FOREIGN PORTFOLIO INVESTMENT AND ECONOMIC GROWTH IN NIGERIA

Abstract

This study examines the relationship between foreign portfolio investment and economic growth in Nigeria from 1986 to 2017. Data for the study were gathered from secondary sources. The data was analyzed with the use of both descriptive and inferential statistical methods. The Toda Yamamoto Non- Causality test was used to ascertain the relationship between Foreign Portfolio Investment and economic growth and the impulse response function was used to examine the transmission response of foreign portfolio investment to economic growth in Nigeria. The study found that there is a bi-directional relationship between foreign portfolio investment and economic growth and the impulse response revealed that economic growth would respond positively and permanently to shocks in foreign portfolio investment in Nigeria after the second period of forecast. The study recommends that policies to encourage the inflow of foreign portfolio investment in Nigeria should be vigorously pursued. Also emphasis should be geared towards efficiency in the use of foreign portfolio investment and the reduction of capital flight.