensive review of the on-going restructuring of investment policies of government such as divesting in and privatising PHCN, NNPC and many more of their type for efficiency. 1. Introduction The importance of foreign direct investment (FDI) has long been acknowledged and discussed in academic literature worldwide.

For example, it is argued that FDI has the potency to benefit developing countries in many ways including its ability to: i. Complement the unimpressive internal efforts of these nations to fill their resource gaps in order to rescue their battered economies; ii. Help to massively inject foreign capital or resources in order to generate and bring about the much needed increase in output, minimize their ever rising unemployment rate and reduce the escalating rate of inflation; and iii.

Create a non-debt external resource through the acquisition of foreign technology, transformation of the structure of their domestic outputs and provide an array of goods and services to residents of the recipient countries, the diversification and expansion of the non-oil export sector of the oil dependent countries such as Nigeria, and the effective management of their external liabilities. Generally, FDI has the potency to spark an economic performance of both the host and exporting countries and spur appropriate policy frameworks.

Admittedly, an underlying investment and business principle is that the movement of capital can only be undertaking by a rational investor if such investment would yield tangible returns to him given favourable financial market regulations, economic and most importantly political factors that prevail in the receiving country that will ensure the safety of life and investment. The research questions that are to be addressed by this study therefore are: 1.

What are the factors that have affected the flow of FDI to Nigeria during the intervening period? 2. What are the relationships between the observed FDI inflow and the size of the Nigerian market, economic situation and the prevailing political environment? 3. Has any or all the factors either adversely or positively affected the movement of FDI to Nigeria? Foreign private investment has remarkable potentials for regenerating the economy of the importing or receiving country.

This assertion is without prejudice to the arguments of scholars like Ake (1978), Oyande (1976), Ohiorhenuah (1983) who separately argued that FDI enables foreigners to dominate domestic economies, create distortions in the domestic labour market by paying higher or discriminatory wages. As a matter of fact, Nigeria between 1962 and 1986 adopted a conjecture of numerous developmental and investment policies that could be interpreted inimical or adverse to foreign investors.

While the industrialising countries of Eastern Asia (the Asian Tigers) adopted an open door policy towards encouraging foreign investments, Nigeria adopted the indigenisation decree (Nigerian Enterprises Promotion Decree NEPD) in 1972 and thus nationalised all British concerns in Nigeria in 1975/76 for political reasons rather than economic. These had the unfortunate effect of retarding foreign investment inflows. While the country pretended to encourage foreign investment in theory and principle, it nonetheless executed policies that discouraged FDI in practice.

For example, a controlled interest rate, managed and officially fixed exchange rate regimes, strict and exclusive trade policies as well as government full time and active participation in business during this review period up until the introduction of the Structural Adjustment Programme (SAP) in 1986 provided wrong signals to potential investors hence the country recorded a low average FDI level of 0. 79 per cent between 1973 and 1989 (Anyanwu, 1998). Nigeria opened its doors, in the true sense of the word, to foreign investment beginning from 1986.

SAP as a policy framework was a deliberate and desperate attempt by the then military government to combat the triple problems of hyper inflation, domestic recession and most importantly balance of payment deficit which the country was going through that together acted as disincentives to FDI inflows. These were products of the structural rigidities that characterised the pre-SAP Nigerian economy with the endemic hydra-headed corruption and outright looting of public funds by government officials.

Given the anticipated positive spiral and trickle-down effects of FDI to the recipient economies it stands to reason why Nigeria in the light of her prolonged chequered economic recession and macroeconomic instability has decided to formulate and prosecute strong economic programmes such as SAP, National Economic Empowerment and Development Strategy (NEEDS), vision 2010 and now vision-20-20-20 among others to stimulate growth and development of the Nigeria’s domestic output, minimise he rate of inflation which stands at two digits presently, reduce the high unemployment level, put a lid on the rising stock of external debt after her previous debt was forgiven, acquire foreign technology and substantially reduce depreciation of /the exchange rate of the naira which has hit the rooftops in recent years. 2. Literature Review

FDI is defined as the mobilization of men, money, materials and entrepreneurship across country borders mainly from the developed to the developing countries to form business concerns (Igudia, 1998). It is the flow of capital and human resources from one country to another country. The ownership of such capital can be individual, corporate bodies or government (Yakub, 2003). When viewed from the perspective of finance, FDI refers to a kind of lending in the form of equity participation (Obadan, 2004).

In general, FDI involves the transfer of technology, managerial know-how, capital, personnel and marketing expertise from the country of export to the recipient country. The World Bank (1996) defines FDI as investment that enables the investor to acquire a lasting management interest in an enterprise in a country other than the investor’s own country with the aim of having an effective voice in the management of such an enterprise.

Odozi (1995) sees foreign investment as the inflow or transfer of a package of resources including capital, technology, management, marketing expertise, reinvested earnings, equity capital or net borrowing from parent companies or affiliates into another country. Anyanwu (1998) opines that foreign direct investment means the sum of equity capital, reinvestment of earnings, and both long and short-term capitals as represented in the balance of payment statement of account of the receiving country.

The determinants of FDI has been variously interpreted and classified (see for example Oyeranti (2003); Akinkugbe (2003); Asiedu (2002); Anyanwu (1998); Dunning (1994); Yauri (2006)). While Akinkugbe (2003) argues that the determinants of FDI are based on some locational advantages classified as pull-factors, Asiedu (2002) argues that such factors can be classified into two – the market-seeking and non market-seeking factors. However, Anyanwu (1998) in his study broadened the classification into four as 1.

The Natural Resource-seeking investment; 2. Market-seeking investment; 3. Efficiency-seeking investment; and 4. Strategic asset-seeking investment. The first two categories justify the main reasons for an initial foreign entry by a firm in whatever sector of the economy be it in the primary, secondary or tertiary sector while the other two categories represent the motives for expanding an already existing foreign investment by an established foreign investor.

The efficiency-seeking investments are intended and most times lead to increase in efficiency of the activities of regional or global companies popularly called transnational corporations (TNC) by way of integrating their assets, production and markets. On the other hand, the purpose of the strategic asset-seeking investment is to acquire resources and capabilities that an investing firm believes will sustain and advance its core competencies at regional or global markets (Anyanwu, 1998).

Both the efficiency-seeking and strategic asset-seeking investment modes are frequently the most swiftly way of attaining competitive advantages and market domination in their respective industries (Wendt, 1993). However, these classifications are underpinned by what may be termed raison d’etre: the reason to invest in another man’s country is rather predicated on some salient underlying justifications which are predominantly economic with fewer political undertones. All of these categories are represented in table 1.

