THE EFFECTS OF EXCHANGE RATE FLUCTUATIONS, INFRASTRUCTURE AND INFLATION ON FDI INFLOWS INTO NIGERIA (1986 – 2009)

AUTHOR: OHAZULIKE OBINNA KINGSLEY

DEPARTMENT: BANKING AND FINANCE

AFFILIATION: NNAMDI AZIKIWE UNIVERSITY, AWKA

The study examined the effect of exchange Rate fluctuations, infrastructural development and inflation on FDI inflows into Nigerian economy for the period (1986 – 2009). Secondary data used in the study relied on time series data on four variables namely FDI, exchange rate, inflation rate and expenditure on e conomic services as a proxy for infrastructural development. Th e econometric tools of Ordinary Least Square (OLS) multiple regression, unit root, cointegration, and Granger causality test were used to analyze the data. The results show that both exchange Rate fluctuations and infrastructure have positive effect on FDI although their effects are not statistically significant. Inflation on the other hand, exerts a statistically negative effect on FDI. The granger causality test shows that there is uni-directional relationship between INFRA and FDI in Nigeria. It was found that infrastructural development in Nigeria granger causes foreign direct investment. Furthermore, empirical evidence shows that infrastructural development was found to granger cause inflation. The result reveals that exchange rate fluctuations need not be a source of worry as factors affecting FDI inflow into Nigerian. Also effort should be made to improve the state of infrastructure in Nigeria via judicious utilization of expenditure on public services in order to guarantee desired and optimal FDI inflows into Nigeria. Effort should as well be made by the regulatory authorities to curtail the alarming/increasing rate of inflation as it exerts a negative influence on FDI inflow into Nigeria.

TO VIEW THE FULL CONTENT OF THIS DOCUMENT, PLEASE VISIT THE UNIZIK LIBRARY WEBSITE USING THIS LINK, http://naulibrary.org/dglibrary/admin/book_directory/Thesis/11064.pdf

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