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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.