Table 2. 1: Underlying Justification for FDI S/No| Type/Nature of Investment | Raison d’etre (Underlying Driver or Justification)| 1| Natural Resource-Seeking * Human Resources i. Men (labour) ii. Entrepreneurship * Physical Resources i. Money ii. Material iii. Technology | Include all reasons that spur the initial need to undertake foreign direct investment including domestic demand (large market and high income), profit maximization and cost minimization. 2| Market-Seeking * International Markets * Regional Markets * Domestic Markets| In addition to (1) above, the reasons here include, among others, the need to either create or expand an already existing market for a bigger coverage and representation. | 3| Efficiency-SeekingGeared towards creating and exploiting the economies of efficiency * Across Product * Along Process | To integrate assets, production and markets across countries by establishing Trans-National Corporations and benefitting from he cost-cutting measures derivable from the efficiency of specialisation. | 4| Strategic Asset-SeekingTo create assets with foreign network outlook at regional or global level underpinning through * Market domination * Strategically developed Technology * Improved organisational capabilities | Here, the reasons include (3) above in addition to, among others, the need to acquire resources and capabilities to advance competencies at regional or global level. | Sources: Adapted from Dunning (1994) and Anyanwu (1998).

Although opinions are divided among foreign investment theorists and analysts as to the actual benefits derivable from foreign investment by the recipient country/economy, there seems to be consensus that before a foreign investor decides to commit his or her money in a country order than his/her own, there must be in existence some motivating factors. In this wise, FDI as an issue of industrial organisation, is most likely to be undertaking if there is an ownership specific advantage.

Thus, Dunning (1994) has argued that foreign private investment (FPI) is most likely if firms: 1. Possess ownership-specific advantages relative to the host country’s firms in sourcing markets; 2. Find it profitable to use these ownership-specific advantages themselves rather than to lease them to the host firms; and 3. Find it profitable to utilise their ownership-specific advantages in the host country rather than at home.

This argument is an allusion to the fact that FDI is possible only when certain factors and conditions as listed above present themselves. Other writers either based on time series or cross sectional data for both developed and developing countries, (see Banga (2003); Obwona (1997); Tae-Hyon (1995); Leftwich (1973); Papanek (1973); Anyanwu (1998)) have argued that there are minimum economic and political factors that determine and act as incentives for the inflow of foreign investments into a country from abroad.

For a foreigner to invest in a given country there must be in place a wide range of factors in the host country which Obwona (1997) listed to include; i. Availability and low cost of natural and human resources ii. Adequate infrastructure and support facilities iii. Large market size iv. Trade policy and other policies that affect macroeconomic stability v. Economic growth and development vi. Political stability

In his argument, Tae-Hyon (1995) affirms that factors such as low inflationary pressure, stable exchange rate, liberalised interest rate and democratisation of a country’s policy are capable of positively influencing foreign investment into a country. He demonstrated how the capital inflow in Korea grew tremendously by over 501. 5 per cent in the 1970s due to sizeable market, rapidly growing GNP, a developed and productive infrastructure, an efficient and disciplined labour force, the abolishment of free export zones, and other policies in favour of investors in the local, heavy and chemical industries.

Leftwich (1973) in an empirical investigation of the trend and determinants of foreign direct investment in the United States of America for the period 1962-1971 submits that of the three factors used, the size of the market of the host country contributed largely to FDI inflow while the rate of growth of the market and level of tariffs in the host country though contributed were not as significant as the former. Some of the benefits from FDI include the roles it plays in the process of raising aggregate investment in the receiving country at least in the short run.

It has been argued that consistent and managed inflows of foreign investment provides an important source of foreign exchange earnings needed to supplement domestic savings and eventually augment local investment level (Chete, 1998). Writing in the same vein, Obadan (2004) argues that FDI has the potential to address the host country’s constraints of low levels of domestic investment and foreign exchange shortages. The fact is that inflows of foreign investment can only bring in foreign exchange, supplement domestic industries and reduce import bills if and only if such inflows are properly and well managed.

Foreign investment also indirectly helps to regenerate the local economy of the host country through spurring increased investment in the local industries and by implication increase their capability to earn foreign exchange. Finally, Feldstein (2000), Loungani and Razin (2001) and Razin and Sadka (2002) noted that FDI actually increases the quantum of investments in and growth of the host country’s economy through the gains the host country derives from FDI. These are in the form of: i.

Transfer of technology through new varieties of capital inputs which ordinarily cannot be achieved through either financial investments or trade in goods and services. ii. Human capital development which is gained through the training of employees in the course of operating the new businesses iii. Revenue generation through corporate tax and increase in GDP from the productive activities of the established companies. 3. Model Specifications Several authors have identified a number of factors that determine FDI {see Yakub (2005), Obadan (2004), Oyeranti (2003), Aremu (2003), Saggi (2002)}.

Though these factors vary from author to author and from country to country, this particular study seeks to utilize some of these already identified factors to see if our results for Nigeria for the period under review will corroborate the findings of these previous writers. Nigeria has several features capable of attracting foreign investment inflows. For example, her large and virile population makes her a vastly attractive market (Odozi, 1995). She equally has abundant human and material resources including cheap labour and most recently political stability in the form of democratic governance.

There is a consensus among development and political economists that a country that is stable politically has high prospects of attracting FDI. How stable a country’s polity is can be determined by several factors including the rate and nature of change of government in terms of number of coup d’etat, the rate of civil unrest and wars, the number of intra and inter-ethnic conflicts and so on. Several variables have been selected for empirical analysis in this study. One of such is the gross domestic product (GDP). It is used here as proxy for market size and level of economic development.

This is in agreement with the general argument that GDP to a large extent determines the resource position and size of a nation’s market because of its ability and fluidity to allow for economies of scale (Anyanwu, 1998). Other factors included in this study are balance of trade (BOT), government expenditure, democratic government and government policy instruments. BOT measures the difference between imports and exports. As Fry (1983) puts it, a high BOT can discourage government from pursuing policies that are foreign investment friendly while low BOT encourages FDI.

This might explain why the Nigerian government had in the past remained closed and uninterested on the issue of capital and income repatriation by foreigners because she enjoyed relative favourable BOT. With regard to democratic government, Odozi (1995), Anyanwu (1998) and Papanek (1992) separately argued that it measures the number of coup d’etats, ethnic conflicts or violence, wars and the type of governance which individually and collectively can determine the volume of FDI flows.

Government policy options are qualitative in nature and as such we have assigned dummy values. For democratic government, the dummy value of zero (0) has been assigned to the periods of political interregnum while one (1) is assigned to years of democratic rule. Consequently, the years between 1979 and 1983, and 1999 and 2010 being periods of democratic rule have dummy one (1) while dummy zero (0) is assigned to the years/events between 1970 and 1978, and between 1984 and 1998 being periods of coup d’etats and military rule.

