The Impact of Foreign Direct Investment on Nigeria Economic Growth

Industrialization is defined as a process in which a society transforms itself from an agricultural based society to a more manufacturing based society for the mass production of goods and services. This change affected the lives of all people from the end of the Civil War through the 1870s including immigrants, skilled workers, and the wealthiest of classes.

Foreign direct investment by multinational corporations is the action of obtaining controlling equity share of a firm in a foreign country. There has been many discussions about the role of FDI in affecting a country’s unemployment rate and economic growth. Of which many believed

Despite the huge resource base of the country, Nigeria has not been able to achieve a high level of economic growth, nor has it been able to attract a high level of private sector investment commensurate with its economic potentials (Anyanwu, 1998). In the assessment of the Nigerian investment environment, the following factors have been identified as the major obstacles to economic growth and the flow of private sector investment to the country-

Definition: An investment made by a company or entity based in one country, into a company or entity based in another country.

"Foreign Direct Investment is the purchase by the investors or corporations of one country of non-financial assets in another country. This involves a flow of capital from one country to another to build a factory, purchase a business or buy real estate." (http://www.afsc.org/trade-matters/learn-about/glossary.htm).

This paper is divided into four chapters; chapter 2 looks at crude oil refining in Nigeria, offering an overview and challenges that confronts it. In chapter 3, crude oil refining and petroleum products economics is examined and chapter 4 looks at the implications of both crude oil refining and importation vis - à – vis the economy. The chapter 5 concludes the paper with few suggestions as to what the best economic option should be in meeting the petroleum products demand in Nigeria.

Based on OECD Factbook 2013: Economic, Environmental and Social Statistics, Foreign direct investment defined as cross-border investment by other investors from the economy that had the objective to gain long term interest or benefit from other countries that need capital for development. FDI have divided into 3 categorty such as Horizontal FDI, plaform FDI and vertical FDI. Kimberly state that Foreign direct investment is global economic growth which are apply in all countries such as developing and emerging market countries. The main purpose of FDI that the investor from other countries invests the surplus capital to other countries to gain benefit. At same time, the developing countries will gain more advanatge on

FDI is where the MNE invests directly in production or other facilities over which it has effective control in a host economy (j &t). According to Pollan (), the definition of the terms “investment” is highly significant to Foreign Direct Investment, which can be typical comprehend as the conveyance of capital to a country. Investment can be defined as money committed or property acquired in order to gain profitable returns, as interest, future income or appreciation in value (business dictionary, 2014). The commonest definition used to understand the idea of FDI is the definition provided by International Monetary Fund’s (IMF). The IMF definition of FDI introduces systems and structures which clearly demarcates foreign direct investment from portfolio investment. According to the IMF, direct investment creates a lasting interest in an enterprise, consisting of a long-term relationship between the investor and the enterprise and that the investor has an outstanding amount of control on the management of the enterprise, while portfolio investment does not create an extended relationship and the portfolio investor is rarely directly partaking in the day-to-day management of the enterprise (Pollan,). FDI however has no comprehensive, authoritative and ubiquitous legal definition and the test for the existence of enough degree of control differs in scope depending on applicable law in a

In Nigeria, economic liberalization through deregulation and privatization, has been implemented for various reasons, such as the demand for efficient and effective Public Enterprises, reduction in external borrowing, stronger capital markets, and improve accountability, but most important of all, for generation of employment and sustainable livelihoods for the betterment of Nigerian welfare (World Bank, 2013).

Economists believe that Foreign Direct Investments is an essential part of economic evolution in every country. There are many academic papers that attempt to assess FDI aspects. Despite many researchers have tried to give an accurate explanation to FDI, there is no comprehensively approved theory. FDI motivations have been mainly researched by John Dunning, Stephen Hymer, Raymond Vernon, etc.

FDI is the outcome of Mutual interest of MNC’s and host countries. The FDI refers to the investment of MNC'’ in host countries in the form of creating productive facilities and having ownership and control. On the other hand if MNC or a foreign organization or a foreign individual buys bonds issued by host country it is not FDI, as it has no attached management or controlling interest. Such investments are called Portfolio Investments.

Foreign Investment is direct method to have trade in other country in this a company invest a huge amount of money in selected country. In foreign investment company is going to establish new enterprise own its own in totally new environment. Company have to arrange every single thing like plant, machinery, employees and authorise dealer for marketing the products.

The advent of globalisation has influenced the scope of economic growth for countries in a rapid manner. It has also notified that with globalisation, the business sector has been able to experience considerable benefits from international domain. The concept of Foreign Direct Investment (FDI) has been gain huge prominences in the recent years for getting considerable benefits for the economy and overall development of a nation. The importance of FDI has been attaining huge prominences among the economic as well as business domain. FDI is one kind of investment that influences the overall economic functioning within a country. FDI is mainly accompanied by multinational companies (MNCs)

The topic of my dissertation is about the determinants of foreign direct investment (FDI) in developing countries. With the trend of economic integration, FDI has been considered as an important part of boosting the economic development within any country around the world. Foreign direct investments differ entirely from indirect investments such as portfolio management.The direct way of investing in a foreign country can be conducted in a number of ways—either by establishing overseas controlled corporations, or associate company abroad, by obtaining shares of an multinational company, or though a joint venture.

Foreign Direct Investment is the investment of a country domestic assets into foreign structures, equipment and organizations, but does not include investment into stock markets. Foreign direct investment reflects the objective of obtaining a lasting interest by a resident entity in one economy (direct investor) in an entity resident in an economy other than that of the investor (direct investment enterprise). The lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence on the management of the enterprise. Direct investment involves both the initial transaction between the two entities and all subsequent capital transactions between them and among affiliated enterprises, both incorporated and unincorporated.