Determinants of Foreign Direct Investment in Emerging Markets: Evidence from Nigeria

Hameed H Salihu, Emil Boasson, Vigdis Wangchao Boasson

Research output: Contribution to journalArticlepeer-review


In this paper, we examine the determinants of the flow of Foreign Direct Investment (FDI) to Nigeria. Specifically, we investigate the effects of exchange rate volatility on FDI flows while controlling for macroeconomic factors. We first conducted Dickey-Fuller unit roots tests for our time-series data to determine any trend elements in the sample data. We then conducted Johansen cointegration test for the long run relationships among the determinants of the FDI in emerging markets. Our findings show that a significant long-run relationship exists between FDI and exchange rate volatility. Using Vector Error Correction regression model (VECM), we find that exchange rate volatility has statistically significant negative impacts on the flow of FDI to Nigeria. We also find that market size, exchange rate, infrastructural development, and world commodity prices have positive and statistically significant impacts on the FDI flow to Africa.
Original languageEnglish
Pages (from-to)1020-1038
JournalInternational Research Journal of Applied Finance
Issue number7
StatePublished - Jul 2012


Dive into the research topics of 'Determinants of Foreign Direct Investment in Emerging Markets: Evidence from Nigeria'. Together they form a unique fingerprint.

Cite this