For government policy regulations, dummy one (1) is assigned to 1982 and 1993 (period of stabilisation and SAP) and 1999 and 2010 (period of intense liberalisation and privatisation) while other years outside these periods shall be assigned zero (0). To facilitate our empirical analysis, the following statistical connotation need to be further expressed and defined. FDI = Foreign Direct Investment GDP = Gross Domestic Product BOT = Balance of Trade INF = Inflation GOVTEXP = Government Expenditure GOVTPol = Government Policy Dummy DEMGOVT = Democratic Government Dummy . 2. Regression Models Despite its various shortcomings, the simple regression equations as shown below have been employed to show the individual contributions of the separate factors to the facilitation of FDI inflows to Nigeria. Given the above, the models exhibit some linearity between the dependent variable (FDI) and the explanatory variables in line with the ‘naive’ Keynesian textbook model. Thus, our a priori expected signs are as follows: 4. Presentation and Analysis of Data 4. 1. Trend Analysis of Absolute Inflows of Private Capital to Nigeria (1970 – 2008)

Table 2 presents Nigeria’s cumulative FDI flows for the period 1970 – 2008. It shows that gross FDI inflow rose stupendously in absolute terms from #251. 0 million in 1970 to an all time high of #54,254. 2 million in 2007 representing 216. 15 fold increases. However, with #37,777. 7 million in 2008, the rate of increase between 1970 and 2008 was 150. 51 fold increases. In the first decade (1970 – 1979), FDI inflows increased by a multiple of 280. 48% in absolute terms. Also in absolute terms, the second, third and forth decades recorded increases of 596. 73%, 38. 62%, 2310. 64%.

However, all through the review period FDI inflows fluctuated and showed high variability particularly between 1981 and 2002 due mainly to some political turbulence and upheavals such as the anti-SAP and June-12 riots and adverse government policies. Generally, FDI inflows showed some relatively impressive increases in 1992, 1993, 1995, 1998, 2006 and 2007 in no particular order. Table 2: Flow of Non-Oil Foreign Private Capital in Nigeria from 1970 – 2008 (#’Million) Year| Total Inflow| Total Outflow| Total Net-flow| 1970| 251. 0| 129. 4| 121. 6| 1971| 489. 6| 170. 0| 319. 6| 1972| 432. 8| 184. 5| 248. 3| 973| 577. 8| 385. 2| 192. 6| 1974| 507. 1| 458. 8| 48. 3| 1975| 757. 4| 282. 0| 475. 4| 1976| 521. 1| 474. 8| 46. 3| 1977| 717. 3| 519. 7| 197. 6| 1978| 664. 7| 332. 9| 331. 8| 1979| 704. 0| 414. 1| 289. 9| 1980| 786. 4| 319. 4| 467. 0| 1981| 584. 9| 447. 1| 137. 8| 1982| 2,193. 4| 568. 5| 1,624. 9| 1983| 1,673. 6| 1,116. 9| 556. 7| 1984| 1,385. 3| 850. 5| 534. 8| 1985| 1,423. 5| 1,093. 8| 329. 7| 1986| 4,024. 0| 1,524. 4| 2,499. 6| 1987| 5,110. 8| 4,430. 8| 680. 0| 1988| 6,236. 7| 4,891. 1| 1,345. 6| 1989| 4,692. 7| 5,132. 1| (439. 4)| 1990| 10,450. 2| 10,914. | (464. 3)| 1991| 5,610. 2| 3,802. 2| 1,808. 0| 1992| 11,730. 7| 3,461. 5| 8,269. 2| 1993| 42,624. 9| 9,630. 5| 32. 994. 4| 1994| 7,825. 5| 3,918. 3| 3,907. 2| 1995| 55,999. 3| 7,322. 3| 48,677. 0| 1996| 5,672. 9| 2,941. 9| 2,731. 0| 1997| 10,004. 0| 4,275. 0| 5,731. 0| 1998| 32,434. 5| 8,355. 6| 24,078. 9| 1999| 4,035. 5| 2,256. 4| 1,779. 1| 2000| 16,453. 6| 13,106. 6| 3,347. 0| 2001| 4,937. 0| 1,560. 0| 3,377. 0| 2002| 8,988. 5| 781. 7| 8,206. 8| 2003| 13,531. 2| 475. 1| 13,056. 1| 2004| 20,064. 4| 155. 7| 19,908. 7| 2005| 26,083. 7| 202. 4| 25,881. | 2006| 41,734. 0| 263. 1| 41,470. 7| 2007| 54,254. 2| 328. 8| 53,924. 8| 2008/1| 37,977. 7| 4,362. 5| 33,615. 2| /1 = Provisional Source: Central Bank of Nigeria Statistical Bulletin, 2008 (50 Years Special Anniversary Edition) Table 3 reveals that FDI in Nigeria was once dominated by companies from the UK up till 1992. In 1993, companies from Western Europe took lead, followed by those from the USA. The dominance of FDI by Western Europe has remained till now (2008). The next in lead was the USA up until 1997. By 1998, U. K. took over the second position followed by USA and other countries in that order.

