IMPACT OF FOREIGN DIRECT INVESTMENT (FDI) ON THE GROWTH OF TELECOMMUNICATION SECTOR IN NIGERIA: 1980-2014

Emma Collins N.O

Abstract


For decades, successive Nigerian governments have viewed foreign direct
investment as a vehicle for political and economic domination of Nigeria. And hence the thrust of government indigenization policy through the Nigeria Enterprise Promotion Decree (NEPD) has been to regulate foreign direct investment, with a maximum of 40% foreign participation allowed. This has resulted to a decline in both private and foreign investment and has therefore, slowed down growth in all sectors of the economy including the Telecommunication (Telecom) sector. The study thus undertakes an empirical analysis to examine the impact of Foreign Direct Investment (FDI) on telecom sector growth in Nigeria within 1980 and 2014.Error Correction Model (ECM) was employed to examine how the Degree of openness (DOP), Foreign Direct Investment in telecom(FDItel) and FDI had impacted on the contribution of telecommunication sector to Nigeria's GDP. Unit root test was carried out on each of the variables and stationary variables were subsequently used for the analysis. The conitegration results showed that there was a long run equilibrium relationship among the variables. The findings from the analysis showed that degree of openness (DOP) related positively with telecommunication sector. This
shows the significance of international trade in spearheading the growth and development telecom sector. Based on the findings therefore, the researcher recommends that an investment friendly environment climate should be provided to enhance foreign investment in the telecom sector. More so, streamlining procedures for business visas and entry of foreign workers, deepening tax reforms, should be created by the government so as to increase the inflow of FDI into the Nigerian economy.

Keywords: Foreign Direct Investment, Telecommunication, degree of openness, Gross Domestic product, Error correction model.
JEL Classification: C51, C52, F21, L96 and D92

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International Journal of Management Science Research ISSN ISSN 2536 – 605X(Print)

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