FOREIGN DIRECT INVESTMENT AND EMPLOYMENT GENERATION: EVIDENCE FROM NIGERIA

A country endowed with natural resources as Nigeria should not be wallowing in the state of high unemployment rate as job opportunities can easily be created. A factor which can mitigate this is attracting a greater inflow of foreign capital into the nation. The underdeveloped nature of the economy which has been an hindrance considering the pace of economic development has given rise to the need of embracing Foreign Direct Investment (FDI) in this country. Hence, this study examined the impact and long run relationship between foreign direct investment (FDI) and employment generation in Nigeria which covers a period of 1981 to 2014. In order to establish the relationship, some variables were included in the econometric model which includes: exchange rate, total factor productivity, employment rate, foreign direct investment inflows, interest rate and trade openness. From the results obtained, foreign direct investment had a positive and significant relationship with employment generation in Nigeria. Also, the Johansen cointegration result establishes a long run relationship amongst the variables examined. Therefore, this paper recommends that the government should put various infrastructural facilities in place which will serve as an encouraging factor to the foreign investors. Furthermore, common markets should be encouraged by the government which will inform the interest of the foreign investors and also giving some incentives in order to help attract FDI.