FOREIGN FINANCIAL INFLOWS AND GDP PER CAPITA IN NIGERIA

Abstract

The study empirically examined the relationship between foreign financial inflows and Gross Domestic Product Per Capita ((GDPPC) in Nigeria for the period of 1991 to 2022. Foreign financial inflows were disaggregated into foreign direct investment inflows (FDII), foreign portfolio investment inflows (FPII) and official development assistance (ODA) as well as public external debt (PEXD) and foreign remittances (REMIT). Data was sourced from Central Bank of Nigeria (CBN) Statistical Bulletin 2023, World Bank Data Base and Knomade 2023. The study made use of Auto Regressive Distributed Lag (ARDL) model approach to co-integration for the analysis. The results indicate no cointegration between foreign financial inflows and gross domestic product per capita in Nigeria. In the short-run, the results indicate that only public external debt has a significant relationship with Gross Domestic Product Per Capita.  Foreign portfolio investment inflows show a negative but not significant relationship with Gross Domestic Product Per Capita.   The results also revealed that foreign direct investment inflows and remittances have great potential to contribute significantly to GDPPC in the short run at less than 10% level of significance. It is recommended among others, that Nigerian government sustain the positive and significant relationship that exists between public external debt and gross domestic product per capita, review its foreign portfolio investment policies to uncover the reasons instead of contributing positively it shows a negative relationship and encourage more foreign direct investment and remittances inflows.