Capital Inflows and Economic Resilience: Foreign Direct and Portfolio Investments as Growth Catalysts in the Nigerian Economy.

Abstract:

Capital inflows, including Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI), are pivotal in influencing the economic development of emerging economies. The focus of the study was to analyze the effect of inflow of capital on the Nigerian economic growth and agricultural productivity. Considering the behavioral pattern of the variables used for estimation, this study adopted Autoregressive Distributed Lagged model (ARDL). The findings of the analysis show that there is negative and insignificant relationship between FDI and Nigerian economic growth in both short and long run.FPI has mixed impact of positive and negative in the short run and long run respectively. Foreign portfolio investment (FPI) shows a positive but statistically insignificant short-run effect on agricultural output in Nigeria and negative but insignificant impact in the long run.Foreign direct investment has insignificant negative effect on agricultural productivity in the short run but a positive and insignificant effect in the long run. In the light of the findings and analysis of this research, the researcher recommends that policymakers should focus on attracting high-quality foreign direct investments by addressing underlying structural deficiencies, such as poor infrastructure and weak institutional frameworks. This can create an enabling environment for FDI to have a meaningful and positive impact on economic growth and agricultural productivity.