Correlation Between Manufacturing Sectors and Foreign Direct Investment

Abstract

Abstract The manufacturing sectors of nation’s economies have without doubt been noted as the chief driver of economic growth the world over. The connection between the Nigerian manufacturing sector and foreign direct investment (FDI) was assessed in this work. The study, in order to empirically examine how the variables are related in the long term and short term, utilised time series data spanning 36 years, while the autoregressive distributed lag (ARDL) and co-integration technique were used. From the result, it is seen that the dependent variables explained R2 of 97% of the variations in manufacturing sector indicators (MFI), while Foreign direct investment, (FDI), Inflation rate (INF), government expenditure (GOE), and money supply (MSP) represent the independent variables. One of the recommendations of the study is that the federal government should consciously increase amount of foreign direct investments (FDI) made available to this all-important sector-manufacturing sector to boost its efficiency especially with respect to percentage impact on GDP and employment generation in Nigeria.