The Impact of Foreign Direct Investment on Nigeria Economic Growth

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CHAPTER ONE INTRODUCTION 1.1 Background of the Study Industrialization has not only changed the way the world do business but also changed the world itself. Fortunately, Nigeria is one of the countries that did not escape its impact. Industrialization is the process of social and economic change that transforms a human group from a pre-industrial society into an industrial one. It is a part of a wider modernization process, where social change and economic development are closely related with technological innovation, particularly with the development of large scale energy and metallurgy production. It is the extensive organization of an economy for the purpose of manufacturing. Industrialization also introduces a form of…show more content…
The economic factors that have affected economic development and growth in Nigeria can be segregated into internal and external factors. The internal factors reviewed dates back to the oil boom of the 1970’s when crude petroleum export began to gain ascendancy in foreign exchange revenue. The oil sector which accounted for 22% of the GDP (gross domestic product) provided about 80% of the government revenue and over 96% of export earnings in 1980 and as a result of the increase in government revenue from oil, agriculture were neglected. The share of the agricultural sector in GDP (gross domestic product) fell from 40% in the early 1970’s to 20% in 1980. Nigeria became dependent on imported food and agro-allied industrial inputs, the need for foreign capital then arose in the country for economic development and growth. Foreign capital can enter a country in form of private capital and public capital and private capital my take the form of direct or indirect investment. Foreign Direct Investment (FDI) refers to ownership of physical productive assets in the recipient country. It can be seen as the sum of the following components; • New equity from the foreign company in the home country to the company in the host country. • Re-invested profits earned from the company and • Long-term and short-term net
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