Impact of Foreign Direct Investment on Employment Generation in Nigeria

Abstract

Given the Nigeria economy resource base, the country’s foreign investment policy should move towards attracting and encouraging more inflow of foreign capital. The need for foreign direct investment (FDI) is born out of the under developed nature of the country’s economy that essentially hindered the pace of her economic development. Hence, this study investigates the relationship between international trade flows and employment in Nigeria for the period 1990 to 2010. Using time series estimation technique, we found significant link between FDI flows and employment in Nigeria both in the short-run and long run. However, external factors such as, real effective exchange rate, import rate and internal factors such as inflation rate and export rate more important factors in explaining employment rate in Nigeria. Therefore it is recommended that FDI should focus more on Nigeria’s agricultural sector because of the strategic relevance of the sector to the nation’s economy especially in the area of employment generation
and that concerted efforts should be made by the government to attract foreign investors, encourage production ad generate employment especially for the rural populace.