Abstract:

Existing literature is replete with evidence on the relationship between foreign direct investment (FDI) and economic growth in Nigeria. However, there are minimal empirical examinations of the industrial linkage effects of FDI flows to the country. Given the growing concern for sustainable industrial development and commitments to investment promotion, it is relevant to assess the industry-level effects of foreign investment presence in Nigeria. Conventionally, resource-seeking FDI are less employment generating and welfare enhancing than efficiency-seeking or market-seeking FDI. Also, FDI to the secondary (especially manufacturing) and tertiary sectors tend to create more backward and forward linkages with other productive sectors of the economy than FDI to primary sectors, such as mining and oil industries. As Nigeria’s large market, natural resource endowment and abundant labour force continues to attract investors from developed and emerging economies, it is pertinent to analyse the sector-level distribution of Nigeria’s inward FDI flows and the implications for structural transformation.