ADEBIYI BLESSING OYINDAMOLA

EFFECTIVENESS OF EXCHANGE RATE POLICY ON FDI INFLOW PERFORMANCE IN NIGERIA (1960-2022). - Dr Oluwatosin O. Oluyomi - Mountain Top University Economics July,2024 - 100p

Theoretically, foreign direct investment has been widely accepted as stimulus to economic growth in all economies especially developing economies . However the persistent fluctuations and instability in the exchange rate as well as FDI inflows size to
developing countries when compared to emerging economies has persistently declined therefore the objectives of this research are to investigate the effect of regulated and deregulated exchange rate policy on the FDI inflow performance as well as the causal
direction among exchange rate policy and FDI inflow performance in Nigeria . The estimation technique used in the research is the ARDL Bound’s Cointegration Technique and the data is sourced from CBN bulletin and WDI. Objective one results revealed that
the cointegration test shows that regulated contributed negatively to the gross population per capita in the short-run, but still however, in the long-run, the regulated has a positive effect. This results therefore shows that the regulated exchange rate can bring significant and steady increase to the economy in the long-run. Objective two results from the OLS test reveals that the deregulated has a negative impact of the economy in the short-run as well as in the long-run, still the deregulated contributes negatively to the economy. Objective three results from the OLS test reveals that the deregulated has a negative impact of the economy in the short-run as well as in the long-run, still the deregulated contributes negatively to the economy.It was concluded that regulated exchange rate policies had a positive and significant impact on FDI inflow performance in both the short and long run. This indicates that consistent and predictable exchange rate policies provide a stable environment that encourages foreign investors to commit capital to the Nigerian economy. Conversely, deregulated exchange rate policies were found to have an inverse effect on FDI inflows over the same periods. Overall, these recommendations aim to guide policymakers in crafting effective exchange rate policies that optimize FDI inflows, thereby contributing to Nigeria's economic growth and development. By understanding the complex interplay between exchange rate policies and FDI, the government can develop strategies that not only attract foreign investment but also ensure sustainable economic development.


Economics

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