STATISTICAL ANALYSIS OF FOREIGN DIRECT INVESTMENT (FDI) ON GROSS DOMESTIC PRODUCT (GDP) IN NIGERIA.

CHAPTER ONE

1.0 INTRODUCTION

1.01 BACKGROUND OF THE STUDY

Foreign Direct Investment: it is a way of filling the gap between domestic available supplies of saving government revenue, human capital, skills and desired level of resources needed to achieve growth and development target.

Foreign direct investment is sum of equity capital reinvestment of earning long term and short term capital, it usually involves participation in management, joint ventures, transfer of technology and experience.

Gross Domestic Product: it is the market value of all final goods and services produced within a country in a given period of time. It also often considered an indicator or growth and standard of living for a country. Inflation when the price of most goods and services continues to rise upward. The South Asian Association for Regional Cooperation (SAARC) is an organization of South Asian Nations. .

However, GDP as a measure of economic output has its own defect especially in measuring final output. These defect include difficulties of distinguishing between final and intermediate products which may result in double counting. For this study, GDP is adopted because it is the most reliable indicator of measuring economic growth in developing countries.

The focus rather has been on the more modest goal of seeking to determine whether increase in Foreign Direct Investment (FDI) on GDP in Nigeria will increase export of vice versa.

The benefits from free trade and from allowing maximum benefits from (FDI) advancement have been well known. Many studies opined that free trade and investment enhance economic growth on GDP in Nigeria.

1.02 STATEMENT OF THE PROBLEM

The problems that this research work tends to discover are itemized below;

Does foreign direct investment on GDP in Nigeria take into account level of corruption or does it also take into account the level of poverty in Nigeria? Again, how can foreign direct investment seek to the modest goals to determine whether there is increase in foreign direct investment (FDI) on GDP in Nigeria or not? Thus, can foreigners have empirical work on the linkage between foreign direct investment and GDP in Nigeria?

1.03 OBJECTIVE OF THE STUDY

The aim of this research work are:

1.04 RESEARCH QUESTION

Having known the objectives of the study, the following research questions where set by the researcher to guide this study;

1.05 RESEARCH HYPOTHESIS

The study is guided by the hypothesis.

HYPOTHESIS I

H₀: there is no relationship between foreign direct investment and Gross

Domestic Product.

H₁: there is relationship between Foreign Direct Investment and Gross

Domestic Product.

H₀: GDP is independent on Foreign Direct Investment

H₁: GDP is not independent on Foreign Direct Investment

1.06 SIGNIFICANCE OF THE STUDY

The importance of this study are as follows:

1.07 SCOPE OF THE STUDY

This work covers the relationship between Gross Domestic Product (GDP) and Foreign Direct Investment (FDI) in Nigeria alone from 1996 – 2015.

The data collected was a secondary data from Central Bank of Nigeria and National bureau of Statistical Bulletin in the various years.

1.08 DEFINITION OF TERMS

Foreign Direct Investment: this can be defined as capital flow from one country to another, granting extensive ownership stakes in Domestic companies and assets.

Gross Domestic Product: can be defined as the total market value of all final goods and services produced in a country in a given year equal to the total consumer, investment and government spending, plus the value of exports, minus the value of imports.

Statistical analysis: it can be defined as the collection, summarization, manipulation, interpretation or quantitative causes patterns relationship and trends.

Regression: it is a technique used to describe a relationship between two variables called bivarities distribution.

Correlation: is a technique used to measure the degree or strength of the relationship between two variables.

Data: these are the fact and figures that are collected, analyzed and summarized. It is also the collection of any number of related observation; data are raw materials that form the basis for business and managerial decisions. It is also consist of sets of recorded observation or values.

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