FOREIGN INVESTMENT INFLOW AND UNEMPLOYMENT RATE IN A DEVELOPING ECONOMY
OGBONNAYA I ORJI
Ebonyi State University Abakaliki Ebonyi State, Nigeria
Kenneth C OGBAGA
Ebonyi State University Abakaliki Ebonyi State, Nigeria
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Keywords

Emotional trauma
Foreign direct investment
Foreign portfolio investment
Unemployment rate

How to Cite

ORJI, O., & OGBAGA, K. (2024). FOREIGN INVESTMENT INFLOW AND UNEMPLOYMENT RATE IN A DEVELOPING ECONOMY. Nigerian Journal of Social Psychology, 7(2). Retrieved from https://nigerianjsp.com/index.php/NJSP/article/view/150
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Abstract

Unemployment causes emotional trauma and feelings of low self-esteem; hence the need to tackle the high rate of unemployment in Nigeria prompted this study to investigate whether foreign investment inflows, in the form of foreign direct investment (FDI) and foreign portfolio investment (FPI), have any effect on unemployment rate in the country. We used annual time series data for the period 37-year period from 1986 to 2022. Preliminary stationarity test using Augmented Dickey-Fuller, Phillips Perron, and Zivot-Andrews unit root tests indicate that the dataset employed in the study is a mixture of order zero and order one integrations. The autoregressive distributed lag (ARDL) Bounds test results indicate that the variables have a long-run relationship. The study finds that FDI and FPI each has a significant negative impact on unemployment rate in the long run with regression coefficients -085 and -0.99 percent respectively. On the evidence of the findings, the study concludes that the growth of foreign direct investment and foreign portfolio investment inflows tend to curb the unemployment rate in Nigeria given a stable macroeconomic environment in the country. The federal government of Nigeria should therefore target bilateral trade policies that encourage the attraction, retention, and leveraging of foreign direct investment for job creation. The Nigerian government through its Central Bank and the Securities and Exchange Commission, should also seek to attract more foreign portfolio investment.

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