This fluctuation was dictated by these countries’ foreign policies in relation to their perceive opinions of the foreign policy direction of the Nigeria. Table 3: Cumulative FDI in Nigeria by Country of Origin Year| United Kingdom| United States| Western Europe| Others| Total (#’Million)| | Amount(#’Million)| %| Amount(#’Million)| %| Amount(#’Million)| %| Amount(#’Million)| %| | 1970| 444. 4| 44. 3| 230. 0| 22. 9| 224. 8| 22. 4| 104. 0| 10. 4| 1,003. 2| 1971| 592. 0| 44. 8| 337. 4| 25. 5| 261. 0| 19. 7| 132. 4| 10. 0| 1,322. 8| 1972| 769. 7| 49. 0| 286. 6| 18. 2| 367. 0| 23. 4| 147. 8| 9. 4| 1,571. 1| 1973| 860. | 48. 8| 308. 0| 17. 5| 415. 2| 23. 5| 179. 6| 10. 2| 1,763. 7| 1974| 832. 8| 46. 0| 300. 0| 16. 6| 459. 8| 25. 4| 219. 5| 12. 1| 1,812. 1| 1975| 857. 5| 37. 5| 535. 2| 23. 4| 590. 1| 25. 8| 304. 7| 13. 3| 2,287. 5| 1976| 947. 2| 40. 5| 376. 2| 16. 1| 653. 1| 27. 9| 362. 5| 15. 5| 2,339. 0| 1977| 1,072. 8| 42. 4| 287. 2| 11. 3| 739. 0| 29. 2| 432. 4| 17. 1| 2,531. 4| 1978| 1,195. 3| 41. 7| 342. 4| 12. 0| 847. 6| 29. 6| 477. 9| 16. 7| 2,863. 2| 1979| 1,103. 6| 35. 0| 565. 8| 17. 9| 976. 0| 31. 0| 507. 7| 16. 1| 3,153. 1| 1980| 1,421. 8| 39. 3| 566. 2| 15. 0| 1,107. 2| 30. 6| 524. 9| 14. 5| 3,620. | 1981| 1,429. 2| 38. 0| 438. 6| 11. 7| 1,350. 0| 35. 9| 540. 1| 14. 4| 3,757. 9| 1982| 1,993. 8| 37. 0| 1,171. 6| 21. 8| 1,557. 6| 28. 9| 659. 8| 12. 3| 5,382. 8| 1983| 2,606. 8| 43. 8| 873. 0| 16. 4| 1,684. 2| 28. 3| 685. 5| 11. 5| 5,949. 5| 1984| 3,043. 4| 47. 4| 964. 9| 15. 0| 1,659. 1| 25. 8| 750. 9| 11. 7| 6,418. 3| 1985| 3,594. 2| 52. 8| 860. 2| 12. 6| 1,601. 1| 23. 5| 748. 5| 11. 0| 6,804. 0| 1986| 5,073. 9| 54. 5| 1,381. 5| 14. 8| 1,828. 9| 19. 6| 1,029. 3| 11. 1| 9,313. 6| 1987| 5,508. 1| 55. 1| 1,198. 5| 12. 0| 2,053. 4| 20. 5| 1,233. 6| 12. 3| 9,993. 6| 1988| 4,724. 9| 41. 7| 2,734. | 24. 1| 2,512. 8| 22. 2| 1,366. 7| 12. 1| 11,339. 2| 1989| 6,254. 3| 57. 4| 642. 8| 5. 6| 2,440. 6| 22. 4| 1,561. 9| 14. 3| 10,899. 6| 1990| 6,828. 6| 65. 4| 209. 3| 2. 0| 1,509. 7| 14. 5| 1,888. 5| 18. 1| 10,436. 1| 1991| 7,247. 6| 59. 2| (826. 7)| (6. 8)| 2,840. 1| 23. 2| 2,982. 3| 24. 4| 12,243. 5| 1992| 7,808. 0| 38. 1| 6,010. 1| 29. 3| 3,587. 1| 17. 5| 3,107. 4| 15. 1| 20,512. 7| 1993| 11,441. 3| 17. 1| 12,051. 8| 18. 0| 39,445. 8| 59. 0| 3,848. 1| 5. 4| 66,787. 0| 1994| 12,578. 0| 17. 8| 13,439. 4| 19. 0| 39,178. 4| 55. 4| 5,518. 8| 7. 8| 70,714. 6| 1995| 15,794. 1| 13. | 18,482. 9| 15. 5| 77,463. 4| 64. 9| 7,651. 3| 6. 4| 119,391. 6| 1996| 16,988. 9| 13. 9| 18,673. 2| 15. 2| 78,712. 7| 64. 5| 8,226. 2| 6. 7| 122,600. 9| 1997| 17,221. 5| 13. 4| 22,442. 0| 17. 5| 80,150. 3| 62. 4| 8,518. 2| 6. 8| 128,331. 8| 1998| 31,367. 9| 20. 6| 21,573. 6| 14. 2| 82,279. 2| 54. 0| 17,171. 8| 11. 3| 152,409. 6| 1999| 32,603. 5| 21. 1| 20,084. 1| 13. 0| 83,558. 3| 54. 2| 17,942. 7| 11. 6| 154,188. 6| 2000| 32,779. 3| 20. 8| 21,939. 6| 13. 9| 84,466. 1| 53. 6| 18,350. 4| 11. 7| 157,535. 4| 2001| 35,452. 3| 22. 0| 22,626. 6| 14. 1| 86,175. 1| 52. 5| 19,089. 4| 11. 8| 162,343. | 2002| 36,841. 4| 22. 1| 22,446. 9| 13. 5| 86,324. 4| 51. 8| 21,818. 9| 12. 6| 166,631. 6| 2003| 41,765. 6| 23. 4| 25,364. 8| 14. 2| 88,287. 9| 49. 5| 23,059. 7| 12. 6| 178,478. 0| 2004| 48,972. 1| 19. 7| 28,350. 9| 11. 4| 91,452. 2| 36. 1| 80,545. 4| 32. 4| 249,220. 6| 2005| 58,218. 2| 21. 6| 32,087. 5| 11. 9| 95,018. 1| 35. 2| 84,520. 9| 31. 3| 269,844. 7| 2006| 73,012. 0| 24. 1| 38,066. 0| 12. 6| 100,883. 5| 33. 3| 90,881. 8| 30. 0| 302,843. 3| 2007| 87,614. 4| 24. 1| 46,440. 5| 12. 8| 119,077. 8| 32. 7| 110,875. 8| 30. 5| 364,008. 5| 2008/1| 100,030. 7| 25. 2| 50,786. 6| 12. 9| 124,077. | 31. 2| 122,500. 6| 30. 8| 397,395. 2| /1 = Provisional Source: Central Bank of Nigeria Statistical Bulletin, 2008 (50 Years Special Anniversary Edition) Table 3 showcases the cumulative levels of net FDI in Nigeria by country of origin. From the 1970 value of #1,003. 2 million, the cumulative FDI in Nigeria rose stupendously to #397,395. 2 million in 2008 in absolute terms representing an increase of 39,612. 76% increase over the 29 year period. There has been a consistent increase in the cumulative FDI despite the recorded fluctuations or decline in the percentages invested by the various countries.

