THE IMPACT OF FOREIGN DIRECT INVESTMENT ON NIGERIA ECONOMIC GROWTH

This study investigates the impact of Foreign Direct Investment (FDI) on Nigeria's economic growth over the period 2000–2025, amid challenges such as oil dependency, exchange rate volatility, and global shocks like the COVID-19 pandemic. Drawing on the Knowledge Capital Model, the research examines FDI's role in technology transfer, productivity spillovers, and overall macroeconomic performance. Specific objectives include assessing Nigeria's dependence on foreign capital, evaluating the investment climate's conduciveness to FDI attraction, and analyzing foreign technology's influence on industrial growth. Using secondary data from the Central Bank of Nigeria, the study employs Ordinary Least Squares (OLS) regression with GDP as the dependent variable and FDI, exports, exchange rate, and trade openness as independent variables. Diagnostic tests confirm model validity, with no significant autocorrelation, multicollinearity, or heteroscedasticity. Findings reveal a positive and significant relationship between FDI and GDP growth (β = 0.276, p < 0.01), underscoring FDI's contribution to capital accumulation and innovation. Exports and trade openness also exert positive effects (β = 0.421 and 0.237, respectively), supporting export-led growth, while exchange rate volatility has a negative impact (β = 0.318, p < 0.01). Hypotheses testing rejects the null, affirming FDI's growth-enhancing role. The study concludes that while FDI drives episodic booms, structural reforms are essential to mitigate vulnerabilities and harness spillovers. Recommendations include economic diversification, exchange rate stabilization, and policies promoting non-oil FDI to foster sustainable development.