Drivers of Foreign Private Investment Inflows in Emerging Market: Evidence from Nigeria

• Published in: Acta Universitatis Danubius. Œconomica 2020, Vol.16 (6), p.298-313
• Main Authors: Oluwatobi, Fagbola O, Babatunde, Oke O, Adegbite, Esther Oluwafunmilayo
• Format: Article
• Language: eng ; fre
• Subjects: Business Economy / Management; Capital; Capital movement; Data analysis; Economic development; Economic integration; Emerging markets; Energy consumption; Error correction & detection; Expenditures; Foreign exchange rates; Foreign investment; GDP; Government spending; Gross Domestic Product; Host country; Inference; Interest rates; International economics; Macroeconomics; Policy making; Politics; Private investment
• ISSN: 2065-0175; 2067-340X

In the globalized world with intense competition, emerging markets have attempted to attract more foreign private capital to bridge the dual gap and ultimately achieve their developmental goals. Against this backdrop, it has become imperative to ascertain the drivers of these inflows. This study advances the international private capital flows literature by empirically identifying the drivers of both foreign direct investment (FDI) and foreign private investment (FPI) inflows in Nigeria between 1986 and 2017. To achieve this objective, we employed the ARDL bounds test for cointegration. The estimated model revealed counts of the number of significant push and pull factors influencing the flows of FDI to Nigeria in the short run. The findings further revealed that country specific factors seem to be much more important than global factors in explaining the dynamics of FPI inflows to Nigeria both in the short-run and long-run. The policy inference of this study is that Nigerian policymakers should embrace a more open approach to international economic integration, combined with a proactive macroeconomic policy measure to managing the risks associated with volatile foreign private capital flows.