Impact of Fiscal Prudence and Financial Development on Foreign Direct Investment Inflow: Nigerian Evidence

Foreign direct investment in a globalized and information technology driven environment, as we have today in the 21st century, acted as a driver of growth. This paper provides further evidences on macroeconomic management of FDI in emergent economies especially in Africa. The paper empirically measures the effects of fiscal prudence and financial development on foreign direct investment inflow in Nigeria. It tested the importance of household consumption, domestic credit to the private sector, fixed capital formation, domestic savings, external debt, foreign reserve and financial development for the purpose of ensuring FDI inflow in Nigeria. It findings show that domestic credit to private sector, fixed capital formation, foreign reserve and financial development are statistically significant in the case of Nigeria. The econometric methodologies followed for the study are log-linear regressions and ARDL bound testing. Data was sourced from National Bureau of statistics and World Bank’s World Development Index for the period ranging from 1985 to 2018.

The Relationship Between Information & Communication Technology and Foreign Direct Investment Inflow to Africa

This paper examined the relationship between the increasing Information & Communication Technology (ICT) infrastructure in Africa and foreign direct investment inflow to Africa using panel data sourced from ITU and WDI over 17 years (1998-2014). The paper applies both the fixed-effect and difference-in-differences models. The results indicate that there is a positive correlation between FDI inflow and ICT level in the host country.  The surge in ICT infrastructure in 2009 has substantially increased the FDI inflow to Africa. This increase in FDI inflow was more in the countries that have access to the sea than the countries that have no access to the sea. In other words, the average scale change in FDI inflow to the countries with no access to the sea is smaller than the countries with the coastline.

Nexus between Foreign Direct Investment Inflow and EPI Score in Brazil

Before 1990, foreign investors could not extensively invest in Brazil because of its stringent and conservative trade policy. However, in 1990 Brazil took a remarkable shift in its trade policy from its previous trends by taking a liberal stance in terms of FDI inflow. The liberal trade policy that Brazil took in 1990 remove all the trade barriers that previously hindered the free flow of FDI in Brazil, the sign of which had been reflected in the steady and gradual incremental FDI inflow in the country after that. This New opening of trade atmosphere had brought with it two very different repercussions. In one hand, it accelerated the economic growth by bringing in investment in the needed sectors; on the other hand this acceleration spurred industrial activities that are accompanied by air and water pollution and deforestation as a byproduct. Since then, environmental health and ecosystem of Brazil have been facing tremendous threat owing to these pollution problems which may indirectly distress the EPI score of Brazil. Keeping these issues in mind, the present study investigates the relationship between FDI inflow and EPI score in Brazil. With the help of descriptive statistical tools as well as Pearson correlation test, this study finds the negative relationship between FDI inflow and EPI score in Brazil.

The Short and Long Run Determinants of Foreign Direct Investment in Nigeria

What determines foreign direct investment inflows has been a subject of controversies among scholars. As a result of the highlighted gap discussed in this study, the short and long run determinants of foreign direct investment and their effects on foreign direct investment inflow in Nigeria was investigated from 1986 to 2018. Data were analyzed with Augmented Dickey-Fuller and Philip Perron unit root test, Autoregressive Distributed Lag and Pairwise Granger Causality techniques. Evidence of long run dynamic equilibrium relationship was established between foreign direct investment and its determinants. The short and long run coefficients revealed that government capital expenditure and inflation impede the inflow of foreign direct investment both in the short and long run while exchange rate serve as bane to foreign direct investment in the long run. However, gross domestic product and trade openness were found to stimulate the inflow of foreign direct investment in the short and long run. The Pairwise causality result revealed that government capital expenditure, exchange rate and trade openness had independent causality with foreign direct investment while gross domestic product and inflation rate had unidirectional causality with foreign direct investment. Thus, government should allocate more funds for the provision of enabling and investment enhancing environment to promote foreign direct investment inflow. The study added value to previous studies by estimating the short and long run determinants of foreign direct investment using more dynamic and robust technique of Autoregressive Distributed Lag developed by Peseran and Shin (1999). JEL Codes: C32, F21.