ECO 512: FDI, REMITTANCE INFLOWS, AND ECONOMIC DEVELOPMENT IN A DEVELOPING ECONOMY: WHAT DO NIGERIAN DATA SHOW?

This study investigated the impact of remittance inflows and Foreign Direct Investment on

economic development in Nigeria. The Phillip-Perron unit root test indicated that all the

series except domestic investment were stationary at first difference. With the combination

of orders of integration 1 and 0, the Autoregressive and Distributed Lag (ARDL) Model was

adopted. The results revealed there is a long relationship existing amongst the variables and

that Remittance inflow, Gross Fixed Capital Formation, Private Investment and Exchange

Rate are significant determinants of economic development. Of these variables, Remittance

inflow and Exchange rate were found to negatively influence economic development in the

long run while others were positive. A Vector Autoregressive (VAR) model was also used to

examine the response to shocks of Income per capita to Remittances and FDI respectively

and it was found that Income per capita responds to shocks from both variables. The study

recommends there is need for serious policy interventions from government to make foreign

direct investment and remittances more development enhancing and not retarding.