The point is that what is lost by a country is made up for by other countries thus maintaining the observed consistent increases. Table 4: Cumulative FDI in Nigeria Analysed by Type of Activity (#’Million) Year| Mining &Quarrying| Manufacturing&Processing| Agriculture,Forestry &Fishery| Transport &Communication| Building&Construction| Trade &BusinessServices| MiscellaneousServices| FDIGrand Total| 1970| 515. 4| 224. 8| 11. 2| 13. 8| 13. 8| 206. 6| 17. 6| 1,003. 2| 1971| 694. 0| 378. 8| 15. 4| 12. 0| 15. 4| 187. 2| 20. 0| 1,322. 8| 1972| 859. 7| 356. 6| 9. 4| 12. 2| 34. 3| 242. 7| 56. 2| 1,571. 1| 1973| 925. | 409. 0| 7. 4| 11. 6| 45. 0| 294. 7| 70. 2| 1,763. 7| 1974| 818. 1| 520. 4| 20. 7| 21. 9| 64. 2| 321. 3| 45. 5| 1,812. 1| 1975| 959. 6| 506. 2| 19. 2| 22. 8| 111. 2| 572. 4| 96. 1| 2,287. 5| 1976| 918. 9| 550. 7| 21. 9| 16. 2| 122. 5| 624. 8| 84. 0| 2,339. 0| 1977| 1,090. 8| 703. 8| 75. 0| 30. 6| 121. 4| 365. 5| 144. 3| 2,531. 4| 1978| 421. 3| 1,263. 4| 117. 6| 55. 6| 224. 3| 522. 5| 258. 5| 2,863. 2| 1979| 466. 8| 1,402. 5| 120. 8| 60. 5| 294. 3| 550. 5| 257. 7| 3,153. 1| 1980| 677. 4| 1,503. 9| 120. 5| 62. 2| 307. 8| 693. 2| 255. 1| 3,620. 1| 1981| 526. 0| 1,705. 7| 120. 5| 60. 8| 325. 9| 767. | 251. 8| 3,757. 9| 1982| 974. 0| 1,922. 5| 120. 5| 68. 9| 422. 5| 1,483. 6| 390. 8| 5,382. 8| 1983| 511. 2| 2,128. 1| 127. 8| 77. 3| 443. 9| 2,274. 9| 386. 3| 5,949. 5| 1984| 702. 8| 2,109. 3| 128. 5| 80. 6| 439. 0| 2,622. 5| 335. 6| 6,418. 3| 1985| 744. 0| 2,278. 1| 126. 0| 85. 9| 453. 2| 2,697. 9| 418. 9| 6,804. 0| 1986| 2,510. 4| 2,810. 2| 128. 2| 80. 4| 501. 6| 2,753. 0| 529. 8| 9,313. 6| 1987| 2,260. 2| 3,122. 3| 117. 3| 75. 6| 462. 6| 3,396. 5| 559. 1| 9,993. 6| 1988| 3,403. 0| 3,637. 0| 128. 9| 160. 6| 492. 7| 3,133. 7| 383. 3| 1,339. 2| 1989| 636. 7| 5,406. 4| 134. 8| 158. 2| 481. | 3,497. 2| 584. 7| 10,899. 6| 1990| 1,091. 6| 6,339. 0| 334. 7| 240. 5| 743. 6| 1,710. 4| (23. 7)| 10,436. 1| 1991| (810. 0)| 8,692. 4| 382. 8| 373. 2| 1,471. 6| 1,452. 2| 682. 0| 1 2,243. 5| 1992| 6,417. 2| 9,746. 3| 386. 4| 391. 5| 1,406. 6| 1,482. 5| 682. 2| 20,512. 7| 1993| 27,686. 9| 12,885. 1| 1,214. 9| 426. 4| 71. 2| 1,864. 5| 22,638. 0| 66,787. 0| 1994| 26,680. 0| 14,059. 9| 1,208. 5| 429. 6| 1,707. 0| 2,247. 6| 24,381. 1| 70,714. 6| 1995| 56,747. 3| 27,668. 8| 1,2090| 374. 8| 1,553. 0| 2,990. 7| 28,848. 0| 119,391. 6| 1996| 56,792. 3| 29,814. 3| 1,2090| 485. 6| 1,864. 3| 3,668. 7| 28,766. | 122,600. 9| 1997| 59,221. 4| 31,297. 2| 1,2090| 672. 6| 1,259. 8| 3,625. 7| 31,046. 2| 128,331. 8| 1998| 59,970. 5| 34,503. 9| 1,2090| 689. 2| 3,888. 3| 10,460. 5| 41,689. 5| 152,409. 6| 1999| 58,855. 4| 36,282. 1| 1,2090| 820. 3| 3,995. 9| 10,927. 3| 42,100. 4| 154,188. 6| 2000| 60,710. 9| 37,333. 6| 1,2090| 820. 3| 3,995. 9| 11,201. 3| 42,237. 6| 157,535. 4| 2001| 61,611. 9| 37,779. 6| 1,2090| 955. 3| 4,211. 9| 12,016. 3| 43,657. 6| 162,343. 4| 2002| 61,611. 9| 39,953. 6| 1,2090| 1,736. 3| 4,293. 9| 12,317. 3| 45,509. 6| 166,631. 6| 2003| 61,809. 1| 45,719. 4| 1,2090| 2,890. 5| 4,545. 8| 14,457. 3| 49,056. | 178,478. 0| 2004| 61,145. 7| 102,995. 8| 1,2090| 4,281. 1| 5,194. 1| 20,242. 4| 53,571. 2| 249,220. 6| 2005| 80,789. 4| 133,894. 5| 1,2090| 5,565. 4| 6,713. 3| 26,315. 1| 69,642. 6| 269,844. 7| 2006| 105,668. 4| 212,729. 4| 1,209. 0| 8,291. 0| 10,461. 1| 41,309. 3| 102,780. 0| 302,843. 3| 2007| 132,085. 5| 219,512. 0| 1,329. 9| 10,758. 2| 12,030. 2| 47,505. 7| 129,277. 1| 364,008. 5| 2008/1| 140,497. 1| 229,764. 6| 1,397. 2| 11,383. 3| 12,702. 5| 50,194. 9| 140,370. 1| 397,395. 2| /1 = Provisional Source: Central Bank of Nigeria Statistical Bulletin 2005 and 2008 (50 Years Special Anniversary Edition)

Table 4 shows how FDI has been distributed among the seven sectors of the economy. The investment levels of all the sectors increased during our review period with each sector having its particular boom and recessed periods depending on the policies of government. However, substantial increases were noticed beginning from 1993 in all the sub-sectors with no particular trend observed or be traced to any particular sector during the period except for miscellaneous services, Mining & Quarrying and Manufacturing & Processing which showed higher percentage increases at some points.

