External Financing and Industrial Sector Productivity in Nigeria

Abstract

This paper examined the impact of external financing, which comprised net foreign direct investment (NFDI) and net foreign portfolio investment (NFPI), on industrial productivity in Nigeria using time series data for the period 1986-2017, sourced from the Central Bank of Nigeria Statistical Bulletin (2017) and (UNCTAD, 2019) Bulletin. The paper adopted the co-integration-based autoregressive distributed-lag (ARDL) technique as method of data analysis. The findings of the study revealed that net foreign direct investment (NFDI) has significant negative effect and positive effect on industrial development in Nigeria in the short run and in the long run respectively. The net foreign portfolio investment (NFPI) has significant negative effects on industrial development in Nigeria both in the short run and in the long run. In order to mitigate these negative impacts, the study recommended that government of Nigeria should develop policies that will encourage foreign-owned firms through tax incentive to re-invest their earnings in the country and ensure transparency in industrial policies implementation.