THE EFFECT OF FOREIGN DIRECT INVESTMENT (CASE STUDY: NIGERIA)

ABSTRACT
Foreign direct investment involves a business or production investment by a company to one or more countries. FDI enables host countries to achieve economic growth through investments that outweighs that of the host country’s local investment. It increases the capital formation of host countries, which in the long run lead to growth in both the private and public sectors. Host countries usually benefits from foreign direct investment because of new technologies, capital, employee training, and other incentives which investors bring with them.

This paper tends to look at the relationship that exists between the host country and foreign direct investment. The biggest challenge investors’ encounter in developing countries like Nigeria is the lack of infrastructural facilities and this has reduced the amount of FDIs Nigeria. Various articles from different writers are used in this research work on how foreign direct investment affects the host country.

At the end, it was discovered the foreign direct investment helps in developing the economy of developing countries like Nigeria.


TABLE OF CONTENTS

Abstract
Figure

1          INTRODUCTION
1.1 Nigeria and Nigerian economy
1.2 Statement of research problem
1.3 Research questions
1.4 Objectives of the study
1.5 Definition of terms
1.6 Structure of the research

2          LITERATURE REVIEW: THEORIES, DETERMINANTS, AND CRITICISM OF FOREIGN DIRECT INVESTMENT
2.1 Foreign direct investments
2.2 Infrastructural facilities in Nigeria
2.3 Theoretical framework
2.4 Criticism of foreign direct investment

3          NIGERIA INFRASTRUCTURE AND FDI SYSTEM
3.1 Definitions of foreign direct investment
3.2 FDI and Nigeria meaning
3.3 FDI in Nigeria and country of origin
3.4 Determinants of foreign direct investment
3.5 Infrastructural facilities in Nigeria
3.6 Effects and impacts of FDI in economic growth of Nigeria
3.7 Factors affecting the amount of FDI
3.8 FDI- growth relations with Nigerian economy
3.9 Nigeria economy
3.10 China-Nigeria relationship
3.11 Impact of Chinese FDI on the Nigerian economy

4          DISCUSSIONS AND CONCLUSION
4.1 Discussions
4.2 Conclusion and recommendation
4.3 Evaluation of research method
REFERENCES


1       INTRODUCTION
In the history of the world, there had been so many revolutions, which had changed the pattern of relationship among nations within the global environment. First World War brought about peaceful and friendly relations among the countries internationally because there was a need for them to come together and resolve the various issues that could lead to another war among them and this led to the formation of League of Nations, the War was regarded to be War to end all Wars. It was quite unfortunate that League of Nations couldn‘t prevent the coming of the Second World War in 1939 to 1945 and after this war, there was cold war within the global environment, which ended the friendly relations among the countries in the world and the issue of security came to be prominent and important to them. There was no mean for economic interdependence whereby a multinational company could expand its branch beyond its sovereign state.


From Second World War to 1970s Foreign Direct Investment could not convince so many countries especially developing countries about its advantages and the fear of domination as well as the belief of national security could not allow foreign investors to penetrate beyond their political boundaries in fact, there was nothing like economic relations among the nations then. But from 1970s upward, the need for economic relations and interdependence came to be significant to countries in the world and most in particular, developing nations. And the various benefits of Foreign Direct Investment as a roadway to success for economy development of the developing economies came to be very important to developing countries. FDI had done so much to many nations considering their efforts in Korea after Korean War, Japan after the destruction of Hiroshima and Nagasaki by United State during the World war II, China and India the two most populous countries in the world with poor economy to sustain their people. These countries had economy development by incorporating their local investment with the use of foreign skills, technologies, experts and management through FDI.


The need for Nigerian government to follow this trend came to be very important considering the various efforts of the government to bring foreign investors into the country. Nigeria as a country has been regarded to be Giant of Africa due to her leading roles in the continent but the country remains to be poor and underdeveloped. The inability of the country to develop economically necessitates the need to invite the efficacies FDI inflow into the country. But it was quite unfortunate that African countries in general had not been be to attract much attention of foreign investors due to the struggling economies of the region, as well as lack of various determinants of FDI inflow in host countries. Developing countries including Nigeria have not exploited foreign direct investment to its maximum due to the hostile investment climate. (Asiedu, 2002).


The importance of foreign capital for the economies development of developing nations including Nigeria has cntributed to the growth of a developing country (Obiwona, 2004). Foreign direct investment (FDI) significant for economic growth in the developing countries because it affects the economic growth by stimulating domestic investment, capital formation expansion and also, enhancing the technology transfer in the host countries. (Falki, 2009).


Due to various advantages and effects of FDI to economic development of the host countries, as explained by different writers and scholars of the discipline. Falki (2009) explained that the effects of FDI on the host economy result to increase in employment, enhance productivity, boost in exports and transfer of technology. According to Khan (2007), foreign direct investment (FDI) has emerged as the most significant source of external resource flows to developing countries over the years and has become an important part of capital formation in these countries, though the global distribution of FDI has continued to decline. Government of these developing should encourage foreign direct investment in order to atain a level of development. But it is also quite disheartening that, the continent still remain underdeveloped and poor and some writers accounted for this to be as result of unattractiveness of the region to foreign investors due to the lack of some major determinants of FDI in the host countries. According to (Anyadike, 2012); this slow economic growth and development has been due to the lack of inflow of foreign investment. According to Aremu (1997), Nigeria has adopted a number of measures aimed at improving growth and development in the domestic economy, one of which is attracting foreign direct investment (FDI) into the country.

African countries including Nigeria had made several attempts to attract the interest of Foreign Investors but with all these efforts, they have not been able to achieve their aims to the fullness. The issue of infrastructural facilities as a major obstacle of FDI inflow to the region most in particular Nigeria would be the center focus of this research work. proper infrastructure such as railways, telecommunication, stable power supply, transportation and good health care. The inability of the Nigeria in particular and African countries in general to enhance the development of their infrastructure has made it difficult for foreign investors to come into the region. Though there are other factors that could make a country more attractive to inflow FDI according to different authors. Dinda (2009) revealed that the...

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Item Type: Project Material  |  Attribute: 60 pages  |  Chapters: 1-5
Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.
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