Foreign Direct Investment and Economic Development in Nigeria: A Correlation Analysis

Molokwu, Ifeoma Mirian; Chimezie Ada Ibezim; Ufoaroh, Ebele Theresa

doi:10.5281/zenodo.20584926

Foreign Direct Investment and Economic Development in Nigeria: A Correlation Analysis

Authors: Molokwu, Ifeoma Mirian, Chimezie Ada Ibezim, Ufoaroh, Ebele Theresa

Journal: International Journal of Advanced Economics and Sustainable Development (IJAESD), ISSN 2766-2659

Citation: IJAESD 7(1): 25-32, 2026-05-31.

DOI: 10.5281/zenodo.20584926

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Type: Original Research

Abstract

This study examines the relationship between exchange rate, inflation rate, and Human Development Index (HDI) in Nigeria using annual time-series data from 2005–2024. Human Development Index (HDI) was employed as a proxy for 1economic development. The study utilizes econometric techniques in E-Views, including Augmented Dickey-Fuller (ADF) unit root tests, Johansen co-integration analysis, and Ordinary Least Squares (OLS) estimation. The findings reveal that exchange rate has a positive impact on the economy which implies that the developmental goal of Foreign Direct Investment in developing countries is evident in Nigeria. It also shows that inflation rate invariably has negative and non-significant relationship with HDI. The study recommends that Nigerian government should emphasize in enacting policies that strengthen exchange rate stabilization that will help in efficient and effective development of infrastructure in order to increase the standard of living of her citizens. Secondly, the government should also ensure the implementation of inflation-targeting monetary policy to enable the masses have high purchasing power.

Keywords

Exchange Rate, Inflation Rate, Human Development Index, Foreign Direct Investment

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