Accounting for the symmetric and asymmetric effects of FDI-growth nexus amidst financial crises, economic crises and COVID-19 pandemic: application of hidden co-integration

Abstract

AbstractThis study investigates the symmetric and asymmetric effects of FDI-growth nexus amidst financial crises, economic crises and COVID-19 pandemic s in Nigeria over the period 1983–2020. Having confirmed the long-run stable state among the variables, the symmetric estimates suggest that the FDI inflow/outflow is significantly linked with economic growth both in the long and short run, while the asymmetric model suggests that the parameter estimates have asymmetric effects on economic growth during the economic crisis in Nigeria. Specifically, the positive shocks in FDI inflow/outflow generate a significant reducing impact on economic growth, while negative shocks in FDI inflow/outflow generate a significant increasing effect on economic growth. Based on this findings, the study suggests that policy option would need to generate more economic activities that would improve net inflow/outflow and cushion the effect of future crisis.