The Impact of Foreign Direct Investment on Economic Development in Nigeria (1990 - 2024)

ABSTRACT
Foreign Direct Investment (FDI) has been considered vital in economic development given the volume of capital, technology, and expertise it channels into host economies especially in developing economies like Nigeria. However, its actual impact on growth remains debated.
This study examines the impact of FDI on Nigeria's economic development using annual data from 1990 to 2024. Economic development is proxied by real GDP per capita (logged), with FDI, trade openness, and education expenditure as explanatory variables. The Autoregressive Distributed Lag (ARDL) model was applied after confirming that the variables were integrated of order one IL). The ARDL bounds test confirmed the existence of a long-run equilibrium
relationship among the variables.
The findings indicate that FDI positively and significantly influences the economic development in the long-term, which means that greater inflows lead to the increase in income per capita. Trade openness indicates a positive but not statistically significant impact, which indicates that the present trade system of Nigeria might not entirely facilitate development
goals. The expenditure on education has a negative and statistically insignificant effect
meaning that the education sector is not having a developmental impact due to inefficiencies
or slow returns.
The study concluded that although FDI contributes greatly to the long-term economic growth of Nigeria, the advantages of open trade and investment in education expenditure are limited.
It advises to enhance the quality and targeting of FDI. reconsider the current trade policy to
encourage export diversification and make education expenditure more efficient in the context
of achieving optimum economic development.