SELECTED MACROECONOMIC DYNAMICS AND FOREIGN DIRECT INVESTMENT IN NIGERIA

ABSTRACT

This research examined the impact of macroeconomic factors on foreign direct investment (FDI) in Nigeria from 1990 to 2023, using the Dynamic Ordinary Least Squares (DOLS) technique to analyze seven hypotheses. The findings reveal that the exchange rate significantly and negatively affects FDI, while GDP growth has a significant positive influence. Inflation also significantly and negatively impacts FDI, whereas broad money supply, unemployment, crude oil prices, and interest rates were found to have no significant effects. Based on these results, it is recommended that the Nigerian government stabilize the naira, prioritize sustained economic growth, and adopt balanced monetary policies to curb inflation while fostering growth. Additionally, improving financial market efficiency, diversifying the economy into non-oil sectors, and maintaining lower interest rates through enhanced stability and inflation control would help attract diversified foreign investments and reduce borrowing costs.