This study was designed to investigate the long run and short run
implications of foreign direct investment inflow on growth in gross fixed
capital formation in Nigeria from 1981 to 2022. Other variables considered
germane to the study were also employed to determine their implications on
GFCF and to further ensure robust results. Data employed for analysis
were obtained from Central Bank of Nigeria statistical bulletin published in
2023. Econometric procedure adopted for investigation was the Auto
Regressive Distributed Lag modeling. The result of the long run coefficient
signifies that foreign direct investment negatively related with gross fixed
capital formation. However, the results of the short run dynamics between
foreign direct investment and gross fixed capital formation are
incompatible. While FDI in the contemporaneous period impeded growth in
capital formation, nevertheless, past values of FDI in one year lag
significantly supported growth in gross fixed capital formation. Therefore,
we strongly suggested that a feasible institutional framework be put in
place to objectively monitor and allocate foreign direct investments to
preferred sectors of the economy germane and strategic to the growth of
capital formation in Nigeria.
