Macroeconomic Variables and Foreign Direct Investment in Nigeria

This study investigates the association between macroeconomic variables and foreign direct investment in Nigeria from 1980-2024. The variables used are foreign direct investment, exchange rate, gross domestic product, inflation rate, interest rate and trade openness. The techniques applied for the estimation is the Ordinary least square of multiple regression analysis, unit root, Co-integration and error correction mechanism. The result of the study indicated that some variables had positive link while others had negative association between macroeconomic variables and foreign direct investment in Nigeria. Variables like gross domestic product and exchange rate are statically significant at 5 per cent level of significance except interest rate, inflation rate, interest rate and trade openness which had negative sign as was expected. The result of the R2 is 61% indicating that the link between macroeconomic variables and foreign direct investment in Nigeria is 61 per cent. The study concludes that macroscopic policies should geared toward a better improvement in the macroeconomic environments to enhance and utilize the foreign direct investment inflow in the economy of Nigeria. Government should also be able develop sound policies that would strengthen or lure foreign direct investment into Nigeria by paying more attention to the identified macroeconomic policy variables that can attract its inflow. The study recommends a favourable interest rate policy so as to enhance the entire economy.