Foreign Portfolio Investment, Investment Policy and Economic Growth in Nigeria
DOI:
https://doi.org/10.51699/ijbde.v2i12.3598Keywords:
Portfolio InvestmentAbstract
The study examined the effect of investment policy of 1995 on the relationship between foreign portfolio investment and economic growth in Nigeria. This was with a view to explore the nexus between the investment policy, foreign portfolio investment and economic growth in Nigeria.Secondary data were used in this study. Annual time-series data for the period 1986 to 2013 on foreign portfolio investment and maximum lending rate were obtained from Central Bank of Nigeria (CBN) Statistical Bulletin, while data on variables such as GDP growth rate and gross domestic savings were obtained from World Development Indicators (WDI) database, published by the World Bank. Data collected were analyzed with both descriptive statistics and econometric techniques. Time series properties of the variables were examined using both Augmented Dickey Fuller and Phillip Peron tests. Cointegration properties of the variables were also examined. Vector Auto-Regressive technique supported by Variance Decomposition and Impulse Response analysis were employed to empirically determine the relationship between foreign portfolio investment and economic growth in Nigeria. The study revealed that though the investment policies of 1995 in itself had not led to economic growth but it had succeeded in attracting more foreign portfolio investment into the economic and that it aided the growth of the economy through these foreign portfolio investments.
References
Adam, Z. (2002) Fine-tuning foreign investment: Differentiating FDI and portfolio investment in postcommunist East Central Europe. Paper presented at the Second EPIC Workshop in Florence, May 1622.
Agarwal, R. N. (2006): “Foreign Portfolio Investment in Some Developing Countries: AStudy of Determinants and Macroeconomic Impact” (Institute of Economic Growth).
Akpokodje, G. (1998) "Macroeconomic Policies and Private Investment in Nigeria", in: Rekindling Investment for Economic Development in Nigeria by Ben. E. Aigbokhan (ed) Selected Papers for the 1998 Annual Conference, The Nigerian Economic Society.
Baharumshah, A.Z. and M. A-M. Thanoon (2006): “Foreign Capital Flows and Economic Growth in East Asian countries” China Economic Review Volume 17, Issue 1, 2006, Pages 70-83
Bekaert, G., Harvey, C.R. and Lundblad, C., 2005, Does financial liberalization spur growth? Journal of Financial Economics 77, pp 3-55.
Bordo, M.D. and C.M. Meissner (2007) “Foreign Capital and Economic Growth in the First Era of Globalization” NBER Working Paper No. 13577.
Bussiere, M. and Fratzscher, M., 2008, Financial openness and growth: Short-run gain, Long-run pain? Review of International Economics 16, pp 69-95.
Butkiewicz, J.L. And Yanikkaya, H., 2008, Capital Account Openness, International Trade, and Economic
Growth: A Cross-Country Empirical Investigation, Emerging Markets Finance and Trade 44, Pp 15-38.
Central Bank of Nigeria (2014), Statistical Bulletin and Statement of Accounts.
Chambet, A. and Gibson, R., 2008, Financial Integration, Economic Instability and Trade Structure in Emerging Markets, Journal of International Money And Finance 27, Pp 654-675.
Chanda, A. (2000). The Influence of Capital Control on Long-Run Growth: where and how much? Working paper, North Caroline State University.
Chenery, H. B. and A. Stout (1966), “Foreign Assistance and Economic Development” American Economic Review, Vol. 55 pp.679-733.
Central Bank of Nigeria (2014): Central Bank of Nigeria Statistical Bulletin. Abuja, Nigeria. Cottrell, P. L. (1975) British overseas investment in the nineteenth century. London:
Macmillan.
Dhingra, S., 2005, Equity Markets Versus Capital Account Liberalization: A Comparison of Growth Effects of Liberalizations Policies in Developing Countries, Annual Conference on Pacific Basin Finance, Economics and Accounting, Pp 1-61.
Dimitrios A, Xeni D and Dionysius G (2005) ‘FDI and Growth: Evidence from a Panel of European Transition Countries’ «ΣΠΟΥ∆Α1», Τόµος 55, Τεύχος 1ο, / «SPOUDA1», Vol. 55, No l, (2005), University of Piraeus, pp. 9-30
Duasa, Jarita. and Kassım, Salina H.(2009) “Foreign Portfolio Investment and Economic Growth in Malaysia”, Pakistan Development Review, Summer 2009.
Durham, J. B., (2003), “Absorptive Capacity and the Effects of Foreign Direct Investment and Equity Foreign Portfolio Investment on Economic Growth” European Economic Review 48, pp. 285-306.
Eichengreen, Barry (1992) Golden Fetters: The Gold Standard and the Great Depression, 1919-1939. New York: Oxford University Press.
Ekeocha, P .C (2008 ) ‘Modelling the Long Run Determinants of Foreign Portfolio Investment in an Emerging Market: Evidence from Nigeria’, International Conference on Applied Economics
Ekineh, D. (2003). Deepening the Nigerian Capital Market: Regulatory, Supervisory and Operational Imperative in a Global financial Environment. Abuja: Security and Exchange Commission.
