Trade Liberalization. Foreign Direct Investment Nexus In Nigeria (1990-2016)

Scientific Study from the year 2020 in the subject Economics - Foreign Trade Theory, Trade Policy, grade: 2.1, University of Nigeria, language: English, abstract: The primary objective of this work is to investigate the nature of the relationship between foreign direct investment (FDI) and trade liberalization in Nigeria and to ascertain the direction of causation between FDI and trade Liberalization. The work seeks to empirically examine the interlinkages between trade openness and foreign direct investment in Nigeria by relying on annual time series data spanning the period 1990-2018 and using the Engle-Granger two-step co-integration test to establish the existence of a stable long run equilibrium relationship among the variables at 5 percent level of significance. The study employed the Ordinary Least Square (OLS) regression technique and the pairwise granger causality test to validate the nature of the relationship existing between trade openness and foreign investment in Nigeria. Sequel to the regression result, the author found that although openness is statistically insignificant, foreign direct investment responds positively to changes in trade liberalization. Similarly, the granger causality reveals a zero causality between TOPEN and FDI.