Empirical investigation of the impact of foreign direct investment on manufacturing firms and banks in Nigeria

Abstract

This thesis is based on the econometric investigation of the impact of Foreign Direct Investment on Nigerian manufacturing firms and banks. Unique data obtained from a survey of Nigerian firms conducted by the Centre for the Study of African Economies, University of Oxford, and United Nations Industrial Development Organization was employed for the estimations based on manufacturing firms. For the investigation based on Nigerian banks, this study uses the BankScope data base. Ordinary Least Squares and Fixed Effects techniques were used to estimate the coefficients of foreign presence measures in augmented Cobb-Douglas models for manufacturing firm data, and augmented Dealership models for data on banks. Results of the estimations show evidence of positive effects of foreign presence on domestic manufacturing firms, while no effects were obtained from the estimations based bank data.

The differences in FDI effects reflect on the sector-specific characteristics of manufacturing firms and banks in Nigeria. Manufacturing firms in Nigeria operate at low technology levels and are open to foreign direct investment, while the opposite seems to be case of banks in the country. The results therefore support earlier thoughts in literature on FDI which assert that positive spillovers exist were technology gaps between foreign firms and domestic firms exist, or in sectors open to FDI.

Important contributions were made in examining the effect of the approaches taken towards the measurement of foreign presence on spillover estimates with particular reference to sampling procedure and data quality. The study therefore concludes that FDI generates spillovers in Nigerian manufacturing firms but attention of empirical investigations should focus on appropriate measurement of foreign presence variables, and the specific characteristics of the sector or industry being examined.

Date of Award	Jan 2012
Original language	English
Awarding Institution	University of Portsmouth
Supervisor	Martin Snell (Supervisor) & Alan Collins (Supervisor)