FOREIGN DIRECT INVESTMENT AND POVERTY REDUCTION IN NIGERIA (REGRESSION ANALYSIS USING OLS)

FOREIGN DIRECT INVESTMENT AND POVERTY REDUCTION IN NIGERIA (REGRESSION ANALYSIS USING OLS)

The title page

Page of approval

Dedication

Acknowledgment

Abstract

Contents table

INTRODUCTION TO CHAPTER ONE

1.1 The Study’s Background

1.2 Problem identification

1.3 The study’s objectives

1.4 Research concerns

1.5 The study’s hypotheses

1.6 The study’s significance

1.7 The study’s scope

1.8 The study’s limitations

1.9 Terms and Definitions

REVIEW OF LITERATURE IN CHAPTER TWO

2.1 Theoretical framework

2.2 Theoretical Structures

2.3 An empirical examination

2.4 Review of related literature summary

RESEARCH METHODOLOGY (CHAPTER 3)

3.1 Research strategy

3.2 Field of Study

3.3 Research population

3.4 Number of samples

3.5 Method of sampling

3.6 Research apparatus

3.7 Information source

3.8 Validity and dependability of research instruments

3.9 The instrument’s dependability

3.10 Data analysis methods

RESULTS AND DISCUSSIONS IN CHAPTER FOUR

ABSTRACT

Developing countries all over the world compete to attract foreign direct investment in the belief that it can be a tool for poverty reduction because it supplements domestic savings and is frequently accompanied by technology and managerial skills that are essential in economic development. Foreign direct investment can make a significant contribution to breaking the growth-poverty vicious circle, and therein lies Nigerian hope. The Nigerian government has opened up several economic sectors to foreign investors and provided a number of investment incentives. Since the implementation of market-oriented economic reforms in Nigeria, the emphasis has been on attracting FDI. The empirical relationship between FDI and poverty reduction is examined in this study. It is based on secondary data gathered from various sources. Nigeria’s central bank and the World Bank’s global development indicators. The study spans the years 2007 to 2017. The Ordinary Least Squares Estimation Approach was used to estimate the model. The findings indicate that FDI has a positive but not statistically significant impact on real per capita income and thus has the potential to reduce poverty in the country. The insignificant impact on the Nigerian economy may be due to underdevelopment of human capital, backward institutions, crowding out of domestic investment, or other factors that require further investigation. However, the fact that FDI has no significant impact on poverty reduction has important implications for policymakers, particularly trade and FDI policies, which must be reviewed in order to promote FDI growth.

CHAPTER ONE

INTRODUCTION

1.1       Background of the study

Foreign capital is well understood to be important to developing countries. It supplements their domestic savings and is frequently accompanied by technology and managerial skills, both of which are required for economic development. Foreign direct investment has the potential to significantly contribute to breaking the growth-poverty vicious circle, giving Nigerians hope. The Nigerian government hopes that Foreign Direct Investment (FDI) will compensate for shortfalls in domestic capital, provide technology and managerial skills, facilitate access to foreign markets, and generate both technological and efficient spillovers to local firms. Foreign Direct Investment (FDI) is expected to improve the integration of the continent’s global economy, spur economic growth, and alleviate poverty by providing access to external markets, transferring technology, and building capacity in local firms in general. Direct foreign investment has been described as the most effective form of foreign finance. Foreign Direct Investment (FDI) packages include finance, technology, and highly skilled personnel (Lall and Streeton 1977). Indeed, in the case of Nigeria, as in the case of other third-world countries, Foreign Direct Investment (FDI) was the primary channel through which their import-substitution industrialization strategies were pursued. It is widely assumed that, given appropriate host-country policies and a basic level of development, benefits from Foreign Direct Investment (FDI) could include job creation, the acquisition of new technology and knowledge, and increased tax revenue from cooperative profits generated by Foreign Direct Investment (FDI). All of these benefits are expected to contribute to increased economic and employment growth, which is the goal. The most important and effective tool for improving human well-being and alleviating poverty in Nigeria. However, the impact of Foreign Direct Investment (FDI) on poverty alleviation is primarily determined by a variety of factors, including host country policies and institutions. The most effective way for Foreign Direct Investment (FDI) to help alleviate poverty is to increase access to employment opportunities. Nigeria’s ability to alleviate poverty is dependent on an adequate inflow of foreign investment resources. For decades, the country has faced challenges in its efforts to alleviate poverty. At the moment, the majority of Nigerians live in poverty. As a result of the low level of per capita income that characterizes less developed economies, the traditional economic model assumes that average and marginal consumption propensities are the same. are high, savings are low, and new productive capital formation is limited.