Eniekezimene, A. F. (2013). The impact of foreign portfolio investment on capital market growth: evidence from Nigeria. Global Business and Economics Research Journal, 2(8): 13-30.
Errunza, Vihang (2005): “Foreign Portfolio Equity Investments, Financial Liberalization, and Economic Development” Faculty of Management, McGill University, Montreal, Canada
Ghose, A. K. (2004) “Capital Inflows and Investment in Developing Countries” Employment Strategy Papers, No. 2004/11.
Guluzar and Bener (2013) ‘The Relationship between Foreign Portfolio Investment and Macroeconomic Variables’ European Scientific Journal vol.9, No.34 ISSN: 1857 – 7881
Harrod, R.F. and E.D. Domar, (1946) “Capital Expansion, Rate of Growth and Employment” Econometrica, 14.
Idolor, and Erah (2011) ‘An Empirical Analysis of the Impact of Capital Market Activities on the Nigerian Economy’ Journal of Research in National Development 9(2) ISSN 1596 – 8308.
Klein, M.W., And Olivei, G.P., 2008, Capital Account Liberalization, Financial Depth, and Economic Growth, Journal of International Money And Finance 27, Pp 861-875.
Levine, R., 2001, International financial liberalization and economic growth, Review of International Economic, pp 688-702.
Lütkephol, Helmut (1991), Introduction to Multiple Time Series Analysis. Berlin- Heidelberg: Springer-Verlag.
Narayan (2013) ‘Causal Relationship between Foreign Capital Inflows and Economic Growth: Empirical Evidence from India’ International Journal of Economics, Finance and Management, volume 2 no 1
Nuri and Huseyin (2012) ‘Capital Flows and Economic Growth across Spectral Frequencies: Evidence from Turkey’ Panoeconomicus, volume 4, pp. 441-462
Okoye and Nwisienyi (2013) ‘The Capital Market Contributions towards Economic Growth and Development; the Nigerian Experience’ Global Advanced Research Journal of Management and Business Studies Vol. 2(2) pp. 120-125 (ISSN: 2315-5086)
Olotu and Jegbefume (2011) “The Place of Foreign Capital Flows in the Nigerian Economic Growth Equation:
Evidence from Foreign Portfolio Investment” International Journal of Economic Development Research and Investment Vol 2 No. 3,
Olotu and Orji (2014) ‘Decomposition of Capital Inflows and Capital Market Development of Emerging Economies: Evidence from Nigeria’ Journal of Research in National Development 12 (1). ISSN 15968308.
Orji Anthony and Mba, Peter.N (2010) “Foreign Private Investment, Capital Formation and Economic Growth in
Nigeria: a two stage least square approach” Journal of Economics and Sustainable Development ISSN 2222-1700 (Paper) ISSN 2222-2855
Osuji C. C and Akujuobi B A (2013) Effect of Foreign Investment on the Economic Growth in Nigeria. Information and Knowledge Management ISSN 2224-5758 (Paper) ISSN 2224-896X Vol.3, No.1,
Owolabi and Ajayi (2013) ‘Econometrics Analysis of Impact of Capital Market on Economic Growth in Nigeria’ Asian Economic and Financial Review, 3(1):99-110
Ozurumba B. A. (2012) ‘The Impact of Stock Market Returns on Foreign Portfolio Investment in Nigeria’ IOSR Journal of Business and Management (IOSRJBM) ISSN: 2278-487X Volume 2, Issue 4, PP 10-19
Patro, D. and P. Wald (2005) Firm Characteristics and the Impact of Emerging Market Liberalisation. Journal of Banking and Finance 29:7, 1671–1695.
Prasad, E.S., R.G. Rajan, and A. Subramanian (2007): “Foreign Capital and Economic Growth . National Bureau of Economic Research. Working Paper 13619
Quinn, D., 1997, The correlates of change in international financial regulation, American Political Science Review volume 91 number 3, pp 531-551.
Sethi, Narayan and Patnaik K.U.S. (2005): “Impact of International Capital Flows on India’s Economic Growth” Unpublished Thesis, Department of Economics, University of Hyderabad, P.O – Central University.
Sethi, Narayan (2013) ‘Causal Relationship between Foreign Capital Inflows and EconomicGrowth: Empirical Evidence from India’ International Journal of Economics, Finance and Management, Vol. 2, NO. 1.
Simon-O and Olayemi O (2014) Foreign Private Investment, Capital Formation and PovertyReduction in Nigeria.
European Journal of Business and Social Sciences, Vol. 2, No.10 , pp 157-168, January 2014.
Tokunbo S. O and Lloyd A. (2010) A Foreign Private Investment and Economic Growth in Nigeria. Journal of Applied Econometrics and International Development Vol.10-2
World Bank (2014) World Data Indicator, Online Publication
