Exchange Rate Channel Of Foreign Direct Investment Through Oil Sector To Economic Growth In Nigeria 1970-2022
Emmanuel Eche PhD
Federal University Wukari, Faculty of Social Science, Department of Economics
Emmanuel Nwokah PhD
Federal University Wukari, Faculty of Management Sciences, Department of Business Administration
Nene Awa Eche CFA, CCA
Federal University Wukari, Department of Accounting
Keywords: Oil export, Economic growth, foreign direct investment, exchange rate, inflation, employment
Abstract
This paper investigates the indirect effect of Foreign Direct Investment on economic growth in Nigeria focusing on the Exchange rate channel. Although it has been difficult to determine why oil rich countries similar to Nigeria have benefitted from FDI in oil sector in the area of favorable exchange rate creation but Nigeria has not been able to efficiently benefit adequately in this regards, it is on this premise that the work offers a practical means of addressing the phenomenon. The study covers the period 1970 -2022; the study is descriptive and quantitative in nature using statistical tools, trends, the Structural Vector Auto regression (SVAR), among other econometric models. The findings of the study showed exchange rate channel is weak in transmitting the spillover effects of FDI in the oil and gas sector to economic growth in Nigeria. This weak transmission was ascribed to inefficiency in the management of foreign exchange earnings/market leading to excess pressure on the market and the resultant exchange rate depreciation and volatility in the economy. The paper recommend among others prudent management of foreign exchange supply from FDI and prudent allocation to critical sectors of the economy for further inflows of FDI into the economy