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DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN NIGERIA: A MARKOV REGIME-SWITCHING APPROACH

Review of Innovation and Competitiveness, 2017-04, Vol.3 (1), p.21-48 [Peer Reviewed Journal]

2017. This work is published under https://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. This is sourced from HRČAK - Portal of scientific journals of Croatia. ;ISSN: 1849-8795 ;EISSN: 1849-9015 ;DOI: 10.32728/ric.2017.31/2

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  • Title:
    DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN NIGERIA: A MARKOV REGIME-SWITCHING APPROACH
  • Author: Enisan, Akinlo A.
  • Subjects: Developing countries ; Economic growth ; Economic reform ; Error correction & detection ; FDI ; FDI; Markov-Regime Switching Model; Nigeria ; Foreign exchange rates ; Foreign investment ; GDP ; Gross Domestic Product ; LDCs ; Liberalization ; Macroeconomics ; Manufacturing ; Markov-Regime Switching Model ; Nigeria ; Structural adjustment ; Trends
  • Is Part Of: Review of Innovation and Competitiveness, 2017-04, Vol.3 (1), p.21-48
  • Description: Several studies have analyzed the movement of foreign direct investment in Nigeria using linear approach. In contrast with all existing studies in Nigeria, this paper runs several non linear FDI equations where the main determinants of FDI are determined using Markov- Regime Switching Model (MSMs). The approach enables us to observe structural changes, where exist, in FDI equations through time. Asides, where FDI regression equation is truly nonlinear, MSMs fit data better than the linear models. The paper adopts maximum likelihood methodology of Markov-Regime Model (MSM) to identify possible structural changes in level and/or trends and possible changes in parameters of independent variables through the transition probabilities. The results show that FDI process in Nigeria is governed by two different regimes and a shift from one regime to another regime depends on transition probabilities. The results show that the main determinants of FDI are GDP growth, macro instability, financial development, exchange rate, inflation and discount rate. This implies liberalization that stems inflation and enhance the value of domestic currency will attract more FDI into the country.
  • Publisher: Pula: Juraj Dobrila University of Pula
  • Language: English;Croatian
  • Identifier: ISSN: 1849-8795
    EISSN: 1849-9015
    DOI: 10.32728/ric.2017.31/2
  • Source: ProQuest Central
    DOAJ Directory of Open Access Journals
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