1.2   STATEMENT OF THE PROBLEM

Despite massive FDI flows into the country aimed at improving the economy and thus reducing poverty, the incidence of poverty in Nigeria remains high (Ogunniyi and Igberi, 2014; Oni, 2014). FDI inflows have been positive and steadily increasing. Currently, the country is the most popular foreign capital destination in Africa, accounting for more than 15% of total FDI flows into the continent (UNCTAD, 2012). However, as a gap in the literature that this study intends to fill, an answer to the poverty FDI inflows nexus in Nigeria has not been provided, particularly the influence of some selected macroeconomic variables or indicators such as Foreign direct investment, External earnings, Trade openness, Market size, Exchange rate, External debt, and so on. Foreign aid and technology in the fight against poverty Nigeria has a reduction. This knowledge gap necessitates an empirical investigation to determine the impact of these selected macroeconomic indicators on poverty reduction in Nigeria.

1.3       OBJECTIVE OF THE STUDY

The study’s objectives are as follows:

1. Determine the link between foreign direct investment and poverty reduction in Nigeria.

2. To ascertain whether FDI has had an impact on poverty reduction in Nigeria.

3. Determine whether foreign direct investment causes poverty in Nigeria and vice versa.

1.4       RESEARCH QUESTIONS

a) Has FDI had an impact on poverty reduction in Nigeria?

b) Is there a link between foreign direct investment and poverty in Nigeria?

c) Does foreign direct investment cause poverty in Nigeria and vice versa?

1.5   RESEARCH HYPOTHESES

The researcher developed the following research hypotheses in order to successfully complete the study:

H0: In Nigeria, there is no relationship between foreign direct investment and poverty reduction.

Ha1: In Nigeria, there is a link between foreign direct investment and poverty reduction.

H02: Foreign Direct Investment has little impact on poverty reduction in Nigeria.

Foreign Direct Investment has no significant impact on poverty reduction in Nigeria, according to Ha2.

1.5       SIGNIFICANCE OF THE STUDY

The research will be useful to the Nigerian government, students, and the general public. Nigeria’s ability to alleviate poverty is dependent on an adequate inflow of foreign investment resources and the country’s security for investment. The study will also serve as a resource for future researchers interested in this topic.

1.6   SCOPE AND LIMITATION OF THE STUDY

The study’s scope includes foreign direct investment and poverty reduction in Nigeria. The researcher comes across a constraint that limits the scope of the study;

a) Research Material Availability: The researcher’s research material is insufficient, limiting the study.

b) Time: The study’s time frame does not allow for broader coverage because the researcher must balance other academic activities and examinations with the study.

c) Organizational privacy: Limited access to the selected auditing firm makes obtaining all necessary and required information about the activities difficult.

1.7       DEFINITION OF TERMS

Foreign Direct Investment: A foreign direct investment is an investment by an entity based in another country in the form of controlling ownership in a business in one country. The concept of direct control distinguishes it from a foreign portfolio investment.

Poverty is defined as the scarcity or lack of a specific amount of material possessions or money. Poverty is a multifaceted concept with social, economic, and political components.

Poverty Reduction: Poverty reduction, also known as poverty alleviation, is a set of economic and humanitarian measures aimed at permanently lifting people out of poverty.

1.8  Organization of the Study

This research paper is divided into five chapters for easy comprehension: The first chapter is concerned with the introduction, which includes the (overview of the study), historical background, problem statement, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms, and historical background of the study. The second chapter emphasizes the theoretical framework on which the study is based, as well as a review of related literature. The third chapter discusses the study’s research design and methodology. The fourth chapter focuses on data collection, analysis, and presentation of findings. The study’s summary, conclusion, and recommendations are presented in Chapter 5.