Re-examining the Casuality between Capital Flight and Foreign Direct Investment in Nigeria
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Date
2018
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Acta Universitatis, Danubius Romania
Abstract
The relationship between capital flight and Foreign Direct Investment (FDI) has generated continuous debate in literature. This study aims at providing quantitative analysis of cointegration and causality between capital flight and FDI in Nigeria from 1985 to 2015. The study employed secondary data which was obtained from Statistical bulletin or Central Bank or Nigeria and data base or World Bank.The data obtained were subjected to Units root test, Co-integration test and Pair-Wise test of Granger Causality. The findings or co-integration revealed that the estimated equation and the series are co-integrated. The Granger-Causality test shows that there is no bi-directional causality between FDI and Capital Flight in Nigeria.The study concludes that the success to curtail capital flight in Nigeria is to improve level or infrastructural facilities in the country which can facilitate increase in domestic investment and also attract FDI. It is recommended that enhancing investment environment by minimizing the obstacles to doing economic activities and increasing tile effort against international financial crime will help reduce capital flight and improve FDI in Nigeria.
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Keywords
Capital flight, foreign direct investment, Causality, BOP, Nigeria