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This study estimates the impact of Foreign Capital Inflows on economic growth in
Nigeria from 1986Q1 – 2014Q4. For empirical analysis, the paper adopts the Auto-
Regressive Distributed Lag- Unrestricted Error Correction Model (ARDL-UECM).
Empirical evidence from the ARDL-bounds Co-integration Test shows there is co-
integration between Economic Growth (proxied by Growth rate of Real Gross
Domestic Product) and Foreign Capital Inflows (disaggregated into Foreign Direct
Investment, Foreign Portfolio Investment and Workers’ Remittances) in Nigeria. The
results also show that apart from remittances, other components of Foreign Capital
Inflows have significant impact on Economic Growth in Nigeria. The study therefore
recommends that Government should, alongside other economic activities, provide an
enabling economic environment for more Foreign Capital Inflows. Also the financial
sector should be improved so that workers’ remittances can be efficiently tracked
through the banking channels and also put to productive use. This is how to minimize
the negative impact of workers’ remittance inflows into Nigeria.