Table 5: Components of Net Capital Flow by Country of Origin from 1970 – 2008 (#’Million) Year| United Kingdom| United States of America| Western Europe| Others| Total | 1970| 47. 4| 26. 4| 29. 6| 18. 2| 121. 6| 1971| 147. 6| 107. 4| 36. 2| 28. 4| 319. 6| 1972| 177. 7| (50. 7)| 106. 0| 15. 3| 248. 3| 1973| 91. 2| 21. 3| 48. 2| 31. 9| 192. 6| 1974| (28. 1)| (7. 9)| 44. 6| 39. 7| 48. 3| 1975| 24. 7| 235. 2| 130. 3| 85. 2| 475. 4| 1976| 84. 5| (159. 0)| 62. 9| 57. 9| 46. 3| 1977| 130. 8| (89. 0)| 85. 9| 69. 9| 197. 6| 1978| 122. 5| 55. 2| 108. 6| 45. 5| 331. 8| 1979| (91. 7)| 223. 4| 128. 4| 29. 8| 289. 9| 980| 318. 2| 0. 4| 131. 2| 17. 2| 467. 0| 1981| 7. 4| (128. 1)| 242. 8| 15. 2| 137. 3| 1982| 564. 6| 733. 0| 207. 6| 119. 7| 1,624. 9| 1983| 615. 0| (200. 6)| 116. 6| 25. 7| 556. 7| 1984| 500. 0| (6. 1)| (25. 1)| 65. 4| 534. 8| 1985| 484. 8| (94. 7)| (59. 0)| (2. 4)| 329. 7| 1986| 1,479. 7| 511. 3| 227. 8| 280. 8| 2,499. 6| 1987| 434. 2| (183. 0)| 224. 5| 204. 3| 680. 0| 1988| (783. 2)| 1,536. 3| 459. 4| 133. 1| 1,345. 6| 1989| 1,529. 6| (2,092. 0)| (72. 2)| 195. 2| (439. 4)| 1990| 573. 5| (433. 5)| (930. 9)| 326. 6| (464. 3)| 1991| 419. 5| (1,035. 9)| 1,330. 2| 1,094. 2| 1,808. 0| 1992| 560. 4| 6,836. | 747. 4| 124. 5| 8,269. 2| 1993| 3,633. 3| 6,041. 8| 22,558. 2| 761. 1| 32,994. 4| 1994| 1,136. 7| 1,387. 6| (267. 4)| 1,650. 3| 3,907. 2| 1995| 3,216. 1| 5,043. 5| 38,285. 0| 2,132. 5| 48,677. 0| 1996| 1,194. 8| (288. 2)| 1,249. 4| 575. 0| 2,731. 0| 1997| 232. 6| 3,768. 7| 1,437. 6| 292. 0| 5,730. 9| 1998| 14,146. 4| (868. 4)| 2,147. 0| 8,653. 8| 24,078. 8| 1999| 1,235. 6| (1,489. 5)| 1,261. 0| 771. 9| 1,779. 1| 2000| 175. 8| 1,885. 6| 907. 7| 407. 9| 3,347. 0| 2001| 2,673. 7| (490. 0)| 738. 9| 451. 0| 3,377. 0| 2002| 4,027. 9| 1,761. 2| 1,300. 3| 1,116. 1| 8,205. 5| 2003| 6,045. 6| 2,918. 4| 2,161. | 1,930. 7| 13,056. 5| 2004| 7,206. 6| 2,986. 6| 3,065. 0| 6,650. 9| 19,909. 1| 2005| 9,368. 6| 3,882. 6| 3,984. 5| 8,646. 2| 25,881. 8| 2006| 14,989. 7| 6,212. 1| 6,375. 2| 13,893. 8| 41,470. 8| 2007| 19,620. 3| 8,085. 4| 8,369. 1| 17,967. 1| 54,041. 9| 2008/1| 12,590. 0| 3,103. 4| 6,006. 1| 11,958. 1| 33,657. 6| /1 = Provisional Source: Central Bank of Nigeria Statistical Bulletin, 2008 (50 Years Special Anniversary Edition) 4. 2. Presentation, Analysis and Discussion of Regression Results Model one is consistent with our a priori expectation of a positive relationship between GDP and FDI.

The results show that the regression coefficient of GDP is 0. 017892 which implies that this quantity of increase in GDP yields a one unit increase in FDI. In other words, if GDP increases or changes by say about eighteen thousand naira (#18,000), FDP would increase or change in sympathy by a whopping one million naira (#1,000,000). This means that over our review period, GDP impacted so much on the inflows of FDI to the country. 1. FDI = 233690. 0 + 0. 017892GDP + µ (63399. 9) (0. 0039501) Note: The figures in parenthesis in the fitted estimated model are the standard errors. R2 = 0. 98270 DW = d* = 1. 778 @ 5% Significance level t* = 3. 476 tt(0. 0025) = 2. 042 at 5% significance level The test of goodness of fit shows that the coefficient of determination (R2) is equal to 0. 98270. These results reveal that 98. 3 per cent of the total increases in FDI are explained by the increases in GDP. The test of significance of the parameter estimate employing a 5% significance level using a two-tail test shows that our GDP is statistically significant in explaining the increases in FDI over the review period as the calculated t-test vale of 3. 48 is greater than the tabulated t-statistics value of 2. 04. 2. FDI = 55815. 2 + 0. 1295BOT + µ (12001. 4) (0. 018954) Note: The figures in parenthesis in the fitted estimated model are the standard errors. Model two is consistent with our a priori expectation and it shows that a 0. 11298 increase in BOT spurs a one per cent increase in FDI. In other words, if BOT increases or changes by one hundred and twelve thousand, nine hundred and fifty naira (#112,950), FDI would in sympathy increase or change by one million naira (#1,000,000). R2 = 0. 49660 DW = d* = 0. 20697 @ 5% Significance level t* = 5. 9593 tt(0. 0025) = 2. 042 at 5% significance level From the result of the goodness of fit, R2 = 0. 9660. Therefore, the total variation in FDI as a result of the variation in BOT is 49. 7 per cent. Employing a two-tail test at 5% level of significance with the degree of freedom of 37, the t-test shows that BOT is statistically significant in explaining the quantity of FDI that came into this country during the review period as t* = 5. 96 > tt = 2. 04. 3. FDI = 87710. 9 – 699. 78INF + µ (25534. 4) (987. 08) Note: The figures in parenthesis in the fitted estimated model are the standard errors. R2 = 0. 013769 DW = d* = 0. 059708 @ 5% Significance level t* = -0. 70895 tt(0. 0025) = 2. 42 at 5% significance level Model three is inconsistent with our a priori expectation of positive relationship between inflation and FDI. The result reveals that a decrease of INF by 699. 8 units causes the FDI to increase by one unit. This means that there is an inverse relationship between Inflation and FDI. The result also reveals that the proportion of the increase or change observed in FDI over the review period as a result of changes in Inflation was approximately 1. 4 per cent. The t-test result shows that inflation was statistically insignificant in explaining the inflow of FDI during this period as t* = -0. 09 < tt = 2. 04. 4. FDI = 14436. 1 + 0. 15665GOVTEXP + µ (4784. 3) (0. 0066827) Note: The figures in parenthesis in the fitted estimated model are the standard errors. R2 = 0. 93851 DW = d* = 0. 78725 @ 5% Significance level t* = 23. 44101 tt(0. 0025) = 2. 042 at 5% significance level Model 4 is a test result of the relationship between government expenditure and FDI. The result is consistent with our a priori expectation of positive relationship between FDI and government expenditure. A unit increase in FDI is as a result of every 0. 157 increase in government expenditure.

