Trade Openness, Foreign Direct Investment and Economic Growth Nexus: Evidence from Nigeria

Abstract

The study examined the relationship among trade openness, foreign direct investment, and economic growth in Nigeria between 2000 and 2024, using ARDL bound technique. The study examined few specific objectives which examined the impacts of the independent variables (FDI, TOP, INFLR, and INTR) on economic growth (RGDP) and the causality among the variables. Findings showed the establishment of a long-run relationship among the variables.  In the long-run, no one variable has significant impact(s) on the economy. In the short-run, FDI likewise interest rate (INTR) showed significant impacts on the economy but the impacts are negative, while openness of trade and inflation rate (INFLR) have positive insignificant impacts on economic growth in Nigeria within the period of study. Therefore, it recommends that government should encourage a healthier foreign direct investment (FDI) in order to create employment and enhance economic growth. Government should put up policies on trade that will promote trade openness among the neighboring countries so as to create economic expansion, stability and protection.