Private Investment And Macroeconomic Instability In The Nigerian Economy 1970 – 2002

Abstract

This study was carried out to prove an insight into the analysis of the impact of macroeconomic instability on private investment in Nigerian economy. The study takes a systematic approach to the subject matter by first devoting separate chapters to state objectives which include a background of the study, statement of problems, objectives of the study, as well as the methodology and limitations of the study. Also, a review of the various literatures was carried out in chapter two where various macroeconomic aggregates policy options were critically appraised. In chapter three an empirical assessment of selected macro-economic aggregates was carried out where the ordinary least square regression method was applied. In the empirical analysis, the dependent variable is foreign direct investment and the expiratory variables are Total Government Expenditure, Gross domestic product and unemployment. In the analysis, it was observed that the most significant variable determining changes in private investment is Government expenditure. The study also found that unemployment in the economy was significantly related to foreign direct investment but having a negative impact on foreign direct investment. Also recommendations were put forward which include adopting strategies on Interest rate and exchange rate management, the question of finance being addressed, provision of essential infrastructure facilities, policies that encourage FDI should be put in place and equally maintained and Nigeria should avoid unstable policies reversal by every new government. This tends to scare foreign investors away and discourage domestic investors.


JORIND Vol. 4 (2) 2006: pp. 113-126