In other words, if government expenditure increases or changes by one hundred and fifty-six thousand, six hundred and fifty naira (#156,650), FDI would in sympathy increase or change by one million naira (#1,000,000). The coefficient of determination R2 yielded 0. 93851 meaning that the proportion of the total increases in FDI observed during the review period is explained by a unit increase in government expenditure. The result of the t-test equally reveals that government expenditure is statistically significant in explaining the inflows of FDI to Nigeria during the period as t* = 23. 44 > tt = 2. 04. 5. FDI = 32320. + 112462. 3DEMGOVT + µ (17178. 1) (28301. 1) Note: The figures in parenthesis in the fitted estimated model are the standard errors. R2 = 0. 30490 DW = d* = 0. 20895 @ 5% Significance level t* = 3. 97381 tt(0. 0025) = 2. 042 at 5% significance level Model five is consistent with our a priori expectation and it shows that a 112462. 3 increase in democratic government spurs a one unit increase in FDI. In other words, democratic governance causes a greater inflow of FDI. From the results, there was higher inflow of FDI during the period of democratic government in Nigeria than the military period over the review period.

From the result of the goodness of fit, R2 = 0. 30490. Therefore, the total variation in FDI as a result of the variation in government is 30. 5 per cent. Employing a two-tail test at 5% level of significance with the degree of freedom of 37, the t-test shows that democratic government was statistically significant in explaining the quantity of FDI that came into this country during the review period as t* = 3. 97 > tt = 2. 04. 6. FDI = -11263. 5 – 5350. 6GOVTPol + µ (24969. 4) (6419. 2) Note: The figures in parenthesis in the fitted estimated model are the standard errors. R2 = 0. 7842 DW = d* = 1. 9087 @ 5% Significance level t* = -0. 83354 tt(0. 0025) = 2. 042 at 5% significance level Model six is inconsistent with our a priori expectation of positive relationship between government policies and FDI. In this model, there is an inverse relationship between government policies and FDI. The result reveals that an unfavourable change in government policies causes the FDI to change also. The result also reveals that the proportion of the increase or change observed in FDI over the review period as a result of changes in government policies was approximately 97. 8 per cent.

The t-test result shows that government policy was statistically insignificant in explaining the inflow of FDI during this period as t* = -0. 834 < tt = 2. 04. In line with the findings of studies conducted at various times by previous writers (see for example Chete, 1998; Obadan, 2004; Oyeranti, 2003; Akinkugbe, 2003; Asiedu, 2002; Anyanwu, 1998; Dunning, 1994; Yauri, 2006), this study finds that the GDP, BOT, democratic government and government expenditure contributed immensely and were statistically significant in explaining the inflow of FDI in Nigeria over the period under review.

Conversely, government policies and inflation exhibited inverse relationship with FDI and proved to be statistically insignificant to the observed growth in FDI over the period. The former can be justified, inter alia, by the increases in the level of economic activities including ICT. It can also be explained by some pragmatic economic reforms undertaken in the banking sector by the Central Bank of Nigeria (CBN) which is gradually winning back the confidence of investors. There is equally the issue of relative stable polity (government) beginning from 1999 as supported by the result of our regression analysis.

Government during the period under study took stringent steps at removing trade barriers by consummating the privatization and commercialisation policies as enshrined in the SAP-project. 5. Conclusion and Recommendations In this study, we have established that GDP as proxy for economic growth, government expenditure, BOT and democratic government had positive influences on FDI inflows. We have also demonstrated that inflation and government policies exhibited inverse relationships with FDI. The reasons for these two scenarios have also been highlighted.

Admittedly, our findings corroborate the findings of previous studies as listed earlier. Based on our findings, we recommend that the present administration of President Jonathan must improve on the existing political climate as a matter of urgency and establish a conducive environment that is investment friendly which is devoid of arson, terrorism and bomb blast as is currently the case in the northern part of Nigeria if the country is to sustain and build on the present temple of enthusiasm and gains already achieved.

Government must encourage and use appropriate policies to redirect the FDI inflows to the real sectors of the economy rather than the service and consumer goods subsectors as is the present case. It is only by so doing that Nigeria can accumulate capital formation and re-engineer the productive sector of the economy. Government needs to be more consistent with its policy formulation and execution as this has the potency and capacity to either increase or wane the level of confidence of would-be foreign investors.

Finally, there is the need for government to diversify the economy, reinvigorate the non-oil export activities and undertake a comprehensive review of the on-going restructuring of investment policies of government so as to divesting and privatising PHCN, NNPC and many more of their type for efficiency and eliminate wastage in our public enterprises. References Ake, C. (1978), Revolutionary Pressures in Africa, Zed Press, London. Akinkugbe, O. (2003), Flow of Foreign Direct Investment to Hitherto Neglected Developing Countries, Wider Discussion Paper Vol. 2. Anyanwu, J. C. 1998), An Econometric Investigation of the Determinants of Foreign Direct Investment in Nigeria, (eds) Rekindling Investment for Economic Development in Nigeria, The Nigerian Economic Society’s Annual Conference Papers. Aremu, J. A. (2003), An Overview of Foreign Private Investment in Nigeria, in Nnanna, O. J. et al (eds) Foreign Direct Investment in Nigeria, proceedings of the 12th Annual Conference of th Regional Research Units of the Central Bank of Nigeria Asiedu, E. (2002), Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different? World Development, Vol. 30, No. 11. Chete, L.

