International Journal of Research and Innovation in Social Science (IJRISS) |Volume VI, Issue XI, November 2022|ISSN 2454-6186
Foreign Direct Investment and Employment Generation in Nigeria
Chinwe Ann Anisiobi, Callistus Tabansi Okeke, and Chinwe Monica Madueke
Department of Economics, Nnamdi Azikiwe University Awka, Nigeria
Abstract: FDI as a growth stimulating factor is seen as the largest source of external financing to developing countries and helps to ease capital constraints and contributes to output and employment generation. This paper examined the impact of foreign direct investment on employment generation in Nigeria within the period 1991 to 2021. The variables used in the study include employment rate, foreign direct investment, trade openness and real exchange rate. The paper used the autoregressive distributed lag (ARDL) model for its regression analysis. The data for the analysis was sourced from CBN statistical bulletin and world bank development indicator. The study finds that foreign direct investment and Trade openness have a positive impact on employment generation in Nigeria. Real exchange rate has a negative impact on employment generation in Nigeria. The paper finds that a short run relationship exists between foreign direct investment, real exchange rate, trade openness and employment generation in Nigeria. Based on the findings, the paper recommends that Government should make effort to attract more Foreign Direct Investment into the country to create more employment opportunities through Multi-National Corporations. The Government should encourage trade openness in order to enhance more Foreign Direct Investment in the country as it will increase the standard of living of the citizens by the provision of highly paid employment.
Keywords: ARDL, Employment generation, FDI, Trade openness, Nigeria.
Jel Classification: C19, E24, F2
I. INTRODUCTION
Every economic system seeks to achieve full employment which is seen as the main macroeconomic focus of the government in order to attain economic growth and development. The goal of increasing the level of employment among other macroeconomic objectives is important in many developing nations where unemployment and underutilization of resources has led to rising rate of poverty. Therefore, to increase employment in developing nations, some intellectuals believe that trade flows and FDI inflows could drive employment generation in these countries (Kareem, 2010). However, job creation is a crucial problem in Nigeria as the World Bank Group (2013) stated that employment has been insufficient in Nigeria to accommodate the increasing labour force. According to National Bureau of Statistics (2021), the rate of unemployment rose from 9.9% in 2015 to 33% in 2021. The NBS report states that unemployment for people aged 15 to 24 years stood at 53.4% and 37.2% for people aged 25 to 34 years. High unemployment has devastating consequences for individual, society and the economy. It reinforces poverty,