Causality nexus between trade, political instability, FDI and economic growth: Nigeria experience
by Nor'Aznin Abu Bakar; Luqman Afolabi
International Journal of Trade and Global Markets (IJTGM), Vol. 10, No. 1, 2017

Abstract: The purpose of this study is to examine the causal relationship between FDI inflow, volume of trade, political instability, and gross domestic product (GDP) in Nigeria using time series data from 1981 to 2014. The ADF and Phillips Perron (PP) tests were used to see whether all variables are stationary. Consequently, the Johansen and Juselius cointegration tests were employed to investigate the existence of long-run relationship among the variables. The findings indicated that there was a long-run relationship among the variables used in this study. The multivariate Granger causality test was carried out using the VECM approach to analyse the causal links among all the variables. A bidirectional causality was discovered between the FDI inflow and economic growth (GDP), but there was one-way direction between political instability and FDI, as well as between political instability and GDP. Apart from that, there was also one-way relationship between FDI and volume of trade within the stated period. The results from this study can be used as a guidance for policymakers on FDI, where the government can pay more attention on the issue of political instability and insecurity. The government needs to review and implement a strong, vibrant policy to ensure maximum security and peace in the country with the purpose of attracting more foreign investors.

Online publication date: Tue, 21-Feb-2017

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Trade and Global Markets (IJTGM):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email