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(2002), Trade, Foreign Direct Investment, and International Technology Transfer: A Survey, The World Bank Research Observer, Vol. 17, No. 2, pp191-235 Tae-Hyon, C. 1995), Foreign Direct Investment in Korea: Recent Trends and Changes to Improve the Investment Environment, Korea Exchange Bank Quarterly, First Quarter. Voivodas, C. S. (1973), Exports, Foreign Capital and Economic Growth, Journal of International Economics, Vol. 3, No. 4. Wendt, H. (1993), Global Embrace, Harper Business, New York. World Bank (1996), World debt Tables: External Finance for Developing Countries, Vol. 1, Washington, D. C. Yauri, N. M. (2006), Foreign Direct Investment and Technology Transfer to Nigerian Manufacturing Firms – Evidence from Empirical Data, Economic and Financial Review, Central Bank of Nigeria, Vol. 4, No. 2, June. Yakub, M. U. (2005), Foreign Direct Investment (FDO) Flows to Nigeria: Issues, Challenges and Prospects, CBN Bullion Publication, Vol. 29, No. 4, Oct/Nov, pp54 – 64. Appendix 1 Factors used in the Regression Analysis of the Determinants of FDI in Nigeria Between 1970 & 2008 Year| FDI(#’ Million)/4| GDP(#’ Million)/3| Total Govt Expenditure(#’Million)/5| Inflation(annual Rate %)/2| BOT(#’ Million)/6| Demo Govt(Dummy)/7| Govt Policy(Dummy)/8| 1970| 1,003. 2| 4,219. 0| 903. 90| 13. 8| 46. 6| 0| 0| 1971| 1,322. 8| 4,715. 5| 997. 20| 16. 0| 117. 4| 0| 0| 1972| 1,571. | 4,892. 8| 1,463. 60| 3. 2| 57. 2| 0| 0| 1973| 1,763. 7| 5,310. 0| 1,529. 20| 5. 4| 197. 5| 0| 0| 1974| 1,812. 1| 15,919. 7| 2,740. 60| 13. 4| 3,102. 2| 0| 0| 1975| 2,287. 5| 27,172. 0| 5,942. 60| 33. 9| 157. 5| 0| 0| 1976| 2,339. 0| 29,146. 5| 7,856. 70| 21. 2| (339. 0)| 0| 0| 1977| 2,531. 4| 31,520. 3| 8,823. 80| 15. 4| (527. 2)| 0| 0| 1978| 2,863. 2| 29,212. 4| 8,000. 00| 16. 6| 1,293. 6| 0| 0| 1979| 3,153. 1| 29,948. 0| 7,406. 70| 11. 8| 1,868. 9| 1| 0| 1980| 3,620. 1| 31,546. 8| 14,968. 60| 9. 9| 2,402. 2| 1| 0| 1981| 3,757. 9| 205,222. 1| 11,413. 70| 20. | (3,020. 8)| 1| 0| 1982| 5,382. 8| 199,685. 3| 11,923. 20| 7. 7| (1,398. 3)| 1| 1| 1983| 5,949. 5| 185,598. 1| 9,635. 70| 23. 2| (301. 3)| 1| 1| 1984| 6,418. 3| 183,563. 0| 9,927. 60| 39. 6| 354. 9| 0| 1| 1985| 6,804. 0| 201,036. 3| 13,041. 10| 5. 5| 349. 1| 0| 1| 1986| 9,313. 6| 205,971. 4| 16,223. 70| 5. 4| (784. 3)| 0| 1| 1987| 9,993. 6| 204,806. 5| 22,018. 70| 10. 2| 159. 2| 0| 1| 1988| 11,339. 2| 219,875. 6| 27,749. 50| 38. 3| (2,294. 1)| 0| 1| 1989| 10,899. 6| 236,729. 6| 41,028. 10| 40. 9| 8,727. 8| 0| 1| 1990| 10,436. 1| 267,550. 0| 60,268. 20| 7. | 18,498. 2| 0| 1| 1991| 12,243. 5| 265379. 1| 66,584. 40| 13. 0| 5,959. 6| 0| 1| 1992| 20,512. 7| 271,365. 5| 92,797. 40| 44. 5| (65,271. 8)| 0| 1| 1993| 66,787. 0| 274,833. 3| 54,501. 80| 57. 2| 13,615. 9| 0| 1| 1994| 70,714. 6| 275,450. 6| 160,893. 20| 57. 0| (42,623. 3)| 0| 0| 1995| 119,391. 6| 281,407. 4| 248,768. 10| 72. 8| (195,316. 3)| 0| 0| 1996| 122,600. 9| 293,745. 4| 337,417. 60| 29. 3| (53,152. 0)| 0| 0| 1997| 128,331. 8| 302,022. 5| 428,215. 20| 8. 5| 1,076. 3| 0| 0| 1998| 152,409. 6| 310,890. 1| 487,113. 40| 10. 0| (220,675. 1)| 0| 0| 1999| 154,188. | 312,183. 5| 947,690. 00| 6. 6| (326,634. 3)| 1| 1| 2000| 157,535. 4| 329,178. 7| 701,050. 90| 6. 9| 314,139. 2| 1| 1| 2001| 162,343. 4| 356,994. 3| 1,017,996. 50| 18. 9| 24,738. 7| 1| 1| 2002| 166,631. 6| 433,203. 5| 1,018,178. 10| 12. 9| (565,353. 3)| 1| 1| 2003| 178,478. 0| 477,533. 0| 1,225,988. 30| 14. 0| (162,839. 7)| 1| 1| 2004| 249,220. 6| 527,576. 0| 1,384,000. 00| 15. 0| 1,128,379. 4| 1| 1| 2005| 269,844. 7| 561,931. 4| 1,743,200. 00| 17. 9| 1,364,845. 5| 1| 1| 2006| 302,843. 3| 595,821. 6| 1,842,587. 70| 8. 2| 2,406,340. 6| 1| 1| 2007| 364,008. 5| 634,251. | 2,348,593. 00| 5. 4| 2,379,064. 7| 1| 1| 2008/1| 397,395. 2| 674,889. 0| 3,078,300. 00| 11. 6| 3,482,276. 4| 1| 1| /1 = Provisional /2 = 1970-2005 extracted from National Bureau of Statistics 2006-2008 extracted from CBN Statistical Bulletin /3 = GDP at Current Basic Prices Sources:Central Bank of Nigeria Statistical Bulletin 2008 (50 Years Special Anniversary Edition) and National Bureau of Statistics,2006 Appendix 2: Results of the Regression Analysis of the Estimated Determinants of FDI in Nigeria from 1970 – 2008 Explanatory Variables| Equations | 1| 2| 3| 4| 5| 6| Constant| 23369| 55815. 2| 87710. 9| 14436. 1| 104738. 3| -11263. 5 | GDP| 0. 01789**| | | | | | BOT| | 0. 11295**| | | | | INF| | | -699. 785*| | | | GOVTEXP| | | | 0. 15665***| | | DEMGOVT| | | | | 112462. 3**| | GOVTPol| | | | | | – 5350. 6*| R2 t-StatisticsD. W. Stat| 0. 885023. 476022056| 0. 496605. 95930. 20697| 0. 013769-0. 708950. 059708| 0. 9385123. 441010. 78725| 0. 030543. 973810. 096085| 0. 304. 90-0. 833540. 20895| Note: *** = Strongly statistically significant; ** = Statistically significant * = Statistically insignificant